AT1s to lead ‘compression trade’ into 2021

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By Tyler Davies
19 Nov 2020

The additional tier one (AT1) market has plenty of room left to rally, according to a new report from analysts at Morgan Stanley, even though valuations are already drawing close to other asset classes.

Morgan Stanley published its annual credit outlook this week, revealing that it was “overweight” on AT1s going into 2021. 

The asset class has staged an incredible recovery since the start of the coronavirus pandemic in March, when the average spread to call briefly topped 1000bp. 

But ...

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