Horizon's King looks beyond safehaven assets

NEW YORK (Reuters) - Cash specialist Jill King sees hidden gems in the U.S. short-term debt market, as other investors have flocked into Treasuries and safe-haven assets in an effort to shelter their money from the credit crunch.

In this risk-averse climate, King, a senior portfolio manager at Horizon Cash Management, said short-term debt issued by top-flight U.S. corporations and government-sponsored enterprises offer higher yields than Treasury bills without a great sacrifice in safety.

"At some point, you have to look at some of these distressed areas," King, who helps oversee $3 billion in assets at the Chicago-based money management firm, said at the Reuters Investment Outlook 2008 Summit in New York.

There are opportunities even in the asset-backed commercial paper (ABCP) sector, which was key source of financing for subprime mortgages, King added.

Established "multiseller" ABCP issuers have not run afoul during the current credit turmoil, unlike structured investment vehicles (SIVs), of which a handful defaulted on the debt they issued, according to King.

"Not all ABCP is bad," King said. "Some of the structures don't look good going forward, but there are some good nuggets."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Richard Leong and Al Yoon; Editing by Jonathan Oatis)