Coronavirus outbreak an opportunity to buy corporate bonds- Allianz Global Investors
LONDON – The coronavirus outbreak, which has triggered a sharp selloff in risk assets, has created an opportunity to buy hard-hit corporate bonds, portfolio managers at Allianz Global Investors said on Thursday.
Corporate bonds have been hit by a sell-off in risk assets as the coronavirus outbreak sparked the lockdown of economies across the world, rattling world markets. The yield on the iBoxx euro corporates index closed March at 1.96%, after rising to a six-year high at nearly 2.20% earlier in the month. .
Mike Riddell, head of UK fixed income at Allianz Global Investors, said the firm had taken advantage of the recent cheapening in corporate bonds as well as a recent rise in issuance.
“Coming into this crisis, our fund was essentially 100% in core rated government bonds,” he said on a news call. “In the last few weeks, we’ve been buying in large sizes the new issues.. in investment grade credit – generally single A and triple B names.”
Riddell said that while the coronavirus outbreak would likely hurt economic growth in the months ahead, a recovery was likely towards the end of the year given the scale of fiscal and monetary stimulus being put into place globally as well as a slide in oil prices. “Headwinds should become tailwinds, so Q4 should see a strong rebound,” he said.
(Reporting by Dhara Ranasinghe; editing by Carolyn Cohn)
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