Invesco cross-lists AT1 bond ETF onto Borsa Italiana

Jul 18th, 2018 | By | Category: Fixed Income

Invesco has cross-listed the Invesco AT1 Capital Bond UCITS ETF and its euro-hedged share class on Borsa Italiana under the tickers AT1 IM and XAT1 IM respectively.

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Other than the recent Borsa Italiana listing, the ETF is available on London Stock Exchange and Deutsche Börse Xetra.

The fund provides access to Additional Tier 1 contingent convertible (“CoCo”) bonds issued by European banks.

AT1 CoCos include a mechanical trigger that can write-down the value of the bond or convert it to common equity based on the issuing firm’s level of capital.

The bonds generally offer higher yields than investing in senior bank debt – the ETF’s effective yield is currently 6.3% – and may offer some risk mitigation in regards to rising interest rates.

The fund tracks the Markit iBoxx USD Contingent Convertible Liquid Developed Market AT1 (8/5% Issuer Cap) Index which focuses on the US dollar-denominated AT1 bond market, the deepest and most liquid in which European banks issue AT1 bonds.

The weight of the top five holdings is capped at 8% and the remaining holdings capped at 5%. The index aims to offer a broad coverage of the AT1 USD capital universe, whilst upholding minimum standards of investability and liquidity.

The ETF has an ongoing charge of 39bps, making it slightly cheaper than the other recently launched CoCo bond ETF – the WisdomTree AT1 CoCo Bond UCITS ETF (CCBO LN) – which costs 50bps.

The fund was first launched in June, on London Stock Exchange,under the ticker AT1 LNSince launch, it has accumulated assets under management of $50m.

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