Credit opportunities are on their way – but wait for now

As credit markets reel from the impact of the crisis in the sub prime mortgage market, Fatima Luis, Citywire AA-rated manager of the F&C Strategic Bond Fund, said that despite widening corporate bond spreads it's too early to dive back in to the corporate credit market.

"All financial markets are at risk from the sub prime fallout, as it can be seen today and over the past few days. The breadth of the current crisis is too profound and it is not clear as to what type of losses financial institutions will be announcing," she said. "It's too early to step back into credit."

Luis commented that it would be premature to say spreads are attractive as it is unclear what the right clearing price should be. "Actually trying to trade at the moment is difficult. We believe the best way to play this is through the primary market, when it does open up. That is when we will see buyers having the upper hand in determining prices.

"When we talk about the lack of liquidity in the market, what that really means is that it's really hard to determine if you are buying or selling something at the right price. We do need things to come down to find some equilibrium in prices."

For those investors with low exposure to credit the coming months might bring great opportunities to step into the asset class, but for the time being she recommends new investors to bide their time. Existing investors should sit tight according to Luis.