CQS Sees Value In EU Bank Regulation Complexity

Greg Sadler, Financials Credit Trader at CQS, sees opportunity in European banking complexity.

CQS: Bank capital securities have less risk than reputation suggests

Writing in the hedge fund’s CQS Strategy Perspectives letter sent to investors, a copy of which was reviewed by ValueWalk, Sadler draws the conclusion that bank capital securities have really less risk than their reputation suggests and that complexity has created wide relative value trading spreads.

Prior to 2007, Sadler notes, bank capital securities were seen as a low risk, low volatility asset class, “which enjoyed implicit government support but offered low yields.” Then losses arising from...