FICC Focus Credit Crunch: Credit Clubs, Sovereign Crises, AT1s vs. Hybrids
8 snips
Nov 12, 2025 Samuel Sibony, a Portfolio Manager at Algebris Investments specializing in subordinated debt, joins to discuss the evolving landscape of credit in 2025. They explore the performance of credit relative to sovereign crises, especially in France, and the appeal of AT1s despite market tightness. Sibony highlights selective opportunities in single B and CCC high yield, while cautioning about corporate hybrid valuations and execution risks. The conversation also touches on private vs public credit risks and the implications of market movements on future credit strategies.
AI Snips
Chapters
Transcript
Episode notes
Credit Outperformed Sovereigns
- Credit has massively outperformed sovereign rates during recent European sovereign stress episodes.
- Bloomberg Intelligence showed corporate and bank credit held up better than sovereigns in the France crisis.
Public Defaults Look Contained
- Public credit default risk appears contained even after recent private-credit shocks.
- Worst-case public default scenarios still implied only about a 4.5% trailing default rate.
Buy AT1s Selectively
- Consider AT1s as relative value versus other subordinated instruments when bond-by-bond fundamentals are strong.
- Prefer AT1s of highly profitable, well-capitalized banks with favorable reset mechanics.