Isis' Foster favours high-yield bonds

Group's head of credit believes more pension money will move into fixed interest from equities

Isis head of credit James Foster is confident on the outlook for high-yield bonds after a difficult 2002. Last year, European high yield fell some 8%, according to Merrill Lynch research, compared with a rise of 10% in the investment grade index and a fall of 25% in the FTSE 100. Foster said: 'Companies such as BT, ICI and HBOS are financing themselves through rights issues, so gearing is coming down. They are using free cashflow to reduce debt on their balance sheet.' In addition, Foster believes pension funds will continue to move into fixed interest and away from equities, helping ...