Fuss’s Loomis Sayles Cut Disclosed Irish Bonds After Revival

Daniel Fuss’s Loomis Sayles & Co. reduced disclosed holdings of Irish bonds three years after swooping to buy the nation’s debt as it headed for a bailout.

The amount of Irish debt held by funds including Fuss’s flagship Loomis Sayles Bond Fund fell 31 percent to 329,496 securities in August, according to data compiled by Bloomberg and the company’s website. Boston-based Loomis switched places as the second-biggest disclosed holder of Irish bonds with French investor Carmignac Gestion SA, the filings show.

“Those that were brave enough to dip their toe in the Irish market when it was at distressed levels and most investors were running away are reaping the benefits now,” said Alan McQuaid, chief economist at Merrion Capital in Dublin. “Some may be happy enough to take some money off the table now to lock in those gains and look for other opportunities elsewhere.”

Loomis anticipated Ireland’s recovery and the European Central Bank’s willingness to keep the euro region together. Fuss, who managed the two best large U.S. bond funds over the past decade, began buying Irish debt in the third quarter of 2010, filings show, as the nation’s bonds yields soared and the country’s banks came close to collapse.

Quick financial sacrifices to resolve debt problems helped Ireland navigate the crisis, Brian Kennedy, a Loomis Sayles portfolio manager who works with Fuss, said in an e-mail last month. The gain on some bonds has been about 50 percent, he said. Meg Clough, a spokeswoman for Loomis Sayles in Boston, declined to provide more details when contacted yesterday.

Three-Year Rally

The bonds, which plunged 7.2 percent in the fourth quarter of 2010, jumped 11 percent in 2011, according to the Bloomberg Ireland Sovereign Bond Index. They soared 30 percent in 2012 and 5.7 percent in the first half of this year.

Loomis Sayles’s disclosed holdings of Irish 4.5 percent bonds maturing in April 2020 declined by half to about 97,000 securities, the data show. The firm no longer has any disclosable investment in 4.5 percent bonds due in October 2018 after previously holding more than 47,000, the data show.

Investors who “took on board the credibility of the story in 2011 made a lot of money by buying our bonds in the secondary market,” John Corrigan, chief executive officer of Ireland’s National Treasury Management Agency, told reporters in Dublin on Oct. 4. “The people who didn’t are regretting it.”

The country’s budget deficit will narrow next year to 4.8 percent of gross domestic product, Irish Finance Minister Michael Noonan said this week. That’s down from 13.4 percent in 2011, and the government is now readying to leave the international bailout program in December.

Carmignac Gestion, run by Edouard Carmignac, more than doubled its disclosed holdings of 3.9 percent bonds that mature in March 2023, adding to its portfolio of 5.5 percent debts due in October 2017, data compiled by Bloomberg show. The firm is now second only to Franklin Resources Inc. as the biggest disclosed owner of Irish bonds.

Didier Saint-Georges, a member of the investment committee at Carmignac, declined to comment.

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Donal Griffin in Dublin at dgriffin10@bloomberg.net

To contact the editor responsible for this story: Dara Doyle at ddoyle1@bloomberg.net

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