Partner Insight: Is there a sweet spot in the bank capital structure?

We asked BlueBay’s Marc Stacey and James Macdonald why they think it might be different for select banks this time round

It's an interesting time to be a fund manager investing in contingent capital bonds or CoCos - hybrid debt instruments designed after the 2008 financial crisis to act as shock absorbers if a bank runs into trouble.  Stacey and Macdonald, who manage BlueBay's Financial Capital Bond Fund, have argued for years that this kind of subordinated debt may represent a sweet spot in the bank capital structure, so long as the issuer is robust. Will the corona crisis be the test of fire that proves their reasoning? Better banks CoCos help bank regulators relieve and recapitalise troubled bank...