A portfolio manager at Crispin Odey's Odey Asset Management has become the latest alternatives investor to gain an appetite for contingent capital bonds, new financial instruments that convert into equity should a specific event occur.

James Hanbury, who runs the CF Odey UK Absolute Return Fund, has built an 8% position in 10 year Lloyds Banking Group Enhanced Capital Notes, which yield 9.8% a year to maturity, according to his most recent letter to investors. The instruments will convert into equity if Lloyds' core tier one ratio falls below 5%.