Venture dedicated to the investment in corporate hybrid entities announced
Swisscanto Launches New Fund Focusing on Corporate Hybrid Bonds
Swisscanto Invest has entered the corporate bond sector with the launch of a new fund, the Swisscanto Bond Fund Responsible Corporate Hybrid (ISIN: LU2365392617). This fund offers institutional investors access to the asset class of corporate bonds that exhibit both debt and equity characteristics, known as Corporate Hybrids.
Corporate Hybrids are subordinated bonds issued by non-financial companies. Unlike senior debt instruments, they offer a potentially higher yield due to their subordinate nature. In the capital structure of issuers, Corporate Hybrids are subordinated to other debts and senior to equity capital. This means that in the event of a bankruptcy, bondholders of Corporate Hybrids would be paid out later.
Jan Sobotta, Head of International Sales at Swisscanto Asset Management International in Frankfurt, expressed his pleasure at expanding the fund range and stated that the market for Corporate Hybrids has grown significantly in recent years and become established. He also noted that over ten percent of Corporate Hybrid issuance is made up of Green Bonds, and this trend is increasing. In comparison, the proportion of Green Bonds in the global corporate bond market is currently less than two percent.
The fund management invests in bonds across the entire global Corporate Hybrid universe, with a focus on issuers with high credit quality and strong ESG profiles. The fund integrates ESG criteria into issuer analysis, applies enhanced exclusion criteria, and considers the Paris climate goal in its investment activity.
Issuers of Corporate Hybrids receive a rating about two notches lower due to their subordinate nature. However, Corporate Hybrids can be counted as part of the equity capital, strengthening issuers' creditworthiness. Yields on Corporate Hybrids are higher than those on senior debt instruments, making them an attractive option for investors seeking a compelling risk-return profile.
Despite the growing popularity of Corporate Hybrids, the search results do not provide specific information about companies that have issued corporate hybrid bonds in recent years while demonstrating particularly high creditworthiness and strong ESG profiles.
Sobotta believes that the new fund will provide access to the global Corporate Hybrid universe, offering investors a diverse and promising investment opportunity. The launch of the Swisscanto Bond Fund Responsible Corporate Hybrid marks a significant step forward in Swisscanto's commitment to responsible investing and expanding its product range to meet the needs of its clients.
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