Rising from runner-up to third place is the Nomura International team directed by David Covey. The London-based quartet offers “quick, incisive comments on important data and valuable trade ideas,” proclaims one buy-side enthusiast. Europe’s asset-backed securities market has recovered well, in terms of both demand and pricing, from its guilt by association with the U.S. subprime market, Covey says. Accordingly, the strategists are recommending relative-value alpha trades within secured credit, preferring senior and mezzanine U.K. nonconforming residential mortgage-backed securities, rather than a broader beta positioning. He cautions, however, that markets are still vulnerable to broader macroeconomic risks. Spain is a particular worry: “You have a combination of a plummeting housing market, high unemployment and questionable sustainability of government finances,” the team leader points out. His advice? Steer clear of Spanish RMBS. A loss of confidence in Spain could spark another flight to quality and weaken demand for non-risk-free assets, Covey says. — Ben Mattlin
Gareth Davies, Flavio Rusconi & team J.P. Morgan Conor O’Toole & team Deutsche Bank Krishna Prasad, Ganesh Rajendra & team Royal Bank of Scotland |
Economics & Strategy – Asset-Backed Securities Strategy: Third