The re-election of President George W. Bush bodes well for the coal and healthcare sectors overall, agree buy- and sell-side fixed-income participants. "The Bush victory is certainly a positive for healthcare, energy, coal-miners and other polluters," said one high-yield strategist. Tom Parker, portfolio manager at Barclays Global Investors in San Francisco, said coal and healthcare names weren't trading much tighter this week because there's nowhere for spreads to go in the current tight market. He expects those sectors to perform well during the next Bush administration.
One high-yield healthcare analyst said Bush will benefit hospitals and healthcare providers because he has been supportive of Medicare. The President's tight relationship with branded pharmaceutical companies is also noteworthy, he added, noting the market had been wary of how a Senator John Kerry victory would have impacted the sector. As for coal, Ryan Bailes, associate and metals and mining analyst at Banc of America Securities, agreed though coal names are already trading tight and there's not much room for further tightening, Bush's re-election bodes well for the sector. "In the bigger picture it's positive in the sense that there's less regulation and restrictions," he stated, adding the risk of repercussions if Kerry were elected has been averted.
But the healthcare analyst noted Bush's upcoming term does pose challenges for generic pharma companies, which comprise much of the high-yield healthcare sector. While the bond market didn't see much of a change in spreads this week, the analyst pointed to generic pharma poor performance in the equity market as indicative of potential problems ahead for the sector. "On Tuesday as the market was performing well because of the expectation of a Bush win, generic pharma equities were off 10-20%," he said.
