The debt of Europe’s national banking champions is an attractive play despite the financial sector turmoil of recent days, according to M&G Investments fixed income director Pierre Chartres.
(Bloomberg) — The debt of Europe’s national banking champions is an attractive play despite the financial sector turmoil of recent days, according to M&G Investments fixed income director Pierre Chartres.
That’s because these large institutions are well capitalized, have a diversified deposit base and are subject to stringent regulation, Chartres said in an interview in Singapore. M&G oversees about $412 billion in assets.
“This could be an opportunity to add some European banking risk,” he said. “We’re still relatively constructive on European banks” that are dominant in their jurisdiction, he said.
Credit Suisse Group AG is a name M&G credit analysts have been cautious on, he said.
Concerns about the health of the global financial sector have intensified following the collapse of Silicon Valley Bank, with Credit Suisse tapping central bank liquidity on Thursday. The cost of insuring the debt of banks including Deutsche Bank AG and Barclays Plc surged this week, though it has since declined somewhat.
Because those banks are very well capitalized, contingent risks are limited, Chartres said.
“It’s true that they’re more resilient at this time,” he said in an separate interview with Bloomberg Television Haslinda Amin on Friday. “As as fixed income investor there might be some opportunities but it’s still early days.”
–With assistance from Ruth Carson.
(Updates with quote from TV interview in final paragraph, specification of credit analysts in fourth)
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