Bill Gross, the “King of Bonds,” believes some bonds are more appealing than others these days. From Bloomberg’s Thomas Keene and Susanne Walker last Friday:

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said value is diminishing in credit markets and that relative yields may rise.

Mortgage and high-yield corporate debt is “overvalued,” making Treasuries and investment-grade company debt attractive, Gross, co-founder and chief investment officer of Newport Beach, California-based Pimco, said in a Bloomberg Radio interview.

Emerging-market debt is appealing to “some extent,” he said.

“That’s a limited menu, but it’s what we are presented with at the moment,” Gross said.

The sustainability of the U.S. economic recovery by the private sector after government stimulus programs end remains in question, Gross said. Below-average growth may prompt yield spreads to increase on high-yield debt and the Federal Reserve’s plan to complete its mortgage purchase program will hurt returns on those securities, he said.

Source:

“Bill Gross Says Value Diminishing in Credit Markets (Update2)”
Thomas R. Keene, Susanne Walker
Bloomberg, November 13, 2009

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