F&C's Luis buys into distressed BP bonds

F&C's Fatima Luis has introduced BP bonds into her £237m Strategic Bond fund, believing the debt was trading at excessively distressed levels.

The manager added a holding in a US dollar denominated 2015 bond earlier this week, which she says has subsequently performed well. "We did not have BP holdings before, but the bond was trading at a very distressed level, and was yielding 7%," she says. "Yesterday, the company's CDS was trading at 1,000bps which was indicating there would be some sort of default or restructuring over the next five years. "However, for a company which pays out $11bn in dividends, setting aside $20bn for a fund should mean it is still a very cash rich business."