Fund Strategy – Amid Ireland’s potentially terminal bank bailout last week, another eurozone woe passed relatively unnoticed: bond managers say France may be the next state to be downgraded.
Christophe Akel, a co-manager of the GLG Global Corporate Bond fund, revealed GLG already considers a downgrade a possibility and has gone long German credit default swaps and short French credit default swaps in its hedge funds. The cost of insuring French debt is only 30 basis points higher than the cost of insuring German debt. In Akel’s view the premium should be larger.
