Race to the Bottom in AT1 Bonds Spurs Veterans to Shift Tactics

As the Additional Tier 1 bond market gets ever-more swamped with new buyers, veteran investors are adjusting their playbooks to avoid the crowds — and the risks they bring.

Jeremie Boudinet, the head of financial and subordinated debt at Crédit Mutuel Asset Management who has been running an AT1-focused fund for almost 10 years, doesn’t want to give up the high yields offered by the risky bank debt, but is passing up some deals. Jackie Ineke, the chief investment officer at Geneva-based Spring Investments SA who has been involved in the AT1 market since the securities were created, is telling her investors to hold back some cash and be ready for corrections.