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Investors Are Switching From Portuguese to Riskier Greek Debt for Better Returns

  • Best of Portuguese bond rally may be over: Old Mutual’s Wall
  • More to play for in other high-yielders: BlueBay’s Dowding
Comercio Plaza in Lisbon.

Comercio Plaza in Lisbon.

Photographer: Mario Proenca/Bloomberg
Updated on

Portugal’s credit-rating boost and the ensuing bond rally have prompted fund managers from BlueBay Asset Management and Old Mutual Global Investors to look at riskier Greek debt for better returns.

For BlueBay’s Mark Dowding, Portugal is “not a very high-yielding high-yielder any more”, with two-year government bonds yielding below zero. The Sept. 15 upgrade by S&P Global Ratings saw the country shed its junk-bond status for the first time in more than five years, tightening the 10-year yield spread over German bunds to the narrowest in 20 months.