Bankgesellshaft Berlin (BGB), which manages E1 billion in fixed-income assets through its Luxembourg office, is looking at adding high-yielding, short-dated telco and auto paper. Marcus Volz, portfolio manager, says spreads are attractive on telco paper in light of the recent spate of bad news in the sector. He says he has no specific telco names in mind, but would like to buy after the bad news has been priced in. BGB is a buy-and-hold investor, and Volz says short-dated paper offers less risk, but still has an attractive yield.
Volz is waiting for auto paper to become a little cheaper before adding to positions in Ford and DaimlerChrysler. He declined to say at which levels he would add or which maturities he is considering. In general, he says he is looking at high-yield, short-dated paper for the time being, but may consider longer-dated paper in the future.
BGB holds 70% of its fixed-income portfolio in bank paper rated single-A or better. The bank adds new issues on a regular basis, because it replaces most bonds as they mature. Most recently, BGB bought Hypovereinsbank's 4.75% of '03. Volz says BGB is looking to buy asset-backeds in the future, but needs to change investing guidelines before it is able to buy. BGB does not use a benchmark index and allocates 70% to financial paper, 20% to corporates and 10% to government bonds.
