AT1 from banks including Commerzbank, HSBC Holdings and UniCredit were among leading gainers following a recovery in Asia.
The asset class on Monday suffered its biggest loss on record, according to an index tracking European bonds, after a UBS takeover of Credit Suisse wrote down 16 billion Swiss francs of the lender’s AT1s, even though shares weren’t wiped out entirely. The deal raised questions among investors about legal certainty in Switzerland.
In the US, HSBC’s 8 per cent perpetual CoCo bond rose 8 cents on the dollar to about 96.5. It echoes similar moves in Asia, where Westpac’s perpetual bonds rose alongside those of AIA Group. “In the US we are dealt with the double whammy of regional bank stress and the 100 per cent write-off of Credit Suisse AT1s,” said Kakuda in a phone interview on Tuesday. “The sentiment is it’s probably better to be more senior in the capital structure versus reaching for yields in this environment.”
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