Europe (AO) | Corporate hybrids: Getting your portfolio in shape for summer - Our refreshed Buy list

Research evidence excerpt

Europe (AO) | Corporate hybrids: Getting your portfolio in shape for summer - Our refreshed Buy list

Best Ideas

01 July 2026

Sébastien Barthélemi

Head of Credit Research

+33 1 70 39 74 76

Europe sbarthelemi@keplercheuvreux.com

Corporate hybrids: Getting your portfolio in shape for summer - Our

refreshed Buy list

Key points:

With the summer holidays approaching, we refresh our corporate hybrid monitor published in early April (see here).

The Iran conflict drawdown has fully reversed: the index is back to +1.4% YTD (from -1.6% at the end of March), and the Z-spread

has retraced to 166bps, near its end-2025 tightness.

The real estate hybrid bonds have fully normalised, and more importantly, the primary market has been and remains dynamic:

H1 issuance of EUR25.8bn already equals c. 79% of 2021's full-year supply (2021 is the vintage now reaching its 5-year first calls),

while the 2026 call wall has shrunk to EUR15.3bn with no extension stress.

Carry remains our thesis, with a 4.35% YTC offered (index). At nearly 1x the BB spread and >2x IG, EUR corporate hybrids still offer

BB-like spreads with materially better average quality.

Below, we detail performance, spread and yield levels, and, more importantly, our top Buys per rating bucket.

We continue to push TotalEnergies, BP, Eni, Engie, Enel, Repsol, Iberdrola and OMV across IG; and Bayer, EDF, Telefonica,

Stellantis, Aroundtown and Roquette Frères (new) in the speculative grade.

Performance and spread levels

Total return

In total return, the corporate Hybrid index released a performance of +1.4% YTD. It swiftly had round-tripped the entire Iran-

conflict drawdown (-1.6% trough on 30 March).

Yet the hybrid index matches only the corporate BBB ex sub ex fin index (+1.3%) and trails the corporate BB ex-financials (+1.7%).