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Model Portfolio: 8 April 2010
Model Portfolio : 8 April 2010
No changes in the Model Portfolio’s holding this month, but the continuing demand for corporate bonds has seen the value of the portfolio tick up, even though the underlying trend for gilts has been negative.
A helpful boost to the bottom line has been provided by the bombed-out position in our Bradford & Bingley PIBS. Whilst this security has had its coupon payment frozen, speculators are betting on at least a partial return of the cash (at some distant point in the future) and are picking up stock in the market, nearly doubling the price from last month in the process. We will continue to hold.
We also note that the recently purchased holding in the GKN 6.75% 2019 is performing strongly. We bought this bond hoping to see an upgrade from its current sub-investment grade status over the next year. For the moment, the rating is stable at BB+ ( Fitch) but we note that credit outlook has been moved from "negative" to "stable". It looks like things are going our way and the bond remains a buy.
We still have cash to play with. We also have £10,000 redemption in the late summer from our Merrill Lynch holding, thus as is often the case with for bond investors, we will be better buyers than sellers over the next few months.