Insights

Directly comparing old style Tier 1 to new AT1 bonds obviously disregards the numerous differences between these securities, but to us it does suggest that once the wider investor base has witnessed the resilience of the banks through this period of economic stress, there is still considerable upside from current spread levels as investors price in the structural changes that have occurred in the sector.

So while we certainly expect unemployment to increase across Europe, and we expect more borrowers will fail to pay their mortgages, we believe current mortgage performance is very far away from a level that would threaten coupon and principal payments in the major European RMBS markets.

After a volatile and unprecedented year in global markets, Head of Emerging Market Bonds Luc D’hooge and Head of Emerging Market Corporate Bonds Wouter Van Overfelt recently held a call for investors. We now provide you with access to recordings of both calls, where Luc and Wouter explain their investment approach and give you their outlook for emerging market sovereign and corporate debt.

During the lockdown period, Portfolio Manager Christian Hantel discovered the joys of gardening and learned that it has a lot in common with bond investing. In this Viewpoint, with the help of a few trees, Christian explains how investors can still find income and portfolio stability in a yield-starved world.

Emerging market corporate bonds are an inefficient asset class, according to portfolio managers Wouter Van Overfelt and Sergey Goncharov. In this case study, they show how investors can benefit from exploiting those inefficiencies.

Head of Corporate Bonds Mondher Bettaieb and Portfolio Manager Claudia Fontanive-Wyss update their outlook for corporate bonds after Pfizer revealed a possible breakthrough on a Covid-19 vaccine

The gradual backup in yields since the onset of the pandemic has given Treasuries a little more potency to protect bond portfolios, though we don’t see the rise being anywhere near big enough for them to behave like they used to.

A contested US elections result is likely to unsettle markets. However, US corporates are well prepared to withstand volatility with corporate cash balances at all-time highs.

Regular readers will know that we have a positive medium term view of spread products. This is based on a number of factors; valuations in our view are reasonably attractive compared to history, we are convinced that both monetary and fiscal stimulus will remain in place for an extended period of time, and perhaps most importantly we remain at a very early stage of the new cycle. Conversely, and for similar reasons, our view on government bonds at the moment is not bullish.