Is subordinated debt a diamond in the rough?

ON BONDS

Fixed income may seem doomed but there are some brights spots says Gam's Anthony Smouha - including the subordinated debt of investment grade corporates.

As economic growth in developed countries, particularly in the US, gathers pace, rising bond yields will furthermore erode prices of bonds. Many investors are suffering as a consequence of both of these factors. However, there are some bright spots for fixed income investing. Although eurozone growth is weak with deflationary forces in some of the countries, it appears that the worst is over in some of the peripheral countries. There is also no longer the expectation of an imminent pick-up in inflation. Indeed some economists contend that policy is too tight as Mario Draghi is constra...