“We are in a low-return world, there’s no doubt about it,” he said.
That’s prompted BlueBay Asset Management’s Mark Dowding to look further afield. He’s a fan of Cyprus, which has improved since the emergency rescue package in 2013. Moody’s Investors Service raised its rating for the country’s debt last month, citing a faster-than-expected economic recovery and Cyprus’s ability to meet its fiscal targets.
Since they were sold in October, Cyprus’s euro-denominated 10-year bonds have rallied, pushing down yields from 4.25 percent to 3.88 percent.
“In Europe, we continue to believe that in the periphery, spreads can continue to grind tighter,” said Dowding, who helps oversee $60 billion at BlueBay.
BlackRock’s Thiel says the biggest opportunities lie beyond the highly-rated debt markets of the U.S., Germany and the U.K., which provide little in return beyond the low yields that they carry.
“If I look forward into 2016, I don’t see a reason to own gilts, I don’t see a reason to own Treasuries, and I don’t see a real reason to own bunds,” he said. “In Europe, peripheral markets are still very attractive.”