SYDNEY, May 27 (Reuters) - Pimco, one of the world's biggest bond investors, is upbeat on Australian dollar bank subordinated bonds because they offer more reasonable valuations compared with two years ago, but it sees no value in government bonds paying negative yields.
"The whole bank capital structure in the financial sector is improving with bond holders becoming more senior," Robert Mead, managing director and head of Pimco Australia's portfolio management, told Reuters on Friday.
"Spreads in Tier 1 and Tier 2 capital represent value," he added.
Tier 1 and Tier 2 notes are issued by banks to form part of their regulatory capital which act as buffers to protect depositors. Noteholders rank ahead of shareholders.