Interview with Nicoló Bocchin

Azimut Believes The Spreads on Hybrid Bonds and Subordinated Debt Can Tighten Further During Q120

Date:

PHOTO-2019-12-06-07-09-55_0
Courtesy photo. Los diferenciales de los bonos híbridos y subordinados pueden estrecharse más durante el primer semestre de 2020, según Nicoló Bocchin de Azimut

Author: Patricia Julià, Santiago de Chile

  1. Hybrid bonds and financial subordinated bonds sare issued for different reasons but have common features
  2. “The investor is rewarded for the subordination, in a title with greater volatility, but with a spread similar to that of the High yield segment and an investment grade default risk ”
  3. "We think that negative rates is a distortion of the market and perhaps in 2-3 years’ time with a bottoming out of growth and a pick up in inflation ,which can occur, interest rates will slowly go from negative back to zero, ”
  4. The fund's current positioning is that they have a long credit portfolio but short interest rate sensibility
  5. Since the team started to manage the fund the percentaje of issuers that meet ESG criteria has increased from 75% to 95%
  6. The fund manager thinks there is still room for further sprads reductions, especially during the first semester 2020
  7. “ During 2020 is the year where you should appreciate the fact that this type of instruments have a carry. We don’t expect a big spread compression, although there will be some, and the performance will be basically the yield of the portfolio”