The Algebris Podcast

France is facing a perfect storm of economic and fiscal pressures, rising public debt, social unrest and political deadlock. With borrowing costs climbing, growth stagnating and public services under strain, the country faces mounting challenges on multiple fronts. 

Listen to our latest podcast with Silvia Merler (Financial Equity Analyst), interviewed by Douglas Branson (Head of Business Development UK) from Algebris Investments. 

À bout de souffle: What’s up with France? - Algebris Investments

Financial repression is turning into rebellion, leading investors to overprice bond risks and creating some value in duration. While fiscal risks remain significant and stronger AI-driven productivity could keep rates higher for longer, increasingly hawkish positioning, pressure on risk assets and tighter financial conditions are improving the asymmetry of owning duration. At the same time, credit spreads remain historically tight, arguing for selectivity rather than broad exposure.

Listen to Algebris Investments' latest podcast with Gabriele Foà (Global Credit Portfolio Manager) and Douglas Branson (Head of Business Development UK).

Financial credit differs from corporate credit because banks operate through layered capital structures, constantly reassessing borrower risk and holding capital against potential losses; Within that structure, AT1s sit just above equity, offering higher yield.

European banks are now fundamentally stronger than in past cycles, supported by tighter regulation, stress testing, improved profitability and better asset quality: This has made moving down the capital stack more attractive, particularly in national champion banks where the risk-reward profile may be compelling.

The asset class has also matured: a growing share of AT1s now carries at least one investment-grade rating, challenging the perception that they are purely high-yield instruments.

For investors seeking real income, European bank AT1s can sit between low-yielding investment grade bonds and more leveraged private credit or high-yield alternatives. 

In Algebris’ latest podcast, Bruno Duarte (Financial Credit Portfolio Manager), explains how financial credit works, why AT1s matter, and where the opportunities may lie today.

China is advancing at exceptional speed in AI, robotics, biotech, green transition, electric vehicles, and other key innovation sectors. Its cost advantage versus the US is enormous, while performance remains highly competitive. The main drag on the economy has been the long adjustment after the property bubble burst, which has weighed on local consumption. However, over the next two to three years this pressure may normalize, while the “new China” continues to accelerate. At the same time, Chinese equities trade at a significant discount to global markets and offer higher dividend yields. For this reason, China, especially through Hong Kong, is an underappreciated long-term opportunity in global portfolios.

Listen to Davide Serra (Founder & CEO, Algebris Investments) in his latest analysis.

The key variable for markets is the duration of the conflict between the US, Israel and Iran. A short conflict would likely result in only temporary oil price volatility, allowing markets to return to previous levels. However, a prolonged disruption could impact the Gulf region, which represents roughly 20% of global oil supply, potentially creating a physical deficit and triggering stagflation through lower growth and higher inflation. Markets have reacted quickly, but the moves so far remain relatively limited, suggesting further downside risk for risky assets. With investor positioning still very long after a strong two-year rally, the current shock may represent the early phase of a broader period of volatility.