Why Sanlam has bought back into gilts following UK downgrade

Sanlam Private Investments' (SPI) head of fixed income Craig Veysey has bought back into the gilt market, viewing the UK downgrade as a ‘short term' opportunity to add exposure to the asset class.

Veysey said Moody's decision to downgrade the UK's credit rating last Friday will further weaken sterling, but in stark contrast he expects gilt yields to remain capped on the upside until UK economic growth improves markedly. He believes investors will move back into the gilt market in the expectation the Bank of England (BoE) will provide a further bout of monetary easing support later this year. He therefore expects the downgrade to provide a short term buying opportunity and is using it to boost exposure to gilts, given yields have risen near to a one-year high. The benchmark 1...