Despite yields at all-time lows, investors say asset-backed bonds still offer value relative to their corporate counterparts. "We still favor ABS because we are shielded from corporate event risk," said Bas Kragten, senior portfolio manager at ING Investment Management in The Hague. Uniqa Alternative Investments, a player in the sub-investment grade market, is focusing on double-Bs, according to Philipp Mayer, Vienna-based portfolio manager. "There is still value in the capital structure," he observed, noting there are double-Bs which are only slightly more subordinated than triple-Bs yet offer four to five times the spread.
Felix Blomenkamp, portfolio manager at Allianz Investment Managers, who like Kragten limits buys to investment-grade assets, said he is sticking to triple-As since triple-B asset-backeds are now trading inside similarly rated corporate bonds. "There is better rating migration in triple-A ABS than in corporates," he commented.
