Snowden stays wary over Europe
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Stephen Snowden has said he will remain cautious on peripheral Europe after rejoining Aegon Asset Management, despite credit spreads being the widest they have been in the UK corporate bond market since 2009.
Snowden, the former manager of the Old Mutual Corporate Bond fund and now a bond fund manager at Aegon, says problems in the eurozone keep reappearing.
Snowden says the position is different to 2009, which he says was an opportunity of a lifetime.
He says: “On that occasion the decision surrounded corporate and bank health and the ability for them both to fund themselves and recapitalise. On this occasion concerns have moved from a corporate to a sovereign nature.”
Snowden, who takes on the management of the Aegon investment grade bond and investment grade global bond fund on September 1, says he will invest in the market as a whole on the basis it is unlikely Italy will end up in the same situation as Greece as it is too big to fail.
He says: “As the third-largest bond market in the world, if Italy was to fail we would see a global crisis on a level of 2008 if not worse, so I would say it is too big to fail. But that doesn’t stop people being concerned.”
The manager says he would only be concerned if Italian 10-year bonds breached 6 per cent for a prolonged period.
He says: “If they stayed above that point they would create a new trading range of 7 per cent and that is the recognised point of unsustainability in terms of funding itself.
“Spain has traded above 6 per cent but the market is nowhere near the size of Italy.”
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