Avoca Capital Holdings to use cash hoard to buy high-yield debt

AVOCA Capital Holdings is planning to use a record cash hoard to buy high-yield debt that has plummeted 8.4% since July, the co-founder of the €6 billion Dublin-based fund said.

“We felt there will be better value later this year, especially in bonds, which haven’t fallen enough relative to loans,” chief executive Alan Burke said in an interview in London.

Avoca has €250 million set aside to buy junk bonds and leveraged loans, representing as much as 5% of the fund compared with less than 1% in the past. The firm, which manages 10 collateralised loan obligations, has also cut investment in junior-ranking debt to 4% from 12% a year ago and has no fixed-rate bonds at the moment.