Investment - Articles - Aberdeen Asset Management on High Yield Bonds

 Paul Reed, manager of the Aberdeen High Yield Bond Fund, comments:

 "The UK is likely to experience a snail pace level of growth for a few years with interest rates unlikely to rise anytime soon. In this sort of environment high yield bonds are attractive to investors given the yield uplift they offer compared to government and corporate bonds. Also many are issued by companies not reliant on strong domestic growth as they operate in fast growing markets elsewhere in the world or they offer goods and services not dependent on consumer spending. One bond we like is issued by Edcon which is the leading clothing, footwear and textiles (CFT) retailing group in southern Africa. The Company has grown from opening it's first store in 1929, to ten retail brands trading in over 1000 stores in South Africa, Botswana, Namibia, Swaziland and Lesotho. It currently offers a yield of around 10% and is scheduled to be repaid in 2015."

 "Another bond we hold is issued by Boparan which is the leading supplier of poultry to Tesco and recently bought Northern Foods, makers of Foxs biscuits and San Marco pizzas among other things. The business should continue to benefit from food price inflation and the bonds yields over 10%."