First Quarter Outlook - Corporate Credit Quarterly
The following is a summary of a UBS full-length report on this topic, dated January 6, 2005.
* Credit strategy-modestly underweight:
We expect event risk to remain high, fundamentals to deterioratemodestly, and technical conditions to hold steady at best. Prospects for the end of Fed tightening suggest potential for increased volatility. With spreads historically tight, we believe there is little upside and substantially larger downside risk at present. Given this risk/reward profile, we recommend a modest underweight allocation.
* Sector weighting changes:
We made changes to our sector strategy weightings for diverse sectors. We moved to overweight for banking, securities, and specialty finance. We moved to underweight for consumer products and cable and media. We moved to market weight for integrated oil, secondary oil and gas, electric utilities, and property-casualty insurance.
* Investment opinion changes: BMY, ED, EOP, RTN, and SPG:
We upgraded Bristol-Myers (BMY), Consolidated Edison (ED), and Raytheon (RTN) to Market Perform from Underperform. We downgraded Simon Property Group (SPG) to Market Perform from Outperform and EOP to Underperform from Market Perform.
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