RSS feedsubordinated bonds
’CoCo tastes different in Yorkshire
There’s a much more substantial test looming on the horizon for CoCos — the new darlings of the bank capital universe.
Yorkshire Building Society announced on Tuesday that it’s set to finalise a deal to take over its loss-making rival Chelsea.
Allied Irish Banks’ burden-sharing bonus
Burden sharing for European bondholders is something the market has become extremely familiar with in recent months.
So Allied Irish Bank’s announcement on Tuesday morning, that it has agreed to the European Commission’s request that it should not make discretionary coupon payments on its Tier 1 and Tier 2 capital bonds,
The slow march of the Moody’s hybrid downgrades
Watch out for those Moody’s hybrid debt downgrades!
They are coming:
Sydney, November 17, 2009 — Moody’s Investors Service has published its revised methodology on the way it rates the hybrid securities and subordinated debt instruments issued by banks.
I should not have CoCo-ed?
As outlined in our criteria, we do not consider contingent capital securities to be a form of common equity. We can include them as hybrid equity depending on their exact features. If the conversion trigger is set at a level that we think would lead to a conversion occurring too late,
Beware the hidden hybrids
Apparently they are not always obvious, as the below press release, from Moody’s, demonstrates.
And spotting hybrids is an important issue right now given that the European Commission is determined to impose the concept of burden-sharing on bondholders — forcing them to share some of the pain involved in state bank bailouts.
Contingent capital comes to pass, with a little help from the EC
And so it began — the Lloyds statement detailing the bank’s plans to raise contingent capital is out.
This is a concept still confusing the market even as it’s gaining increasing prominence with regulators.
Burden sharing for bondholders lives!
Remember the hybrid debt, or subordinated bond, attack launched by the European Commission against certain Euro-area banks?
The Commission wanted bank bondholders to share some of the pain of government bailouts,
Capitalising on recapitalisation…
… is something that can be done by buying European banks’ Tier 1 bonds — even hybrid ones — according to Société Générale credit analysts.
The whole thesis is based, firstly, on the idea that under new regulation (the strengthened Basel II,
`There’s no free lunch in credit anymore’
So say Deutsche Bank credit analysts Jim Reid and Nick Burns.
They’re looking into credit markets in a note out on Wednesday, and specifically whether the markets have normalised since the start of the credit crisis and the collapse of Lehman Brothers one year ago.
KBConfusion
What fresh hybrid debt hell is this?
KBC Bank has today launched tender offers in certain countries in Europe and, in respect of one security, in the United States of America to repurchase four series of outstanding hybrid Tier-1 securities with a total nominal value of approximately €1.6 billion.
Adventures in hybrid debt, fixed income fund edition
So who buys banks’ hybrid, or subordinated, debt?
Fixed income funds (FIFs), for a start. And S&P’s just-released report into UK FIFs makes for an interesting illustration of what’s been going on in the sector.
Tear down this hybrid capital wall
The crackdown on hybrid capital begins and the Basel Committee on banking supervision is on the case.
From the FT:
The rules will force banks to substantially improve the quality and extent of the capital buffers they hold to absorb shocks.
Santander subordinates on siesta
What’s red and white and doesn’t redeem itself ’till December?
A Banco Santander LT2 callable bond!
Santander’s announcement last week, that it would not be calling one of its subordinated bonds,