The 2014 All-Europe Fixed-Income Research Team: Asset-Backed Securities Strategy, No. 3: Gareth Davies, Flavio Rusconi & team

J.P. Morgan’s trio advances from runner-up to No. 3 under the guidance of London-based Gareth Davies and Flavio Rusconi. Key issues for the sector this year, the analysts advise, are secondary market opportunities for peripheral nations’ credits and the changing oversight environment. Because they offer a little bit of yield, according to Davies, “name-tainted asset classes” — such as Greek, Irish and Portuguese bonds — are among the team’s preferred segments. Spanish risks offer scalable, high-yield prospects, so are particular favorites, he adds. In the primary space the strategists recommend so-called off-the-run issues, which formerly were dominated by U.K. residential mortgage-backed securities. Now local subsidiaries of multinational banks are providing funding at local versus international levels, he says, presenting a commercial MBS opportunity in new issues while markets normalize. Improvement in peripheral economies this year will be attended, however, by “a more constrained regulatory environment,” Davies notes, as banks face a significant increase in capital charges.