M&G eyes capital relief trades for high yielding opportunities

By Joseph McDevitt
08 Nov 2013

The era of senior tranche ABS trading with a pick-up over unsecured bank or corporate paper could come to an end in the next year or so, according to M&G Investments. With fewer chances to profit from wide ABS spreads, M&G’s portfolio managers are turning their attention to capital relief trades, which they expect will feature more prominently in Europe over the next two years.

ABS investors that survived the financial crisis and stayed in the market after 2008 were handsomely rewarded for their loyalty. Investors could afford to be relatively conservative with their risk profiles, buy senior tranches of deals and still enjoy a generous pick-up over other asset classes, such as ...

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