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| Miguel Biamon |
Bryn Mawr Trust Co. is considering picking up high-grade corporates, to take advantage of some of the recent spread widening in the global credit markets. Miguel Biamon, v.p. and director of fixed income in Bryn Mawr, Pa., said he is looking to buy single-A financials because they offer attractive pickups to government debt. "Corporate spreads are looking attractive again relative to where they've been. There's value there," Biamon said. He is directly responsible for about $200 million in fixed income, while Bryn Mawr has about $400 million in actively managed fixed income. As for financials, Biamon said single-A, seven-to-nine year paper is about 75-90 basis points wider than 10-year Treasuries. He said high-grade corporates offer more value than the credit-risk free benchmark, which has dropped below 4% in recent weeks before heading up to the 4.06% mark on June 21. That being said, Biamon sees higher yields ahead. "I'm certainly not buying the 10-year Treasury--I just don't want to be on the wrong side of that bet," he explained.
Overall, Biamon's accounts benchmarked against the Lehman Brothers Intermediate Government/Credit Index hold about 54% in corporates, 39% in agencies and only small exposures to Treasuries and cash.
Biamon has also been gradually adding callable agencies, which now account for about a third of the agency bucket. The justification here is also relative value, with Biamon noting five-year callables offer about 75bps over Treasuries, with bullets in the 30bps range. And with callables offering coupons around 5.25%, Biamon believes this is a win-win situation, regardless of where rates go. "If rates go up it's defensive and if they get called, I've earned" a healthy coupon, he said.
