Barings' Cole: Why we bought £350m in Italian bonds

Barings' multi-asset team has bought £350m in Italian government bonds in the expectation European banks will use the ECB's Long Term Recovery Organisation (LTRO) to buy government debt.

Andrew Cole, the director of strategic policy who works alongside head of multi-asset Percival Stanion, said although other fund managers may look on them buying up Italian government debt "in horror", they will soon understand why when yields fall further. "We have been increasing exposure to risk assets over the past six weeks and we have been reducing our Australian government debt exposure in favour of Italy. "We think the banks in Europe will utilise the LTRO facility, leading to the risk of a bank or financial institution's collapse to be diminished, and use this liquidity to bu...