Pioneer High-Yield Fund manager Margaret Patel, whose fund has returned 20% so far this year, told Reuters that in spite of the recent sell-off in high-yield bonds, now is the perfect opportunity to buy them. High-yield junk bonds suffered $1.1 billion in net outflows last week, their biggest decline since last September, according to AMG Data Services. Two factors a glut of junk bond paper hitting the market and investors selling out of Treasuries put additional downward pressure on junk bonds recently. But Patel believes this increase in inventory should only result in lower prices.
Patel might know what she is talking about. While other investors sold out of ImClone when insider trading charges roiled its chief executive, she kept a level head, looking past the scandalous headlines to the companys strong balance sheet.
"Whats important is the business position" of companies, Patel told Reuters. "At a time when financial markets were closed to many companies, and banks were very restrictive in their lending, a company that had a liquid balance sheet and wasnt dependent on going to banks or the credit markets was very appealing."