AllianceBernstein has launched a global bond fund that invests in subordinated financial institution debt including additional tier 1 bonds (AT1) used to shore up capital adequacy.
The AB Financial Credit portfolio is managed by Jorgen Kjaersgaard (pictured) who also manages the fund group's European high yield fund and Matthew Minnetian. They will be supported by a team of credit and quantitative analysts as well as specialist traders.
Commenting on the launch Kjaersgaard said: ‘Since the financial crisis in 2008, banks have significantly de-levered their balance sheet and now hold a higher level of capital and better quality assets.
‘We expect the $200 billion (£150 billion) market for AT1 to grow as emerging markets banks, especially from China, and second tier European banks start issuing such securities.’
Lee Matthews, director, UK sales at AllianceBernstein added: ‘The differentiating risk factors for subordinated debt can provide attractive risk adjusted returns, especially as rising rates are expected to have a positive impact on bank profitability.
‘Given the increasing size of the market and its complexity, we see growing investor demand for a dedicated credit fund investing in this sector.’