The Financials Statement: Notes from the Road

研报英文原文证据摘录

The Financials Statement: Notes from the Road

n central lens. Bank investors on the whole

expressed much less concern around Private Credit than they had done coming into the

year, given the overriding relevance of geopolitical events over the past six months, as

well as some interim ‘stress’ testing of the sector through software and AI-related

weakness in HY, and ongoing BDC redemption headlines. Though poor and inconsistent

disclosure on banks’ exposures remains a frustration, investors were on the whole

comfortable with a coalescing of estimates toward the low-single digit % range in terms

of direct balance sheet exposures, though recognising that the increasing complexity of

the overall financial system likely implies that additional indirect, or liability-side

channels of risk do exist. Concerns instead continued to be skewed more heavily toward

insurers given notionally larger exposures, with a handful of accounts indicating some

Underweight positioning toward the sector accordingly. These views were not reflective

of the majority however, with our preference for RT1 against AT1 for instance still

generally quite well received.

• Cross-border M&A – a renewed talking, but not trading point. With UniCredit’s

tender offer for Commerzbank unfolding over the course of our roadshow, M&A, and in

particular cross-border M&A was increasingly raised as a topic of discussion. As we

indicated in last week’s Financials Statement, we expect this to be the case throughout

2Q bank earnings calls also. In terms of what the theme means for credit investors

however, we generally found accounts to be very closely aligned with our view that given

the extent of compression already seen across names in the sector over the past few years,