Coffee Catch-Up Meet Patricia Gacis
Read excerpts from our Q&A below:
Hi Patricia!
Thank you for having coffee with us!
Hope you received a warm welcome from the Sydney office. Let’s start by getting to know you a bit better. Did you always know you wanted to be a credit strategy expert?
Absolutely not, I don’t think I knew what bond or credit markets were when I was young. Conversation topics around the dinner table were quite varied and we were a railway family – my parents worked in Sydney Train operations control and legal divisions, and many of my uncles are train drivers. Growing up I really enjoyed building Lego, had a strong curiosity about the natural world and I was good with numbers and my hands, so I thought I’d end up as an engineer or somewhere in the medical field.
What brought you to IAM? We’d love to hear about your journey!
I started my career as a graduate in the ANZ Markets program rotating through trading, sales and research teams. During my next few years in ANZ, I worked in credit research and fixed income strategy, living through both the boom of loose credit policy and the fall out of GFC, before making a move to the buy side as an Assistant Portfolio Manager at QBE. For the most recent 12 years, I worked as a Senior Credit Analyst at First Sentier Investors (previously CFSGAM) specialising in investment grade non-financial sectors before joining Income Asset Management Group mid September 2024. What excites me about this current role in IAM is the expansion of my coverage set to high yield investment credit and private credit transactions. As a working parent to young children, IAM has also been fantastic about supporting work life balance.
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Now, let’s dive into the professional side of things.
From your perspective, what are some of the best investment practices to thrive in today’s Australian economy?
Understanding both the fundamentals and market technical or drivers of the market price of your investment is very important. If you don’t understand it, it’s probably not a good idea to buy it even if it seems very popular at the time. I subscribe to long standing investment practices such as understanding your risk appetite and structuring investment style accordingly, investing for the long term and diversification. In any case, I think there is always a place for fixed income securities in an investor’s portfolio to fulfil their objectives.
We all know you’re a go-to for insights—but who or what do you turn to for investment advice and inspiration?
I consume news, analysis and market insights from the usual suspects including Bloomberg, the Financial Times, AFR, market brokers, well regarded economists, industry reports, credit rating agencies and broker research. Having a network of highly intelligent and knowledgeable people in different fields of expertise, from different geographies and backgrounds to challenge you and to think beyond your lived experiences and biases I have also found helpful in this respect.
Let’s talk bonds, do you have a couple of favourite bonds right now? What makes them stand out to you?
Sydney Airport 5.9% 2034 bond. Sydney Airport is a very well-run infrastructure asset by an experienced management team. Passenger traffic recovery from COVID is over 90% and international recovery in particular was achieved through the opening up of new markets while China was closed. China’s tourism channel is now re-opened and the fundamentals of long-term demand remain strong. I’m not overly concerned about Western Sydney International Airport – opening in 2026 – displacing Sydney Airport from its prime gateway status.
Scentre Group 5.875% 2054 callable hybrid bond. Exposure to the strong performing retail REIT at attractive levels relative to vanilla senior unsecured bonds. Scentre’s network of Westfield Shopping Centres has such a dominant market presence, virtually full occupancy and consistent FFO growth. They have done such a great job on their tenancy mix and continue to remain highly relevant to consumers despite the rising penetration of online shopping.
As 2024 wraps up, what’s your outlook for the rest of the year? Any top tips for investors?
With the upcoming US election, ongoing geopolitical tensions in the Middle East and East Europe, and major central banks trying to orchestrate a soft landing there is plenty keeping markets busy in the last quarter of the calendar year. With the RBA largely expected to cut interest rates sometime in the next six months, it may be a good time to lock in more fixed yields/increase duration, and revisit unloved sectors that were the most affected by rate rises such as REITs.
How would you describe your approach to credit research?
Bonds are asymmetrical in terms of risk and return, with the price typically capped around its issue price of 100 at maturity, so I tend to focus on the risks to the downside. Using fundamental bottom up analysis – such as industry risks, business profile, financial performance, leverage and cash flow, regulatory landscape, corporate governance/ESG risks – I form a view on whether I believe the credit is deteriorating, stable or improving. In addition to this, I analyse downside protections for bondholders asking questions like the presence of security package, or other protections such as financial covenants, guarantees or change of control clauses.
Moving across to the personal side, we like to know more about the person behind the professional.
Balancing credit research, portfolio management, and personal time must be a challenge! How do you manage it all, and what helps you unwind after a busy day at IAM?
I have two young kids who like to challenge me to board or card games in the evening and sometimes they let me win! Other ways I like to unwind are playing the piano, gardening, watching a great movie with my husband or engrossed in a sci-fi fantasy book.
As a Sydneysider, what are your favourite spots or things to do around the city?
We are pretty spoilt for things to do around Sydney. My family and I love to go to the beach, the ferry ride and a full day at the zoo, museums, bushwalks in the Blue Mountains, and we also have been exploring the parks with playgrounds all over greater Sydney – we’ve probably enjoyed over 20 in the past year or so!
