Dresdner RCM Global Investors will add European telecoms and industrials to its £120 million sterling-denominated credit portfolio. Jamie Stuttard, London-based portfolio manager, says Dresdner will add new issues from France Telecom, which he expects will come with a deal with a sterling tranche this year, if it features a coupon step-up to protect investors from a ratings downgrade. He will add KPN's 814% of '08, because he views the company as a huge recovery story.
In terms of industrials, Stuttard says well-run companies such as Schlumberger and Tompkins--a U.K. general industrial company--offer good value, because their spreads are drifting out on the back of the weakening European and U.K. economies and the amount of supply in the market. Specifically, Stuttard is considering Schlumberger's 612% of '32 and Tompkins' 8% of '11.
Dresdner RCM manages a total of £5 billion in its London office. The sterling credit portfolios are benchmarked against the Barclays Capital credit indices.