American asset manager AllianceBernstein has unveiled a new strategy that will mainly invest in subordinated financial institution debt including additional tier 1 bonds that are used to strengthen capital position.
Commenting on the new offering, AllianceBernstein director of UK sales Lee Matthews said: “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.”
The new vehicle, dubbed AB Financial Credit portfolio, will be jointly managed by Jorgen Kjaersgaard and Matthew Minnetian.
The pair will work alongside a team of credit and quantitative analysts and specialist traders.
“We expect the $200bn market for Additional Tier 1 (AT1) to grow as emerging markets banks, especially from China, and second tier European banks start issuing such securities,” Kjaersgaard stated.