Western Asset's Buchanan Sees Normal Redemptions in High Yield

  • Investors pull $290 million from firm's high-income fund
  • Buchanan says high-yield debt is very attractive now

Michael Buchanan, the deputy chief investment officer at Western Asset Management, said high-yield investors are requesting redemptions at a normal rate days after the collapse of Third Avenue Management’s credit fund.

"To date, we haven’t seen anything out of the norm in terms of redemptions," Buchanan said in a televised interview today on "Bloomberg <GO>" hosted by Stephanie Ruhle and David Westin. "We haven’t really seen anything that causes concern."

Money managers are trying to reassure investors after Third Avenue closed its Focused Credit Fund and suspended redemptions last week, accelerating a selloff in speculative credit. Investors have pulled $290 million from Western Asset’s Short Duration High Income Fund this year through Monday, a net outflow of 26 percent, according to data compiled by Bloomberg. The $742 million fund, which has almost 10 percent of its holdings in oil and gas, has declined 8.8 percent this year, trailing 94 percent of its peers, according to Bloomberg data.

Buchanan said he’s confident that his firm, which is a unit of money manager Legg Mason Inc., has sufficient liquidity to meet any redemptions, and the turmoil in the junk bond market has created buying opportunities.

"High yield is very attractive right now," he said.

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