Baring Asset Management, which manages a total of $16.24 billion in global fixed- income and $500 million in its global high-yield portfolio, is looking to add new paper from European high-yield issuers. "We've been quite active in new issuance on the high-yield side. We have become involved where we feel comfortable," says Toby Nangle, fund manager for fixed-income and currency. Most recently, Baring has bought into deals from Sanitec and JohnsonDiversey. "The markets are so small it's hard to get any volume on trades, but if good deals are coming through the pipeline, we will add issues opportunistically," says Nangle. He declined to say which specific trades he was considering.
Baring recently increased its allocation to U.S. high yield by 10%, by reallocating assets from emerging markets. Nangle explains that although he is concerned about U.S. growth, he is not as pessimistic as the high-yield issuers themselves are. Because they are so negative on U.S. growth prospects, high-yield issuers are in de-leveraging mode, which will cause them to perform well from a bottom-up perspective, despite economic growth, says Nangle.
Baring Asset Management's global high-yield fund invests in emerging markets, U.S. high yield, euro junk and some triple-B names.