Evergreen Investments, a Boston-based high-yield asset management firm, is moving assets from the broadcast sector into wireless telecom bonds, according to portfolio managerPrescott Crocker. The shift will reposition 4% of its total portfolio, or $44 million, and is being triggered by what he says are evolving industry fundamentals. Crocker reasons that the broadcast sector continues to deteriorate, partly because it depends too heavily on advertising sales. On the other hand, he sees a growing potential demand for wireless products, and he anticipates the sector will benefit from expected consolidations.
As examples of recent purchases in the wireless telecom sector, the firm bought Triton PCS 11% notes of '08 (B2/B-) at a 650 basis points spread over the 10-year Treasury. It also bought Airgate PCS 13.5% notes of '09 (Caa1/CCC) at 890 basis points over the 10-year Treasury. A recent sale in the broadcast sector includes the Young Broadcasting Inc. 10% notes of '11 (B2/B) at a 540 basis point spread over the 10-year Treasury.
With $1.1 billion of high-yield U.S. debt under management, the firm allocates 70% to U.S. high-yield, 15% to Treasuries and 15% to foreign Government bonds. With a 4.60-year duration, the fund is slightly longer than its benchmark, the J.P. Morgan Chase High-Yield index, whose duration is 4.12-years.
