Loomis has not owned by Treasury for over a year and is betting on emerging market currencies

Loomis Sayles & Co. has fled bought Treasury bonds and debt in Canada and Indonesia, up from 95 percent of bond funds this year.

The 19.5 billion U.S. dollars Loomis Bond Fund returned 12.2 percent in the Boston-based company changed the money in Canadian government bonds, emerging markets and convertible bonds and junk. Pacific Investment Management Co. 's Total Return Fund, the largest bond mutual fund, gained 7.99 percent.

Loomis has not owned by Treasury for over a year and is betting on emerging market currencies such as Indonesia rupiah to appreciate against the dollar, the money manager Kathleen Gaffney, said in a telephone interview. The Federal Reserve said on 14 December its plan to buy up to $ 600 billion in treasury bonds to stimulate the economy in the last step in a process known as quantitative easing, or the Queen Elizabeth 2. This can weaken the U.S. currency, said Gaffney.

"We're going to see the developing world to lead the global recovery," said Gaffney, who has worked at Loomis for 26 years and helps to oversee the signing of 150 billion in assets. "The developed world is on that train QE2, letting its currency devalue."

JPMorgan Chase Co. in Asia and the Dollar Index, which tracks the performance of Asia's 10 most active currencies against the U.S., has risen to 114.5 from 110.7 for this year December 31. The rupee rose to 9.043 per dollar from 9404 to late 2009.

Losing Treasuries

Treasuries lost 2.09 percent in December, the worst monthly performance in a year, Bank of America Merrill Lynch index data show. The U.S. government $ 2,150,000,000,000 issued notes and bonds in 2010, surpassing last year's record of $ 2,109,000,000,000.

"It will be a ton of supply," said Elaine Stokes, who also helps manage Loomis Bond Fund with Dan Fuss and Matt Eagan. "Every time there is an artificial buyer in the market, we have to be a little worried."

Elsewhere in credit markets, the extra yield investors demand to own corporate bonds around the world rather than similar-maturity government debt remained unchanged at 170 basis points, or 1.7 percentage points, according Bank of America Merrill Lynch Global Broad Market Corporate Index. The average yield of 3.94 percent.

More Negotiated

Bonds of Charlotte, North Carolina-based Bank of America Corp. were the most actively traded U.S. corporate securities by dealers, with 84 transactions of $ 1 million or more, according to Trace, the bond information system in the prices of the Financial Industry Regulatory Authority.

The Barclays Capital Global Aggregate Bond Index lost 0.53 percent this month, cutting profit this year to 3.63 percent.

The cost of protecting against a default on public debt of Portugal rose today as the spread of the spread of the fiscal deficit of the euro-region crisis. The credit-default swaps of the nation's debt rose 11 basis points to 487, compared to a record closing price of 543 basis points on November 30, according to CMA.

Swaps credit-default usually fall when they improve investor confidence and increase when it decays. The contracts pay the buyer face value if a borrower defaults on its obligations, less the value of the defaulted debt. A basis point equals $ 1,000 annually on a contract protecting $ 10 million of debt.

Leveraged loans

The Standard & Poor's / LSTA U.S. leveraged loan 100 Index rose 0.3 percent to 92.51 U.S. cents overnight. The index tracking the 100 largest dollar loans first lien leveraged.

Barclays and JPMorgan agreed to arrange $ 1.5 billion in loans from Thermo Fisher Scientific Inc., the world's largest maker of laboratory instruments, to help finance the purchase of Sunnyvale, California, Dionex Corp.

The loans have an annual interest rate 150 basis points to 200 basis points more than benchmark interbank offered rate in London, or Libor, according to a letter of commitment attached to a regulatory filing. The margin is linked to Waltham, Massachusetts number of Thermo Fisher credit.

Thermo Fisher agreed to pay about $ 2.1 billion for Dionex, which produces products that are used to identify chemical mixtures, the companies said in a statement on 13 December. The transaction was completed in the first quarter of next year.

Jardine Lloyd Revolver

Jardine Lloyd Thompson Group Plc, the UK's largest publicly traded insurance broker, has a line of credit of 270 million pounds ($ 420 million) to refinance existing debt.

The five-year revolving credit facility replaces the company's existing credit expiring in 2011, JLT based in London, said in a statement. Royal Bank of Scotland Group Plc, Barclays Capital, HSBC Holdings Plc, Bank of Tokyo-Mitsubishi UFJ Ltd. and the Overseas Banking Corporation and China provided the new funding.

In emerging markets, the relative yields fell 6 basis points to 248 basis points, according to JP Morgan index.

The China's gross domestic product is estimated to increase 9 percent in 2011, compared with 6.3 percent in Indonesia, 2.6 percent in the U.S. and 1.9 percent in the UK.

The Loomis Bond Fund has 10 percent of Indonesia rupiah-denominated government bonds due in September 2024.

Bush tax cuts

An extension of U.S. of the tax cuts of the Bush era may add an increase of 1 percentage point to GDP of the nation, Michael Cloherty, head of U.S. rates strategy RBC Capital Markets LLC, wrote on December 9 in a research report.

"Not good for the bond market," said Gaffney. "We do not believe that rates will start to increase at least a year, but sometime during the next year or two."

Loomis has shortened the average duration of its bond fund flagship of about 5.9 years from 6.5 years in late 2008 to protect against rising interest rates, "said Gaffney.

The benchmark Treasury yields 3.34 percent and is expected to yield 3.55 percent for the fourth quarter of 2011.

Loomis favors the Canadian government bonds instead of Treasuries, in part because the country has less debt relative to the size of its economy that Canada's budget deficit, the U.S. for fiscal 2010 reached 3.6 percent of GDP, compared with an estimated 8.9 percent for the U.S.

Canada is better positioned to benefit from new market demands for commodities, "said Gaffney. Commodities account for about half of Canada's export revenue.

The demand for commodities

"Our positions developed world, and commodity currencies, Canada, Australia, New Zealand, are also beneficiaries of the new market demands," said Gaffney.

Melbourne-based BHP Billiton Ltd., the world's largest mining company, is based more annual revenue from sales to China than any other region.

Businesses around the world have issued $ 3150000000000 in bonuses this year compared with nearly $ 3,880,000,000,000 in 2009. grade corporate bond investors have lost 1.61 percent in December, ready for its worst monthly performance since October 2008, according to data from Bank of America Merrill Lynch index.

"We have cut the corporate investment grade," said Gaffney. "That's the area where we have seen the biggest margin, leaving them much more sensitive to interest rate changes."

While junk bonds Loomis has sought to provide a cushion of rising interest rates, the company is wary of taking too much credit risk, "said Gaffney.

convertible debt, which can be swapped for equity, has returned 15.14 percent in 2010, Bank of America Merrill Lynch index data show. Pimco, based in Newport Beach, California, last week said the expansion of its policy to permit investment in securities linked to equity, for the first time since 2003.

"Instead of going too far as we are saying that going to take some equity risk," said Gaffney.