Sumitomo Mitsui DS Asset Management sold its entire holding of French government
bonds and reallocated proceeds mainly into German bunds and some short-term
Japanese government bonds, citing concern over France’s fiscal position.
Eurozone sovereign risk premia jumped on Thursday as market concern over French
fiscal and political stress spread; U.S. Treasuries and German bunds rallied
while French and Italian spreads widened. Shinji Kunibe, chief portfolio manager
for global fixed income at Sumitomo Mitsui DS, said French paper had offered
relatively attractive carry but recent developments prompted the full
divestment, and that Japan’s stepped-up market communication provided greater
reassurance compared with France.
