Could a Spanish downgrade be a major buying opportunity?

Corporate credit fund manager Muzinich & Co. is preparing for a buying opportunity in the European high yield sector if Spain suffers further sovereign downgrades.

If Spain was to lose its investment grade status the debt of numerous Spanish companies could follow suit, leading to an influx of higher quality names into the high yield universe. Such a scenario may also result in a separate portfolio boost in the form of capital appreciation for Spanish investment grade debt. Muzinich & Co. is already working with one leading institutional investor to buy up Spanish investment grade names should they undergo a re-rating following a sovereign downgrade. In mid-June Spain's rating was cut by Moody's to a level only just above high yield and put o...