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Model Portfolio: 25 September 2009
Model Portfolio : 25 September 2009
Sentiment remains firm in the corporate bond markets, although the trend of across-the-board price rises that we have seen in investment grade bonds since the beginning the year is starting to slow.
In some cases we note that momentum has turned around. We note the valuations of the Marks & Spencer 2014, the Next 5.25% 2013 and the Roche bond giving back a few pips from recent price highs.
In high yield and particularly subordinated debt, investor appetite is continuing to move back in. Many of these assets were priced for bankruptcy back at the tail end of last year, and the re-habilitation process is taking some time. The best performer in the portfolio this month is the Segro 5.5% 2018, which is now almost back to pre-crash levels (see chart, right).
This month’s purchase of the Rabobank bond takes the portfolio to a fully invested stance. Going forward, I am tempted to take a couple of cheeky profits - perhaps in the Roche or Anheuser Bush bonds, which stand well over par. Re-investment, however, will be tricky given the fairly low yields available in the market.