SSA bonds: A sustainable route to institutional portfolio diversification?
- The euro-denominated SSA bond universe – which often benefits from government guarantees – in our view currently offers an attractive spread pick-up over euro government bonds
- We believe SSAs present one of the best responsible investment profiles within the fixed income universe
- Adding allocation to SSA bonds could improve diversification and liquidity, in our view, and their predictable cashflows can complement both traditional credit and liability-matching portfolios
Supranational, sub-sovereigns and agency (SSA) bonds are a distinct but often overlooked sub-asset class within fixed income. We believe they can offer an attractive investment opportunity to institutional investors due to a potential improved yield over government bonds, their typically higher credit ratings and a diverse risk profile.
Many European pension funds a