If anywhere is a good place to make a pitch for fixed-income investments these days, Charleston, with its glut of retirees and real estate development prospects, may be it.
Analysts and academics gathered downtown Friday for the first day of “Navigating Cathartic Change in Fixed Income,” a conference sponsored by the University of South Carolina’s Darla Moore School of Business.
The discussion ranged from the real estate bubble that led to the Great Recession to the ongoing risk posed by the sovereign debt crisis in Europe.
Chastened by the catastrophic recent past and the uncertain near future, there is “a lot of cash that’s on the sidelines,” said Nick Perkin, co-founder of the Receivables Exchange, a market for corporate receivables.
“What happens when all of that cash starts to go to work?” Perkin asked. “It’s cloudy at best.”
One route, the speakers seemed to favor, is getting into bonds, which are traditionally less risky than equities but offer smaller returns.
Now is a “genuinely outstanding time to buy high-yield bonds,” said Martin Fridson, global credit strategist at BNP Paribas Asset Management.
Jean Helewege, a professor at the Moore School, agreed conditionally.
“The risk going forward is going to be, ‘Are people going to start getting really worried about the fragility of our economy again?’?” she said. “If they’re not, it seems like it’s not a bad time to be buying.”
Helewege dismissed the idea that the “contagion” from heavily indebted Greece will infect the rest of Europe, then the United States.
“Greece is like Rhode Island. I mean, who cares?” she said.
Instead, Helewege seemed to imply, Americans need to quit worrying and be “good capitalists” by putting money in fixed-income products like real estate bonds and corporate bonds.
“Everybody’s looking for yield, but they don’t want to invest in something that’s going to blow up,” she said.
Today’s program, also at Charleston Place, features research presentations on credit risk, sovereign debt and treasuries.