Beyond the cookie cutter
The rally in European banks’ tier one paper has become a self fulfilling prophecy. Since the first wave of hybrid buybacks began in the fourth quarter, investors have inched up the price of securities in anticipation of more cash tenders to come.
As issuers rush out buybacks before the prices rise further, the rally is fed further. But the operations are becoming increasingly less attractive.
With each point that the securities climb, banks lose a potential point of capital generation from a sub-par buyback.
Some of them have skirted around this recently,
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