Luis looks to World Cup bonds boost

As the sporting world looks ahead to an exciting summer on South Africa's football pitches, F&C's Fatima Luis is positive on the potential of two compellingly valued South African high-yield bond issues - from companies that could well enjoy the benefits of increasing demand during the tournament, which kicks off on 11 June.

In particular, Luis favours high-yield credits from Consol Glass and Peermont, which she has added across her range of retail bond funds - the F&C Maximum Income Bond Fund, F&C Strategic Bond Fund and F&C Extra Income Bond Fund - over the last 18 months.

"Consol Glass is South Africa's number 1 producer of glass bottles for beer, wine and spirits companies. They hold the dominant share of this market and benefit from robust demand and low production costs. Their performance has been consistently strong, driven by stable demand for beer, wines and spirits, which is likely to be enhanced when the World Cup gets underway," Luis commented.

Peermont is a well-established player in South Africa's casino-resort market, with a 24% market share in Gauteng province, which itself accounts for 43% of South African gaming revenues. Profits were impacted in 2009 during the refurbishment of Peermont's main cash-generating asset - Emperors Palace - however, this was completed in December. Luis believes the World Cup should trigger an increase in demand, and says the outlook is bright for these bonds.

Luis concluded: "I continue to seek out the most compelling opportunities from well-funded businesses, identifying what I believe offers the best prospects on a stock by stock basis."