Bond squeeze threatens risk-reward dynamics in senior bank paper

By Tyler Davies
22 Jan 2020

Investors have been showing a clear preference for subordinated bank bonds in the primary market, with the valuations for more senior asset classes having been squeezed into extraordinarily tight levels in 2020.

Spreads on newly issued senior notes have been rallying hard in recent days as markets have shrugged off various sources of potential risk, including renewed fragility in Italian politics and the emergence of the coronavirus in China.

A €1.5bn seven year non-preferred senior bond issued by Société Générale ...

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