Below Par — Capital-Gain Kicker

Discounted USD coupon bonds (price ≤ 92) with a 2–7Y tenor and BB+ or better rating.

In an environment where interest rate volatility remains a primary concern, deepdiscount USD bonds offer a compelling structural advantage for totalreturn portfolios. By targeting highquality issuers trading significantly below par, investors can capture a dualsource return profile: a steady coupon income coupled with a substantial capitalgain kicker as these instruments pull to par at maturity. This strategy effectively shifts the riskreward dynamic, providing a defensive cushion through price appreciation while maintaining exposure to investmentgrade credit. The current selection highlights significant value within the financial and utility sectors, particularly among toptier global institutions. For instance, highrated entities like KDB (AA) and KORELE (AA) offer yields to worst in the 4.1% range, providing a stable anchor for fixedincome allocations. Meanwhile, Japanese financials such as MUFG and SUMIBK present attractive entry points with yields to worst ranging from 4.5% to 4.6%. These bonds allow professional investors to lock in longterm credit risk at depressed prices, optimizing the path to par while benefiting from the robust credit profiles of these systemic global players.