After debuting in third place last year, Michele Barlow’s Bank of America Merrill Lynch squad shoots straight to the top of the sector, whose name is changed from Fixed-Income Strategy. “This team has always been very helpful, insightful and available to provide in-depth information, whether on the difficult credit stories of Asia or high-level events around the world,” observes one buy-side enthusiast. “We avoided many big losses in the Indonesian and Chinese credit spaces thanks to them.” The strategists are upbeat on the year ahead. “Although the technical backdrop is weakening, given strong supply and slowing fund inflows because of the more modest returns we’ve seen to date, liquidity remains plentiful,” primarily owing to supportive central bank policies, the Hong Kong–based crew leader explains. The researchers are urging clients interested in Asian investment-grade credit to “balance duration and yield,” Barlow says. “We believe the seven- to ten-year part of the curve offers the best combination of these two factors.” In high yield investors should “focus on double-Bs while selectively buying the single-Bs, as many do not offer much compensation for the higher risk and volatility,” she adds. The team anticipates returns of 2 to 3 percent for regional investment-grade credit this year and 4 to 5 percent for high yield. Barlow, who earned an MBA at Canada’s University of British Columbia, joined Merrill Lynch in 2003 from Morgan Stanley, where she worked in the ratings advisory group. — Pam Baker |
Economics & Strategy – Credit Strategy: First
