Invesco has launched a fixed income ETF giving investors access to the growing pool of higher yielding convertible assets issued by European banks.
Traded on the London Stock Exchange, the Invesco AT1 Capital Bond UCITS ETF has been launched at a time of growing market demand for Additional Tier 1 (AT1) assets and further expands Invesco’s suite of highly competitive fixed income ETFs.
The ETF tracks the performance of Additional Tier 1 capital bonds issued by European banks. AT1 bonds are contingent convertible bonds, which 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. Over EUR147 billion in AT1 capital bonds have been issued by European banks to date.
The Invesco AT1 Capital Bond UCITS ETF tracks the iBoxx USD Contingent Convertible Liquid Developed Market AT1 (8/5 per cent Issuer Cap) Index. The index focuses exclusively on the USD denominated AT1 bond market, the deepest and most liquid in which European banks issue AT1 bonds. Through the ETF, Invesco writes that investors get exposure to over 80 per cent of European banks by market cap, including all of the largest issuers.