Germany explores senior non-preferred debt option

Author: | Published: 24 Apr 2017

The new asset class introduces an additional layer of bail-inable debt but doubts remain as to how it should be regulated

For the past four years, banks have focused on issuing common equity tier 1 (CET1 ie common shares), additional tier 1 (AT1 also known as CoCo bonds) and tier 2 (supplementary) capital instruments as provided for in the Capital Requirements Regulation (CRR) to meet their regulatory requirements. Recently, such a spectrum of asset classes has been broadened. Latest headline news refer to senior non-preferred bonds – an asset class issued by European banks that is news to many European capital markets. As senior non-preferred bonds become increasingly en vogue, the rationale behind the creation of this new asset class needs to be looked into, as do specific issues arising with respect to the still evolving legislation providing for them with a particular focus on the German angle....



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