Economics

Fan of Portugal Bonds Says Reduce Exposure on Fitch Upgrade

Yields to see other drivers once credit story fades: Nomura AM
Portugal’s yields to move closer to peripheral peers: Rabobank

The dome of Santa Engracia church is seen on the horizon beyond residential properties in the old district of Alfama in Lisbon, Portugal, on Tuesday, June 18, 2013. Portugal's borrowing costs increased at an auction of 1.05 billion euros ($1.41 billion) of 18-month bills.Photographer: Mario Proenca

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By Anooja Debnath

November 17, 2017 at 5:00 AM UTC

Updated on

November 17, 2017 at 10:00 AM UTC

This article is for subscribers only.

A credit rating upgrade for Portugal’s debt might be the right time to start paring back exposure to it, according to Nomura Asset Management’s Richard Hodges.

That would likely mark a turning point in what has been a “full-blown credit story” for the nation’s government bonds, said Hodges, whose Global Dynamic Bond Fund has outperformed 92 percent of its peers in the past year. More than 12 percent of the fund consists of Portuguese debt. The nation’s bonds have seen a sustained rally for most of 2017 on the back of better economic fundamentals and an improving credit outlook.