Peter Palfrey, co-portf mgr of.........>

AUSSIE BONDS: Peter Palfrey, co-portf mgr of $6.5Bln Loomis Sayles Core Plus

Bond Fund, told MNI exclusively his views on Australian govt bonds and Japanese

govt bonds. "Outside of the Yankee corporate or Yankee bank (bond) mkts, there

is very little US dollar-pay govt debt available to outside investors in either

(Jpn or Australian) mkt," he said. "In the local market, however, we do find

some value in Australia as one of the higher-rated higher-yielding developed

markets. The Australian economy is closely tied to that of China particularly

due to Australia's commodity- oriented export sectors. Whereas the economy had

suffered through the commodity bust in 2015/early 2016, it is now seeing

improvement as pricing and demand has rebounded," which has "been manifested in

a sharp recovery in the Australian Dollar since Jan 2016." - He said that "we

now consider the AUD to be trading close to fair value, but note that it could

benefit from additional USD weakness and/ or additional commodity strength.

Local bonds remain attractive as one of the highest yielding high quality bond

markets, with the RBA (Central Bank) expected to remain on hold over the nearer

term."