The Bank of England (BoE) decision to slash the base rate by 1.5 per cent is good news for bond investors, says Henderson Global Investors.

The BoE Monetary Policy Committee (MPC) yesterday applied a hatchet to interest rates, announcing a cut of 150 basis points, taking the base rate to three per cent – its lowest level since the 1950s.

And while this is not welcome news for cash investors, John Pattullo, fund manager of the Henderson Preference and Bond and Strategic Bond funds, believes that this represents an excellent buying opportunity.

He says, ‘The investment-grade corporate bond sector in particular now looks to be particularly good value. Using our cash, we are currently adding investment-grade bonds that are offering yields of between nine and 12 per cent, while the sector as a whole is discounting default rates at levels which are commensurate with the Great Depression rather than a severe recession.’