Bank Capital’s Riskiest Bonds Are Pricing Like the Safest
Executive Summary Additional Tier 1, or AT1, bank bonds are trading at near-historic tight spreads despite their complex, loss-absorbing structures. With the ICE CoCo Index offering roughly 206 basis points over benchmark rates, well below its 385-basis-point historical median,…
Executive Summary Additional Tier 1, or AT1, bank bonds are trading at near-historic tight spreads despite their complex, loss-absorbing structures. With the ICE CoCo Index offering roughly 206 basis points over benchmark rates, well below its 385-basis-point historical median,…
BELLINGS Intelligence Score: 38
Why it matters
The unusually tight pricing of the riskiest bank capital bonds (AT1) relative to their historical spreads signals a notable market dislocation that could affect credit risk assessment and bank funding costs, relevant to credit-market professionals but without immediate systemic or regulatory impact.
Sources
Connect CRE
Bank Capital’s Riskiest Bonds Are Pricing Like the Safest
Executive Summary Additional Tier 1, or AT1, bank bonds are trading at near-historic tight spreads despite their complex, loss-absorbing structures. With the ICE CoCo Index offering roughly 206 basis points over benchmark rates, well below its 385-basis-point historical median,…