Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Sonya Morris, CFA | 10-23-2009 04:14 PM

Stanek: Corporate Bond Market Off the Mat

Baird's Mary Ellen Stanek says the credit market is closer to fair value today, though some areas like the bonds of financial intermediaries, still look attractive.

Sonya Morris: Hello, I'm Sonya Morris, editorial director with Morningstar's mutual fund research group. I'm here with Mary Ellen Stanek of Baird Advisors. Mary Ellen is the chief investment officer of Baird. She has 30 years of experience managing fixed income portfolios, and she manages several Baird bond funds including Baird Aggregate Bond.

Mary Ellen, thanks for joining us today.

Mary Ellen Stanek: Thanks, Sonya.

Morris: I'm sort of reminded of that old Chinese curse, "May you live in interesting times." It seems like bond managers have certainly lived in very interesting times for the past several months. I wonder if you could talk about some of the challenges you faced in 2008, and compare that to what you're seeing today.

Stanek: Sure. As we like to tease each other, we can't wait until bonds are boring again.

Morris: [laughs]

Stanek: And certainly when you look at 2008 and look at 2009, in a lot of ways they're mirror images of one another. In 2008, we saw spreads get very wide, liquidity get very challenged to nonexistent, and so you saw just incredible volatility, even in the highest-quality bonds and the highest-quality sectors.

In 2009, as much as investors were running away from risk in 2008, we have seen them start running back towards areas in the bond market that they had virtually gone on strike or abandoned.

And so we've seen a lot of what we call the spreads, or the additional yield available versus Treasuries, go from very, very wide levels, historic levels near the end of last year, to what we consider more fair value levels in many of the sectors.

So it's been an interesting time and while liquidity is better, we're seeing better issuance, certainly the market environment is still fragile.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article