Vontobel's bond chief stacks up on corporate debt before year end
New issuances from corporates still look more attractive than their sovereign counterparts, according to Vontobel's Holzgang.
by Emily Blewett on Dec 12, 2012 at 12:10
Vontobel's head of fixed income Anna Holzgang has recently upped exposure to corporate debt, buying into names primarily of new issuances which offer investors a chance to get into better quality names.
Investors over the past two years have been clamoring for new corporate bonds, which despite historically lower yields look attractive relative to safe-haven sovereign debt and offer investors a chance to buy into corporate debt when the market is most liquid.
Holzgang, who manages the Raiffeisen Futura Global Bond fund, last month sold sovereign debt from Belgium and the EIB to buy Spanish Gas Natural, French telecom firm Vivendi, UK construction firm Vinci, UK food firm M&S, and UK-based Intercontinental Hotels.
'Credit does well at times of low growth and credit markets will continue to be supported by low rates,' Holzgang told Citywire Global.
'We don't think that the problems in the euro area or US will be resolved in the next year and so we expect rates in safe haven government issuers like US, Germany and Switzerland to stay low.'
The demand for corporate bonds has, however, sparked concern that the sector is bordering on bubble-like territory.
Holzgang said that her choice in bonds lay with companies that issued in sterling and peripheral names that had more attractive yields.
'To increase our exposure to attractive issuers we see the best opportunities to buy corporate names out of new issuances. We expect technicals to remain strong with industrials pre-funding 2013 already,' she added.
Holzgang boosted her exposure to companies bordering a the high yield rating increasing her exposure to BBB+ to 5.8% from 4.7% and almost doubling BBB holdings to 10.1% from 5.3% in November. Exposure to companies within the last investment grade credit bracket, BBB-, currently stands at 1%.
Holzgang's Raiffeisen Futura Global Bond fund returned 40.7% over the last three years, much in line with its benchmark JP Morgan Global GBI Hedged CHF TR which rose 41% in the same period.
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