The investment case for peripheral sovereign bonds

Pockets of value

Europe's periphery continues to trade well against a strong growth backdrop and benign political trends.

Coupled with rising volatility in rates markets and the quantitative easing-driven hunt for yield, we believe the periphery presents an opportunistic area for bond investors looking for pockets of value. We like the constructive story in Greece and tactically-trading Italy. We have always thought that the outcome of the Italian general election would result in uncertainty and this appears to be the case. However, a weak and unstable government is not really new news there. And with none of the major parties pushing for a referendum on EU membership, we see no credible path to an ‘I...