Tikehau Capital launches Tikehau 2029, a new dated fund composed of Investment Grade issuers

24 November 2023

Tikehau Capital, the global alternative asset management group, is launching Tikehau 2029, a new 2029 fixed maturity product as part of its Capital Markets Strategies business. Tikehau 2029 is the sixth dated fund launched by Tikehau Capital since 2011.

INVESTMENT GRADE ISSUERS

Based on a “Buy and Hold” approach, the philosophy of the Tikehau 2029 fund is to invest only in bonds issued by issuers initially belonging to the Investment Grade category. The fund will invest primarily in bonds maturing in 2029. At the end of the fund’s lifetime, the bonds in the portfolio will have a residual maturity of no more than 6 months (final maturity of the product or early redemption options at the fund’s discretion). Tikehau 2029 will also remain open to subscriptions and redemptions throughout its lifetime.

The historic rise in interest rates over the past 18 months has made bond yields, particularly for Investment Grade bonds, attractive once again. Indeed, these issuers continue to display robust fundamentals against a backdrop of economic slowdown and higher financing costs. Simultaneously, central banks appear to be nearing a point of inflexion in their rates hike policies, even if they monitor inflation and job market trends closely. Long-term interest rates have risen sharply in recent months, reaching their highest level in the US since 2007 and in Europe since 2011. While this upward trajectory in rates may not have concluded, the current levels present an advantageous opportunity
for positioning.

“Against this backdrop, we wanted to leverage on our historical expertise in managing fixed maturity products, by offering investors a strategy positioned on Investment Grade bonds and longer maturities in order to increase the duration8 of their investments, while financing quality issuers according to our analysis,” said Laurent Calvet, Head of Fixed Income and Fund manager of Tikehau 2029.

EXPOSURE TO THE FINANCIAL SECTOR

The fund also targets exposure to the financial sector on both the senior and subordinated (limited for its part to a maximum of 30%) segments. Subordinated financials, which is a strong and longstanding area of expertise for Tikehau Capital, continues to offer an attractive risk/return profile in our assessment. This is due to the quality of banks’ results observed over the past few quarters, as well current market entry point.

In addition, Tikehau 2029 may invest up to 25% of its net assets in high-yield debt securities with speculative characteristics, issued solely by issuers initially belonging to the “Investment Grade” category.

The launch of Tikehau 2029 is in line with our existing product range and draws upon our recognised expertise: both in terms of format, since this is the sixth dated fund launched by Tikehau Capital in over 10 years, and in terms of fundamental credit analysis, carried out by a team of 19 experts.

Source: Tikehau