The Unloved Bonds That Goldman, Prudential Say Will Surge
- Debt backed by mortgages, student loans looks attractive now
- Consumer strength enhances the appeal versus corporates
Goldman's Swell: Feeling 'Bubbleicious' in Credit Markets
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To money managers at Goldman Sachs Group Inc. and Prudential Financial Inc., the laggards of the debt universe look pretty good right now.
The asset-management arms of both firms are buying bonds backed by consumer and corporate debt like mortgages and student loans, which they view as offering high yields for the risk investors are taking. The performance of asset-backed securities is not directly tied to U.S. corporate profits, which have been weakening, and more linked to consumers and other areas of the economy that remain relatively strong.