Cocos in the sweet spot – Marc Stacey

Marc Stacey joins us on the BlueBay Insights podcast to share his expertise on coco bonds & European banks, discussing fundamentals, risks, ESG opportunities and the potential investment ‘sweet spot’ enjoyed by AT1 capital.

We asked Marc:

1. Banks were deemed villains following the global financial crisis back in 2008 but have been a key part of the solution to the corona virus pandemic. Can you talk us through this shift and what it means for investors?
2. Your investment approach has always focused on fundamentals – how are things looking right now? What’s the situation with non-performing loans – have we seen the peak or do you anticipate a pick-up later this year?
3. In a world of rising inflation and swathes of negative-yielding debt, bank capital in the form of AT1s seems to offer something of a ‘sweet spot’ to investors – in your view what’s the potential opportunity here? 
4. Where are you seeing the greatest alpha potential?
5. What are the possible risks that could challenge your core investment views this year?
6. Where do you think an allocation to coco bonds best sits within a broader portfolio and who do you think should be looking at the asset class this year?