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Pimco launches financials debt fund as regulatory cloud lifts
by Chris Sloley on Sep 25, 2013 at 10:29
Fixed income specialist Pimco has launched a dedicated bond fund to target subordinated debt from financial institutions.
The Dublin-domiciled Pimco GIS Capital Securities fund will be run by London-based portfolio manager, Philippe Bodereau (pictured).
Bodereau, who is head of global financials research, will target subordinated, hybrid and contingent convertible (Coco) bonds issued by banks, insurance companies and other financial institutions.
It will be able to invest up and down the capital structure but be dependent on Pimco's assessment of associated risk and reward. The fund mirrors an existing strategy which Bodereau has been managing in-house since July 2011.
Commenting on the timing of the launch, Bodereau told our sister publication Citywire Global the improved clarity surrounding regulation of listed financials made them particularly attractive at this time.
He said: ‘We have a lot more clarity about Tier One instruments and a lot more clarity about what future regulations are going to look like.’
‘This is while we have a banking sector which is deleveraging, so the market environment is very conducive to the appreciation of capital securities.’
Bodereau said this regulatory push, which has been largely implemented in response to the financial crisis, has led to increased equity issuance and a larger capital buffer for securities higher up the capital structure.
‘This major deleveraging is pushing banks to have more capital in them and that is a theme which is not slowing down [and still] has a number of years to run [which] can only prove beneficial to capital securities,’ he said.
The fund will invest a minimum of 80% in capital securities at any one time. It is able to invest in capital securities on a global basis.
The annual management fee on the fund is 0.79%.
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