Baillie Gifford head of credit Stephen Rodger has defended his exposure to Greek corporate debt, saying there are still opportunities in peripheral Europe.
Baillie Gifford’s £131.9m corporate bond and £185.4m highyield bond funds are both exposed to Greek corporate debt.
The corporate bond fund holds 1.4 per cent in Greek tele-communications provider OTE while the high-yield bond fund holds 1.6 per cent in OTE, 1.3 per cent in Fage Diary and 2 per cent in Yioula Glassworks.
Rodger says: “We do see some opportunities in the periphery. There are a few companies out there that we will lend to. We recognise that it will be a rocky ride but we believe we are compensated for it.
“The interesting thing about OTE, which has a 20 per cent yield, is that three of its board members are from Deutsche Telekom, which has increased its stake in OTE from 20 per cent to 40 per cent.”
But Kames Capital co-head of fixed income Stephen Jones says investing in peripheral companies is a risky strategy.
Jones says: “We are significantly underweight the periphery, with a few per cent exposure across the funds. We remain cautious as there is enough risk to be had in mainstream investments. We have come out of those less liquid investments and we would be reluctant to go back until we see resolution in Europe.”