Halister News

(Bloomberg) -- Asian investment-grade bonds are not overvalued but high-yield bonds are definitely overvalued given overall spread vs. the amount of risk, Kevin Kearns, a money manager at Boston-based Loomis Sayles, says in an interview.

• Has favored Indonesia over the last 3-6 months
  • “The challenge is in Asia you have so much money chasing everything so quickly”
• Wary of Chinese developers, expects yields on builder bonds to widen
  • NOTE: Asia Junk Dollar Bond Market Turns as Low Rated Deals Stall
• Has favored EM since beginning of the year because Trump policy is a disaster in terms of getting anything to legislature
  • Likes Argentina and Brazil dollar bonds
  • “We expect EM to benefit significantly from the weak dollar so we have favored a lot of local-currency EM bonds since the beginning of the year. We still are in favor of that trade”
  • “The question is coming into the Q4, if the central banks do start to taper, we wanna be quick to exit that position if rates start to rise significantly”
  • “The biggest risk we face in the next 12-18 months is, if you take the geopolitical risk aside, the central banks and the end of QE”
• Earlier story:
  • Loomis Wary of Chinese Bonds Without Better Creditor Protection

To contact the reporter on this story: Lianting Tu in Hong Kong at ltu4@bloomberg.net To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net Chan Tien Hin