European high yield played out, claims Psigma’s Becket

Psigma’s multi-asset manager Tom Becket has claimed the opportunities in European high yield have “largely played out” and has shifted his bond exposure.

Mr Becket said European fixed interest yields had “collapsed” to lower levels than those in the US.

“As a guide, the yield now achievable on a European high-yield index is in the low 4 per cent range, whereas the US equivalent has risen back above 6 per cent,” he said.

“Companies like BMW have issued paper with a measly 0.5 per cent coupon for the next four years.

“The opportunity set that we identified in early 2012 in European corporate credit markets has now largely played out.”

Mr Becket said European yields had fallen largely because of ongoing concerns about deflation.

The manager has switched the proceeds into European asset-backed securities, emerging market corporate debt and US high-yield bonds.