Snowden rates debentures

OLD Mutual corporate bond fund looks to Debenture opportunities to fill non-credit element

The Old Mutual Corporate Bond fund is relying increasingly on debentures to populate the 20% it can invest in non-investment grade debt. Manager Stephen Snowden favours debentures, the unrated fixed-rate securities used by companies to raise debt, above high-yield bonds because of the latter's greater risk return ratio. Two of the £188m fund's top 10 holdings are in the debentures of Thistle Hotels and property company BL Universal. "Because debentures are unrated, many managers will not buy them, so I have been very active in the market," said Snowden. "The loan to value ratio on d...