EBA opens equity-linked door
The European Banking Authority on Thursday opened the door to equity-linked issuance for banks to meet the regulator’s 9% capital buffer. The common termsheet for contingent capital instruments published by the EBA specifies the core features that instruments must have in writedown situations — but leaves open the possibility for additional optional conversion by holders.
That could give the traditional convertible bond investor base more interest in subscribing for what will otherwise be a difficult sell.
The amount of required capital to be raised from the market, or from governments, however looks like it could be larger than the October estimates. Banks will be
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