Axiom adapts to new CoCo opportunities
March 30, 2015

Adapt or die has become one of the key mantras of our times. It is arguably as important in the financial services industry as in any other field of activity. Axiom Alternative Investments, a specialist in instruments issued by financial institutions, today provides another example of the evolutionary drive with its announcement of the launch of Axiom Contingent Capital.

This is a French-regulated investment fund dedicated to Additional Tier 1 and Tier 2 Contingent Convertibles, or ‘CoCos', the new generation of bank subordinated debt instruments (regular readers will be more than familiar with the high esteem in which bond specialist Bill Blain of Mint Partners holds such instruments, created to replace legacy bonds, which did not fully serve their purpose as capital instruments for banks).

Axiom notes that the implementation of Basel III requirements gave birth to a new generation of bank subordinated bonds, which amounted to EUR 100 billion at the end of 2014 and could reach several hundred billion euros in the coming years.

It says the new fund will take advantage of the high yields offered by this new asset class through the careful selection of issuers and the close monitoring of conversion risk and potential coupon suspension.

Axiom Contingent Capital will aim to outperform its benchmark, the Bank of America Merrill Lynch Contingent Convertible Index, through a focus on bonds from the large systemic European banks (circa 90 percent of the Fund's exposure).

David Benamou, Managing Partner, Axiom Alternative Investments, commented: "We see a significant opportunity in this new generation of subordinated debt which is emerging as a result of Basel III with the aim of replacing legacy bonds by 2022. We are aware that some investors, particularly those in the wealth management sector, are struggling to access this asset class, so believe that our UCITS-compliant offering will provide an effective solution.

"These instruments offer high yields compared to other asset classes and, with a focus on instruments issued by large European banks, we are confident of delivering attractive long-term returns to investors."





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Adapt or die has become one of the key mantras of our times. It is arguably as important in the financial services industry as in any other field of activity. Axiom Alternative Investments, a specialist in instruments issued by financial institutions, today provides another example of the evolutionary drive with its announcement of the launch of Axiom Contingent Capital.

This is a French-regulated investment fund dedicated to Additional Tier 1 and Tier 2 Contingent Convertibles, or ‘CoCos', the new generation of bank subordinated debt instruments (regular readers will be more than familiar with the high esteem in which bond specialist Bill Blain of Mint Partners holds such instruments, created to replace legacy bonds, which did not fully serve their purpose as capital instruments for banks).

Axiom notes that the implementation of Basel III requirements gave birth to a new generation of bank subordinated bonds, which amounted to EUR 100 billion at the end of 2014 and could reach several hundred billion euros in the coming years.

It says the new fund will take advantage of the high yields offered by this new asset class through the careful selection of issuers and the close monitoring of conversion risk and potential coupon suspension.

Axiom Contingent Capital will aim to outperform its benchmark, the Bank of America Merrill Lynch Contingent Convertible Index, through a focus on bonds from the large systemic European banks (circa 90 percent of the Fund's exposure).

David Benamou, Managing Partner, Axiom Alternative Investments, commented: "We see a significant opportunity in this new generation of subordinated debt which is emerging as a result of Basel III with the aim of replacing legacy bonds by 2022. We are aware that some investors, particularly those in the wealth management sector, are struggling to access this asset class, so believe that our UCITS-compliant offering will provide an effective solution.

"These instruments offer high yields compared to other asset classes and, with a focus on instruments issued by large European banks, we are confident of delivering attractive long-term returns to investors."



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