Corporate Hybrid Bonds offer a compelling diversification opportunity. Unlike CoCos, Hybrids exhibit lower volatility, stronger incentives for first-call redemption, and cash-cumulative coupon deferral, making them a more stable and liquid option. With imperfect correlation to CoCos, hybrids can further enhance portfolio resilience, especially amid market disruptions.
Central bank policy, rising geopolitical tensions and escalating concerns around the global macroeconomic backdrop have together caused considerable equity market volatility as well as a significant repricing in the fixed income universe.