Goldman Sachs Group Inc.’s fund management arm is overweight on Slovenia’s bonds and may buy more as it believes the challenges facing the Alpine nation won’t force the sovereign into debt restructuring.
Yields on Slovenian dollar-denominated notes due 2022 fell nine basis points, or 0.09 percentage point, to a one-week low of 5.9 percent by 4:07 p.m. in Ljubljana, 48 basis points below last week’s record high, according to data complied by Bloomberg. The country’s bonds tumbled over the last two weeks on speculation it may be the next euro member to ask for a bailout after Cyprus’s emergency tax plans soured sentiment.
Goldman Sachs Asset Management may expand its “modest” overweight position in Slovene bonds if the selloff caused by ripples from Cypriot efforts to obtain aid resumes, according to Sam Finkelstein, a money manager who helps manage $40 billion in emerging-market debt at the company. While Slovenia’s banks are saddled with bad debts amid a second recession since 2009, the financial industry is less bloated then in some European Union peers, he said in an interview.
“It’s a very solid investment story and not the same issues that faced either Greece or Cyprus,” Finkelstein said by phone from London today. “If there is further contagion, we’d be looking to buy that dip.”
Slovenia’s crisis isn’t “insurmountable,” Bostjan Jazbec, approved by lawmakers as Slovenia’s next central bank president this week, said in an interview yesterday.
While the country faces “a number of challenges” and has a “weak” coalition government, its “banking sector is not large compared to other EU members and debt-to-GDP is low,” Finkelstein said. “The remedy to their challenges is not a haircut to the government debt. So I’m very comfortable with an investment in Slovenia.”
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