Hedge Funds Corporate Bonds
Hedge Funds See Opportunity After Corporate Bonds Sell-Off
Opportunistic hedge funds are picking up bargains in corporate bonds after a sharp sell-off this summer, preferring the sector to pricey-looking government debt.
A number of managers believe credit markets are now pricing in too-deep an economic slowdown and default rates that are too high, and are picking up high-yield bonds in the United States and Europe, often favouring short maturities, as well as senior secured bonds.
"Credit offers a very good risk-reward, especially after the last few weeks," said Omar Kodmani, president of fund of funds firm Permal Group, which runs $21 billion in assets. "High yield is very attractive in our view." Source