John Miller’s high-yield muni team at First Eagle staffs up

First Eagle Investments has hired John Suh and Andrew Belsky as credit analysts as the firm continues to build out its high-yield team under Chief Investment Officer and high-yield manager John Miller.

Suh, based in New York, previously was a trader/analyst on the high yield desk in JPMorgan’s public finance division. He was at JPMorgan for 12 years, and before that was at Barclays Capital and Bear Stearns.

Chicago-based Belsky joins First Eagle from Barclays, where he was director on the municipal trading desk with a focus on high-yield credit. Before that, he held buyside credit research roles at Whitebox Advisors and Rosemawr Management. 

First Eagle Investment’s high yield manager John Miller, formerly of Nuveen, said he would continue to hire to build out the firm’s first high-yield muni shop.

First Eagle Investments

As credit analysts, the pair will report to Miller and be responsible for multi-sector underwriting, credit monitoring and portfolio analysis, the firm said. They follow the hires of Bryce Pickering as head of municipal trading, and Carl Katerndahl as chief operating officer. 

Miller, 56, was hired by New York-based First Eagle in September and began on Jan. 2. He joined the firm after his high-profile exit last April from Nuveen, where his 27-year run helped shape the high-yield muni market.

Miller said he plans to continue to hire to build out the “research and trading capabilities” of the team.

On the portfolio side, Miller said he sees opportunity in the land-secured, charter school, industrial development revenue, and healthcare sectors, where he said that some hospitals are stabilizing after the pandemic.

The land-secured sector has “been extremely steady fundamentally,” Miller said in an email. Low new-home inventories and tight markets, especially in Texas and Florida, mean “valuations of developed lots continue to be steady-to-increasing, and property tax collections have been growing at 8% per year nationally.”

Credit selection is key to buying charter school paper, but overall the sector offers opportunity for yield, Miller said. “Liquidity in charter school bonds within high-yield municipals has been relatively weak, which is both a challenge and an opportunity,” he said. “Investors today are understandably expecting to be paid with extra credit spread for lower liquidity.  When this can be impounded into the yield, pricing and projected returns of the bond, charter schools can often represent opportunity.”

When it comes to IDBs, Miller said he likes “publicly-traded companies in metals over project finance,” as the publicly traded companies may be more resilient to economic challenges and benefit from infrastructure spending.

“Project finance has had some troubled situations,” Miller said. “At First Eagle, the muni team is managing some small portfolios with newly purchased municipal bonds and at this stage, we don’t see a compelling need to get involved in troubled situations currently.”

After two years of depressed issuance and fund outflows, Miller said he expects to start to see inflows this year.

“I suspect that rates are likely to trend lower for the year as a whole even though the path is likely to be volatile,” he said. “In addition, some of the self-funding of infrastructure may be mitigated as COVID relief related programs wind down very gradually. If these factors hold true, then high-yield issuance should rise in 2024 from the recent tepid levels of the prior two years.”

The team so far has launched two funds: the First Eagle High Yield Municipal Fund, formerly the First Eagle High Income Fund, and the First Eagle Short Duration High Yield Municipal Fund. “First Eagle intends to make its municipal capabilities available to mass-affluent and high-net-worth retail investors and institutions in the US through a variety of product structures, including mutual funds, closed-end funds and separately managed accounts,” the firm said in a press release.