AT1 tourists should read the Ts and Cs
Improving bank credit and tightening in other asset classes have widened the appeal of additional tier one (AT1) paper. But newcomers should make sure they price in the risks of resets and call options.
Take two outstanding AT1s reaching their first call option at the same time from banks with similar credit profiles. Why should one trade way above another? Because of the differences in their structures.A bond not redeemed at the first call date thereafter pays the original coupon minus ...
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