Franklin Templeton Investments is considering selling off some of the better-performing names in its E57 million European high-yield portfolio. Atanas Christev, portfolio manager, says he would sell only if he can find suitable new names to buy in the new issue market. Some of the names Christev may consider unloading are: Yell, the yellow pages directory, Growhe, a sanitary goods maker, and Elektrownia Turow, a Polish electricity company. Another good performer is CHC Helicopter, but Christev says he will likely hold onto it because it has an 11 3/4% coupon.
Christev says his portfolio is well diversified, holding between 35 to 40 bonds. He notes the portfolio has good exposure to chemicals companies, but he would like to add to consumer names. Consumer names are usually quite diverse and what makes them more attractive is consumer high-yield issuers specialize in products where there is less competition.
For example, two recent consumer issues, Le Grand--a French manufacturer of electricity goodsand Safilo--an Italian designer sunglasses maker--are examples of esoteric names that have done well because the market is very strong and there is demand for new bonds. "Everything is lapped up by the market, especially if it's half-way decent," says Christev. Franklin Templeton uses the Merrill Lynch high-yield index as its benchmark.
