PIMCOs Gross Buys Munis

My favorite book talker putting his money where my mouth is.  Bill Gross buying Munis.  I will not hold this against Munis as I still see value in the sector.  BABs are getting pretty interesting here.

The opportunity created by falling prices for tax-exempt debt has tempted Bill Gross to invest $4.4m of his own money in five municipal bond funds run by his firm, Pacific Investment Management Co

Mr Gross, a founder of Pimco and manager of the world’s largest bond fund, made the investments between the 8th and 10th of December, according to Securities and Exchange Commission filings, taking his total investment in the funds to $8.9m.

It follows more than a month in which investors have been selling “munis” as yields on benchmark US Treasury bonds rose and a popular subsidy programme that has supported the market since the financial crisis was poised to expire at year end.

Many market participants had hoped for an extension of the so-called Build America bonds programme, which provides for a federal subsidy for 35 per cent of the interest on newly issued taxable infrastructure bonds.

Full article here :FT - Gross Buys Munis

PIMCO Buying Credit, Munis and Mortgages

On the wire;

Steve Rodosky, head of Treasury and derivatives trading at Pimco, said that he has stopped buying Treasurys since July. Instead he has purchased high-quality assets in investment-grade corporate bonds, mortgage-backed securities and municipal debt.

Article here:  PIMCO Talks Their Book

Bottom line:  PIMCO is a buyer of spread product.  This helps confirm my thesis that credit still has legs and BABs (or QScABs) have value as well. 

Disclosure:  Long LQD