All material subject to strictly enforced copyright laws. © 2022 Euromoney Institutional Investor PLC group

London Manager Hunts For Yield

BondWeek is the leading news publication for fixed-income professionals, covering new deals, structures, asset-backed securities, industry and market activity.

WestAM is looking to bulk up its double-A and triple-B corporate credit positions to add yield. Philip Chow, who looks after corporate credits, says, "We find that when investors talk about relative value, these days, they really mean a search for yield. Anything with yield, people will switch into."

Chow notes that many sterling-denominated triple-Bs have performed very well recently and are at historically tight levels. He attributes the tight spreads to the overall lack of corporate issuance in the sterling market couple with pent-up demand. Accordingly, he is reducing the portfolio's exposure to single-As which are trading very tightly and is selectively adding to double-A and triple-Bs.

That said, Chow believes that the rally experienced in triple-B names has been driven somewhat by the equity market rally. Going into summer, if equities fall back a little bit from their highs, he may reassess his triple-B positions. But for now, the underlying technical situation is quite favorable for these credits, he says.

Chow says he has recently bought new sterling issues from British American Tobacco and General Motors, both triple-B names. He also picked up LaFarge in the secondary market. WestAM manages E1.2 billion in fixed-income assets from its London office, of which 70% is allocated to corporate credit.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree