Yassen Dimitrov

Potential credit crunch in Europe pushes Dynamic manager to get defensive.

Michael Ryval 30 September, 2011 | 6:00PM
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Since August, the European sovereign and banking crisis has escalated to the point that it has prompted some money managers to become very defensive.

"If unsecured term funding for European banks remains difficult to access or expensive, that means there is a potential for a credit crunch in Europe," says Yassen Dimitrov, a portfolio manager at Toronto-based Goodman & Co. Investment Counsel Ltd., who oversees the $95-million Dynamic Financial Services.

Dimitrov notes that there has been a dramatic increase in Italian and Spanish bond yields. "With the intervention of the European Central Bank to buy Italian sovereign bonds, yields fell from 6.18% to 5%. But they have since increased to 5.7%. Recent auctions for one-year Italian bonds have seen spread-widening of 150 basis points, compared to July."

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Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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