Relentless rally helps AT1 extension risk hit lows

AT1
By Tyler Davies
17 Aug 2017

European banks are expected to call the first generation of Basel III compliant additional tier one (AT1) instruments, as a prolonged rally in the asset class has made refinancing conditions very attractive for issuers.

When banks price new AT1s they calculate a back-end spread using the bond’s coupon and issue price. This is the level an issuer will have to pay to investors should it keep the instrument outstanding past its first call date.

According to recent trading level data compiled by ...

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