Since the end of the negative interest rate environment, banks have once again been of great interest to equity and bond investors. “Financial bonds are structurally more attractive valuation-wise than non-financial bonds due to their better ratings and lower interest rate sensitivity. However, the asset class struggles with many prejudices,” writes Christian Bettinger, Head of Fixed Income Euro & Emerging Markets at Berenberg.

In a recent insight, Berenberg’s fixed income team clears the prejudices by examining the attractiveness of financial bonds in general, financial bonds issued by small banks, bonds issued by banks in Europe, and insurance bonds.

“We believe that smaller banks offer attractive opportunities for financial bonds in comparison to larger banks, and banks outside of core European countries can also generate an appealing long-term added value in a portfolio context,” Bettinger states.

Read the full insight here.