Pacific Investment Management Co., one of the world’s biggest money managers, is paring down its positions in high-yield corporate debt, the best-performing U.S. fixed-income market in 2012. Mark Kiesel, global head of corporate bond portfolio management at Pimco, told WSJ in a phone interview Tuesday that he started cutting exposure to the so-called junk debt market several weeks ago. He continued with the strategy even as talk of crisis-fighting actions by the European Central Bank bolstered investors’ risk appetites and fueled further gains for these speculative-grade corporate bonds.
Pimco’s move sharply contrast with rivals such as BlackRock
Inc., which sees more room for junk bonds to strengthen further. It also puts
it firmly on the more pessimistic side of a growing debate on the junk bond
sector, whose 10% return this year through Monday sharply outperformed the 1.2%
posted by Treasury bonds, as per data from Barclays. Pimco looks more cautiously on the prospects
for resolving the euro-zone crisis than the junk-bond bulls do....
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