U.K. Investor Focuses On High-Yield

Henderson Global Investors in London could add £40 million ($71 million) in high-yield bonds and long-dated gilts in the coming quarter, said John Pattullo, director of retail credit.

  • 24 Sep 2004
Email a colleague
Request a PDF
John Pattullo
Henderson Global Investors in London could add £40 million ($71 million) in high-yield bonds and long-dated gilts in the coming quarter, said John Pattullo, director of retail credit. He is responsible for Henderson's £300 million in sterling-and euro-denominated high-yield managed out of London. "High-yield offers the best returns in fixed income, but at the same time we want to lengthen duration since rates aren't going up as fast as the market anticipated," said Pattullo.

In Henderson's strategic high-yield bond fund, for example, which also includes investment-grade, convertibles and governments, Pattullo in the last month increased the high-yield allocation to 80% and upped sovereigns to 15%, with the remainder in convertible bonds. The fund manager intends to maintain this allocation through year-end. The £56 million fund is benchmarked against the Standard & Poor's U.K. Other Bond index.

"With default rates at their lowest in two decades, reasonable valuations and good technicals in high-yield, we are focusing on single-B credits with credible management teams and not too much leverage." The 10%, 2011 bonds of Focus Wickes, the U.K. do-it-yourself company, constitute one of Pattullo's largest holdings.

The asset manager expects this fall's high-yield issuance to be dominated by high-quality yet highly levered names, with German sanitary fittings company Grohe's recent offering a case in point (BW, 9/13). "This won't be a vintage year for high-yield new issues, so it's especially important to be selective about what you invest in," Pattullo observed. Henderson is neutral on the cable sector and recently lightened up on bonds in Germany's Kabel Deutschland in anticipation of more issuance in the sector.

The duration of the portfolio is seven years, up from four years just one month ago, and Pattullo plans to keep it at this level at least until Christmas. "We believe future interest-rate hikes are already fully discounted by the market and there is a risk bond yields will peak at lower levels than expected," said Pattullo. Consequently, the asset manager has increased holdings in U.K. Treasury 6% '28s to close to 4% of the fund.

  • 24 Sep 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 358,291.38 1348 9.06%
2 JPMorgan 320,704.66 1461 8.11%
3 Bank of America Merrill Lynch 318,128.31 1104 8.04%
4 Goldman Sachs 236,643.87 789 5.98%
5 Barclays 231,197.41 895 5.84%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 35,007.57 165 6.53%
2 Deutsche Bank 34,880.53 120 6.51%
3 Bank of America Merrill Lynch 31,805.65 97 5.93%
4 BNP Paribas 27,920.60 169 5.21%
5 SG Corporate & Investment Banking 24,398.89 138 4.55%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 19,745.92 80 8.85%
2 Morgan Stanley 16,334.63 83 7.32%
3 Citi 15,972.34 95 7.16%
4 UBS 15,487.17 60 6.94%
5 Goldman Sachs 14,053.61 76 6.30%