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Commento su Euro Corporate Bond

Commento su Euro Corporate Bond: a cura di Adam Cordery, Head of UK and European Credit Strategies and fund manager of Schroder ISF EURO Corporate Bond   


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            Overview
            – We do not believe there will be a recession next year but expect the credit quality of companies to continue to improve resulting in default rates coming down, which will support and tighten credit spreads.
            – Main risk is the underlying governments bonds that credits are based on.
            – Fears surrounding the Eurozone e.g. Euro banks collapsing and a double dip have forced investors to safe havens such as government bonds. However, we believe that this fear is starting to decrease which could lead to the government bond bubble deflating or possibly bursting.

            Risks for corporate bonds

            – Japan style deflation but we don’t expect this or see this in inflation forecasts
            – Large bank failures but don’t see this as a high risk
            – Most worrying is inflation because central banks are aiming to increase inflation in order to help de-leveraging. If inflation goes above 5% then this would be bad for all bonds

            Positioning

            – Overweight any sector with the most potential to tighten in spread e.g. sub-financials, cyclicals in the industrials sector
            – Underweight low spreading sectors e.g. utilities, senior financials, telecoms; and duration e.g. by selling German government bond futures
            – We are seeking to protect the fund from rising government bond yields by being overweight high credit spreading sectors and shorting German government bond futures

            Outlook

            – More modest outlook for total returns in 2011 than previous years
            – Key is to focus on value (credit spreads rather than yield) and risks (very low level of German government bonds)


            Source: ETFWorld – Schroders

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