Tuesday, January 31, 2023

Bonds are back, says Altana Wealth


  • Yields look attractive, says Lee Robinson
  • Market in corporate bonds has “begun to defrost”
  • Reopening of markets “will set a floor” for credit

Corporate bond opportunities are increasing as the market “defrosts” after a bruising period for fixed-income, according to Lee Robinson’s Altana Wealth.

“We’ve been saying it for the past few weeks but bond yields are attractive,” Robinson, who manages the Altana Corporate Bond Fund Ucits with Philip Crate, told investors in an update.

“We’ve seen some inflows into the fund amid a growing realisation that bonds can generate a great income whilst you wait for other assets to become attractively priced.”

The managers added that one of their investors, a successful UK equity investor, has bought long dated inflation linked Gilts to cover his next 30 years of expected expenses.

“Over the last four weeks the new issue market has reopened after being effectively closed for high yield since February, a longer period than in 2008-09 crisis. This has caused many asset classes to reprice lower.
 
“But recently the market has begun to defrost.”

They highlighted Carnival, the cruise operator, which upsized a planned $1.25bn bond issue to $2bn “due to strong demand for an all-in 10.75% yield” as an example.

“This is great news for bond markets as banks prefer to price credit relative to recent issues. Unless these bonds really fall in price then the reopening of the credit markets will set a floor for credit and other assets.”

London-based Altana Wealth manages about $500m.