2014: the year of AT1

Author: Danielle Myles | Published: 27 Feb 2014
  • This is the year that contingent convertible bonds (CoCos) will become mainstream;
  • A number of European countries are expected to confirm that coupons are tax-deductible in the coming months;
  • But some believe investor appetite will be the primary factor that determines which jurisdictions issue the most bank capital this year;
  • CoCo-linked indices will be a sign of a maturing market.

Bank capital investors and issuers should prepare for a busy 10 months, as some of Europe’s biggest market players tip 2014 as the year regulatory capital comes of age.

Long-awaited clarity on the tax deductibility of coupons in key jurisdictions, including Germany, is expected by summer. This would unlock the Additional Tier 1 (AT1) market to some of the region’s biggest issuers, and pave the way for the asset class's maturation....