In Hot Credit Market, Fixed-Maturity Funds Are Booming

In this Bloomberg article, Pradeepa Kuppusubramanian, Head of Credit Research, Acuity Knowledge Partners discusses the significant investments in perpetual AT1 and corporate hybrids by fixed-maturity funds. She explains that fund managers’ approach to treating European bank AT1s’ first call date as an effective maturity is ‘justified.’

Pradeepa highlights that EU banks typically adhere to the unwritten rule of exercising AT1 calls, with recent tender and refinancing activities supporting the notion of first calls as pseudo-maturities.