Bright light of AT1 yields blinds buyers to product’s risks
FIG investors this week gave a clear indication that they would do pretty much anything to get their hands on some yield, placing a whopping $25bn of orders for Crédit Agricole’s $1.75bn debut additional tier one trade as they chased the prize of a 7.875% coupon from one of France’s best-known financial institutions.
The buying bonanza prompted a range of incredulous reactions among FIG market participants, with some claiming the deal was mis-priced and others warning that the market was not demanding enough premium for the growing range of risky subordination features being introduced into AT1 products.
But one thing everyone
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