Commerz feels regulatory bite as premium soars for tier two

11 Mar 2011

Investor hostility to tier two bank debt was plain to see this week as Commerzbank priced a Eu1.25bn deal with a shocking 250bp premium to its senior paper. The deal provided stark evidence of how expensive tier two capital is set to be in the brave new world of resolution regimes and harsher capital regulation.

The bond, which was part of a wider tier two capital optimisation exercise by the borrower, was the first deal to be priced in Germany since the country introduced a bank resolution regime at the beginning of the year. The result was that the issuer had to pay ...

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