VIEW-ABN likes corporate debt and pharma

By Gilbert Kreijger

AMSTERDAM (Reuters) - ABN AMRO Private Banking advises switching from government debt to high-grade corporate bonds as they will benefit from a recovery of credit markets, and it favours healthcare, IT and consumer staples stocks.

"For investment-grade debt the risk of default is extremely low," Didier Duret, chief investment officer at ABN AMRO Private Banking, told Reuters on Wednesday.

He advised investing in corporate debt rated A+ or higher which could yield a total return of 6 to 7 percent in 2009. Government bonds are "extremely expensive" now due to the flight to quality.

Bonds from French oil major Total (TOTF.PA), U.S. pharmaceuticals company Abbott (ABT.N), Anglo-Dutch Unilever (ULVR.L) and Dutch bank BNG were attractive investments, Duret said.

ABN AMRO Private Banking, which manages more than 100 billion euros (95 billion pounds) for clients and is part of Dutch ABN AMRO Bank, likes investing in shares from companies with little debt or a net cash position and predictable cash flows.

"There is visibility on dividend. These companies are a safe harbour to tip toe back into the market," Duret said.

British household cleaning products group Reckitt Benckiser (RB.L), Swiss drugmaker Roche (ROG.VX), U.S. health care firm Johnson & Johnson (JNJ.N), Cisco Systems (CSCO.O) and Japanese video game maker Nintendo (7974.OS) are some of the stocks ABN likes, it said in a report.

Equities in general are expected to return 12 to 20 percent in total next year, Duret said.