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.