Minnesota Shop To Sell Treasuries

  • 09 Mar 2003
Email a colleague
Request a PDF

Wayne Schmidt, portfolio manager at Advantus Capital Management, will rotate 5% of the firm's $1.5 billion portfolio, or $75 million, from Treasuries into a combination of corporates and mortgage-backed securities. Schmidt plans this move over the next month, when he predicts the Treasury market will rally to a point where profit taking will make sense. He says that a war with Iraq will produce a flight-to-quality but that the rally will be short lived, as uncertainty will be resolved. His trigger for the move is when the 10-year Treasury drops to 3.25-3.50%. Last Tuesday, the 10-year Treasury had a 3.64% yield.

Schmidt says that he will liquidate intermediate Treasuries with a five- to 10-year maturity, as a rally will cause the curve to be steeper. With the proceeds, he will buy shorter duration MBS and corporates. He will use the rotation as a way to shorten duration in anticipation of higher interest rates looking forward. For instance, with the proceeds of 10-year Treasuries, he will buy seven- to eight-year corporates. With the five-year Treasuries, he will invest in two- to three-year corporate bonds.

Schmidt declined to indicate any particular name or sector for his future corporate purchases. He says he will buy investment-grade rated bonds only. As an example of a recent purchase, he bought the PHH Corp. 7.12% notes of '13 (BBB+/BBB+) at a 330 basis point spread over Treasuries. Last Tuesday, the notes were trading at a spread of 321 basis points over the curve. Schmidt does not plan to add to this position.

Advantus is based in Saint Paul, Minn. Schmidt allocates 48% to MBS, 32% to corporates, 14% to Treasuries and 6% to agencies. With a four-year duration, the fund is almost neutral to the Lehman Brothers aggregate index, which has a 4.10-year duration.

  • 09 Mar 2003

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 415,838.72 1590 9.03%
2 JPMorgan 379,647.36 1732 8.25%
3 Bank of America Merrill Lynch 359,324.90 1302 7.81%
4 Goldman Sachs 267,102.04 920 5.80%
5 Barclays 266,010.35 1070 5.78%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 45,073.36 191 6.67%
2 Deutsche Bank 37,312.62 138 5.52%
3 BNP Paribas 36,204.20 208 5.36%
4 JPMorgan 34,040.23 112 5.04%
5 Bank of America Merrill Lynch 32,958.96 107 4.88%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 22,398.41 104 8.67%
2 Morgan Stanley 19,092.40 102 7.39%
3 Citi 17,768.49 110 6.88%
4 UBS 17,693.89 71 6.85%
5 Goldman Sachs 17,256.05 98 6.68%