Fixed Income Insights
Innovative Fixed Income Solutions: Evaluating the added value of SPIRE Repacks
Freya Lobedank, Faith Chin, Bryan Wallace
Published: 27-03-2025

In the evolving landscape of fixed income investments, SPIRE notes have emerged as a transformative vehicle. These structured notes represent an innovative solution for hedging fixed income portfolios, providing investors with access to enhanced yield opportunities, flexibility and simplified hedging and oversight processes.

Overview

We at J.P. Morgan have been among the first asset managers to utilise and successfully launch customised portfolio SPIRE notes for our investors, with the first portfolio trade having taken place in 2023. SPIRE, which stands for Single Platform Investment Repackaging Entity, is a Luxembourg-based special purpose vehicle (SPV) primarily suitable for insurance companies, pension funds, and other institutional investors. SPIRE notes cater to those who require global market access to aggregated fixed income but demand more certainty around yield, risk, and operational management.

Key takeaways

  1. Fixed hedged coupons
    SPIRE notes enable investors to secure a fixed hedged yield for the portfolio's lifetime. This is achieved through a comprehensive hedging strategy that locks in future cash flows back to the investor’s base currency, ensuring yield certainty from day one.

  2. Yield enhancement and diversification
    By accessing a global issuer base, investors can significantly diversify their portfolios and enhance overall yield. SPIRE notes allow for the inclusion of additional features like bond forwards and credit default swaps, offering tailored risk-return profiles.

  3. Reduced hedging complexity
    Utilising SPIRE notes simplifies operational processes by eliminating the need for complex International Swaps and Derivatives Association (ISDA) agreements and Credit Support Annex (CSAs) as hedges fully are being managed within the SPIRE vehicle.

The process of a SPIRE portfolio trade

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Sample use cases of SPIRE portfolio trades

  1. Cash flow matching portfolios: SPIRE notes provide fully hedged, diversified portfolios that generate projectable cash flows to match liabilities over time.
  2. Bulk purchase annuity transactions: SPIRE notes simplify onboarding and ongoing management through standardized note structure, enhancing capital efficiency.
  3. Diversifying via global corporate bonds: Investors can achieve significant diversification and potential yield pick-up by investing in global corporate bonds.
  4. Investing into US Municipal Bonds: SPIRE notes offer non-US investors a compelling opportunity to enhance portfolios with high-quality, yield-generating assets.

Conclusion

SPIRE SPV notes represent a transformative vehicle for fixed income investors, providing a fully hedged, capital-efficient solution that helps investors lock in yields, manage risks, and work towards their investment objectives with a high degree of certainty and customisation potential.

For Professional Clients/ Qualified Investors only – not for Retail use or distribution.

This is a marketing communication. The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and may be subject to change without reference or notification to you.

 

The value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass.

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This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

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Freya Lobedank, Faith Chin, Bryan Wallace
Published: 27-03-2025