M&G fixed income stalwart Richard Woolnough has bought into debt issued by football giant Manchester United.
While Woolnough avoided the "overpriced" £500m issue at launch in January, the manager says he added a small position in his £2.13bn M&G Optimal Income fund following a sell-off last month.
Manchester United sterling debt began trading on 22 January at a spread of 569bp over gilts, narrowing to about 550bp during late March and early April. However, the global sell-off in risk assets drove the debt to a spread of about 770bp in May. It is currently trading at about 716bp over gilts.
The high-yield debt, which Woolnough says now looks "attractively valued", offers investors a fixed annual interest rate of 9%, paid quarterly.
Adding the Manchester United debt continues Woolnough's recent trend of boosting high yield exposure in his Optimal Income fund.
Woolnough also took up a new issue in US generic drugs maker Mylan - while increasing his weighting in Ineos, Ziggo, New World Resources and ITV.
He also sold protection on the iTraxx Crossover, an index which represents a basket of European high yield bonds, on the belief spreads will tighten once current instability in credit markets subsides.
Woolnough has 31.3% of the Optimal Income fund in high yield, while sub-investment grade accounts for 10.7% of his £2.51bn Strategic Bond fund and £6.7% of his £4bn Corporate Bond fund.
Vitality at Work scheme
Reporting to Steve Hill
Appointed on 19 September
Plans to double size in five years
Unnamed company valuation reduced