Bond managers switch back to US as peripheral spreads tighten

Bond managers are becoming more bearish on peripheral Europe corporate debt, turning to core names and the US as spreads tighten to post-crisis lows.

The average peripheral company is now able to borrow money cheaper than the average core European company, according to data from J.P. Morgan Asset Management, with peripheral spreads tightening as investors revisit the European countries worst-hit by the financial crisis. The “notable” shift in sentiment means much of the value in peripheral corporate debt has eroded, according to managers. Arthur Milson, co-manager of the £553m Standard Life Investments Higher Income fund, said periphery names had been overbought. The manager is a third underweight the periphery in his fund, pref...