Baltimore Buyer To Bulk Up Finance Exposure

Cavanaugh Capital Management will add up to $10 million to its position in finance credits if interest rates stay at present levels, according to Tom Graff, principal and assistant portfolio manager of $650 million of taxable fixed income at the Baltimore-based firm.

  • 15 Oct 2004
Email a colleague
Request a PDF

Tom Graff

Cavanaugh Capital Management will add up to $10 million to its position in finance credits if interest rates stay at present levels, according to Tom Graff, principal and assistant portfolio manager of $650 million of taxable fixed income at the Baltimore-based firm.

Graff said he prefers single-A finance credits to triple-B industrials because of their attractive yields and stable prices, and the fact that they offer better yields for less risk. For example, Graff recently passed on First Data Corp. '14s, which were trading at 65 basis points over 10-year Treasuries, and Pitney Bowes '14s at 56bps over. Instead, he purchased Goldman Sachs' 5.13% of '14s, which were trading at 100bps over at the time of purchase and are currently holding steady at 99bps over Treasuries. He said the case is indicative of his strategy.

With a cautious Federal Reserve and expectations for rate hikes already priced into the market, Graff said he would put new cash into one- to two-and-a-half year taxable municipal bonds, which have a spread of 35-40bps over comparable Treasuries.

The company's fixed-income portfolios are invested in all segments of domestic investment-grade bonds, including Treasuries, agencies, mortgage-backed securities and taxable municipal bonds. The firm uses several indexes as benchmarks, most notably the Lehman Brothers Aggregate Bond Index. The portfolios are 10% overweight the index in mortgage-backed securities, 15% overweight in corporate credits, 2% underweight in agencies and 20% underweight in Treasuries. The portfolios are at about 80% of the benchmark's duration.

Graff explained the significant underweighting in Treasuries by saying that he's trying to counter the lower yields of shorter securities by seeking out bonds with slightly higher risk. "The biggest risk in the bond market right now is interest-rate risk," Graff said.

  • 15 Oct 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 35,941.13 111 8.93%
2 Barclays 31,588.47 86 7.85%
3 JPMorgan 27,799.55 107 6.91%
4 Bank of America Merrill Lynch 27,706.86 75 6.88%
5 HSBC 21,949.38 82 5.45%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 17 Jan 2017
1 Commerzbank Group 114.00 1 66.16%
2 CaixaBank 37.05 1 21.50%
3 UniCredit 10.62 1 6.17%
3 BNP Paribas 10.62 1 6.17%
Subtotal 172.30 3 100.00%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 17 Jan 2017
1 SG Corporate & Investment Banking 770.06 2 16.80%
2 Goldman Sachs 656.16 2 14.32%
3 JPMorgan 527.28 4 11.50%
4 Emirates NBD PJSC 408.38 1 8.91%
5 Deutsche Bank 321.53 3 7.01%