Friday, June 27, 2008

CMBS Are "Cheap"


Is the worst almost over? One bond manager thinks so. From Bloomberg:

CMBS are ``cheap,'' Naruki Nakamura, portfolio manager at Fischer Francis in Tokyo, said in an interview. The bonds yield 2.7 percentage points more than U.S. Treasuries, compared with 80 basis points a year ago, according to Merrill Lynch & Co.'s CMBS Fixed Rate Index. The spread reached 4.64 points in March, the widest since 1998 when the index started.

``The subprime problem has started to settle down and we are now in a situation where the system will not break up,'' Nakamura, who helps manage the equivalent of $2.5 billion of bonds, said June 24. ``We are planning to go overweight on CMBS as we're confident the market will not unwind again.

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