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
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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
  • 24 Jul 2017
1 Citi 253,106.92 930 8.89%
2 JPMorgan 230,914.50 1036 8.11%
3 Bank of America Merrill Lynch 221,389.46 762 7.78%
4 Goldman Sachs 171,499.26 554 6.03%
5 Barclays 169,046.60 646 5.94%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 25 Jul 2017
1 HSBC 27,039.93 106 7.36%
2 Deutsche Bank 25,125.19 81 6.84%
3 Bank of America Merrill Lynch 23,128.33 61 6.29%
4 BNP Paribas 19,315.94 110 5.26%
5 Credit Agricole CIB 18,706.93 106 5.09%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 25 Jul 2017
1 JPMorgan 13,488.13 59 8.47%
2 Citi 11,496.21 73 7.22%
3 UBS 11,302.86 45 7.09%
4 Morgan Stanley 10,864.95 59 6.82%
5 Goldman Sachs 10,434.21 54 6.55%