Flash Note

Chapter 3: Seizing opportunities in credit July 2016


In today's challenging fixed income market environment, the high level of volatility is a good source of opportunities for credit investments. Carmignac Portfolio Unconstrained Global Bond’s flexible and opportunistic approach enables us to take advantage of market dislocations to invest in rigorously researched, and well understood businesses.

Long-term convictions in the credit universe

European Banks
- Structural reforms, de-risking and improving balance sheets of European banks is beneficial for credit - Selective approach to find quality issuers - Attractive risk/return profile of subordinated debt

- A broken asset class, where regulatory constraints and crisis scars allow to benefit from very attractive spread levels - Very low historical default rates - Floating rate bonds suited to different rate environments

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Targeting opportunities in the High Yield segment

Top Down Perspective: Argentina’s come back
- Beneficial political circumstances – Macri’s willingness to implement necessary reforms - Upon return to markets, the best corporates can issue bonds but with higher risk premium - Example of YPF, Argentina’s national oil company

Bottom-up value: example of Aston Martin
- Compelling valuation with high coupon - 300 million GBP senior debt for business valued as a car manufacturer while brand valuation is worth much more - Brexit creates opportunities

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Marrying Convictions and Opportunities

[Insights] 2016 07_FN_Fund_CGB (All) EN