AT1 Hoarding Is Shielding Market From a Global Risk Selloff
The Strait of Hormuz, between the Persian Gulf and the Gulf of Oman, seen from the International Space Station.
Source: Getty ImagesInvestors are hanging onto Additional Tier 1 bonds for fear of missing out on getting hold of them again, enabling this risky bank debt to dodge the worst of the selloff seen across financial markets since the war in Iran.
AT1s have historically been ditched by money managers when markets come under severe stress. But that’s changed this time around, since the $280 billion asset class has become increasingly popular in recent years, with high yields attracting a flood of new buyers.