Harte dismisses UK default fears

Barings' Colin Harte believes fixed income investors favouring corporate debt over gilts have become too concerned about the fragility of the UK's AAA rating.

Harte, who manages the £167m Global Bond trust and its £174.4m absolute return counterpart, says investors have clouded the issues surrounding gilts with concerns of a rating downgrade. He argues the risk of the UK defaulting is a red herring. He says the real concern is inflation, which will impact on government and corporate bonds alike. “The problem you have with a number of corporate bond fund managers is they seem to forget the fact corporate bonds are priced off government bonds and at the end of the day they are still bonds,” Harte says. “There is a danger people have muddied ...