December 17, 2015 / 5:53 PM / in 2 years

BlackRock's Rieder sees value in high-yield debt despite rate hike

NEW YORK, Dec 17 (Reuters) - A top bond manager at BlackRock Inc said he still sees value in the erratic junk-bond market, including in Europe and in the debt of companies focused on consumer goods and services.

“We think parts of the high-yield market are pretty attractive,” said Rick Rieder, BlackRock’s chief investment officer of fundamental fixed income.

Rieder said he was focused on “better quality” corporate issuers in the consumer cyclical, non-cyclical and transportation sectors.

New York-based BlackRock is the world’s largest asset manager, with $4.5 trillion under management.

Other fund managers have been buyers in the high-yield market since it started falling precipitously on Dec. 7, with oil prices tumbling to new lows and pushing some debt-buying funds to freeze redemptions.

Dan Ivascyn, the group chief investment officer at Pacific Investment Management Co LLC, said Tuesday that investors had overreacted to the credit turmoil and said his company was taking advantage of the sell-off.

Rieder also said European high-yield markets are in a “very different dynamic in terms of where they are in the credit cycle” and in their exposure to the slide in energy prices.

But he said he expected price swings in the broader high-yield market to continue into next year.

The decision on Wednesday by the U.S. Federal Reserve to increase the target range on the federal funds rate to 0.25 percent to 0.50 percent, from near-zero, pushed yields on long-dated Treasuries down.

Rieder, who has argued rates should have been raised far earlier, praised the central bank for laying out a gradual process that “takes some of the ambiguity out” for investors buying long-dated government debt. (Reporting by Trevor Hunnicutt; Editing by Bernard Orr)

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