There is at least one person in America who is bullish on corporate credit in 2003. After getting killed in 2002, Daniel Vandivort said he thinks corporate debt looks good as an investment this year, although there will likely be a fair amount of volatility. He even goes so far as to call recent changes in corporate behavior "healthy."
"We think you've seen a big shift in corporate mentality over the past year," Mr. Vandivort said. "Rather than thinking about growth strategies and aggressively trying to grow businesses, there's a very heavy emphasis now on balance sheet management and credibility. It's a totally different psychology than three years ago, which we think is healthy."
Mr. Vandivort also thinks the year will be OK - but not great - for the bond market, with 10-year Treasury notes at year-end settling in the neighborhood of 4.25% to 4.5% and short-term rates, as dictated by the U.S. Federal Reserve, around 1.5% to 1.75%.
Overall, he is looking for investment returns of 4% from a broad, investment-grade fixed-income portfolio.
Mr. Vandivort said he thinks the economy is poised to begin a rebound, having shed many excesses that built up in the mid- and late-1990s.
"From our standpoint, you're already starting to see a modest pickup in the plans for capital spending," he said. "It's nothing huge, but there's basic capital spending that a company needs to do to keep the business running."
Senior managing director, head of fixed income
Weiss, Peck & Greer LLC, New York
Assets under management: $17.4 billion
GDP: 3% to 3.5%
CPI: 2.75% to 3%
Unemployment: 5.5% by June 30
10-year Treasury: 4.25% to 4.5%
Short-term rates: 1.5% to 1.75%