Bill Gross is buying BP bonds; loads Total Return up on U.S. debt

Bill Gross, co-chief investment officer at Pacific Investment Management Co., recently bought $100 million of shorter maturity BP Plc bonds and some Anadarko Petroleum Corp. debt, spokesman Mark Porterfield wrote today in an e-mail.

BP’s 5.25 percent notes due in 2013 rose 2.5 cents to 93.5 cents on the dollar as of 4:20 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. BP is based in London.

The debt fell as low as 87 cents on the dollar earlier today and has declined from a high this year of 110.8 cents, according to Trace data.

Mr. Gross, manager of the world’s biggest bond fund, also purchased 6- to 12-month Anadarko debt, Porterfield wrote. The Woodlands, Texas-based Anadarko’s 6.75 percent notes due in 2011 rose 0.5 cent to 98 cents, Trace data show. In earlier trading the securities declined to 96.5 cents, the lowest ever, and down from 106.25 cents on Dec. 31.

Mr. Gross also boosted holdings of government-related debt in his fund to the highest since it held an equal amount in November.

The $227.9 billion Total Return Fund’s investment in government-related debt was increased to 51 percent of assets in May, from 36 percent the previous month, according to the website of Newport Beach, California-based Pimco.

Treasuries, part of the government-related category, are the premier holdings for fixed-income investors with the U.S. economy failing to produce private sector jobs and Europe’s sovereign-debt crisis threatening the region’s banking sector, Gross, 66, said this month.

“The U.S. is the least dirty shirt,” Gross, Pimco’s co- chief investment officer, said during a June 4 radio interview on Bloomberg Surveillance with Thomas R. Keene. “The world is full of dirty shirts in terms of excessive debt, and the United States is one of those countries, but it still remains the reserve currency and still remains the flight-to-quality haven.”

Pimco’s U.S. government-related debt category can include conventional and inflation-linked Treasuries, agency debt, interest-rate derivatives, Treasury futures and options and bank debt backed by the Federal Deposit Insurance Corp., according to the firm’s website.

Gross held the Total Return Fund’s mortgage composition in May steady at 16 percent and decreased its high-yield holdings to 3 percent from 4 percent. Emerging-market debt was increased to a record 9 percent from 7 percent, and non-U.S. developed nation debt was cut to 6 percent from 13 percent.

Reuters and CNBC earlier reported the bond purchases by Newport Beach, California-based Pimco.

The worst oil spill in U.S. history began April 20 after an explosion on the Deepwater Horizon rig leased by BP. Anadarko owns 25 percent of the well in the Gulf of Mexico that is spewing the oil.