Fixed income managers argue the sector's future

Subordinated debt controversy undermines sector

As many investors were unexpectedly hard hit for holding subordinated banking debt, fixed income managers are of mixed opinion over the asset's future in the sector. Subordinated debt, which includes lower tier two (LT2), upper tier two (UT2) and tier one (T1) issuance, came under the spotlight for its similar behaviour to equities. Many investors in this arena lost substantial assets in 2008 as the financial crisis hit, with many banks defaulting on paying their bond coupons. This came as a shock, as many presumed their investments would be better protected, with bank debt bonds gene...