Yields on Deutsche Bank CoCos rise to more than 13%
Investors feel pain as yields soar from 7.5% at start of year while shares plummet 40% in same period
London
WHEN European regulators created a new type of bank debt, the idea was to transfer risk from taxpayers to investors. Now, bondholders are learning what that really means.
Yield-starved investors bought US$102 billion of the contingent convertible bonds (CoCos), securities created to help troubled banks hang on to cash in times of stress by skipping coupon payments without defaulting and converting the debt to equity or writing it down. Even though neither of those has yet happened, investors are already feeling the pain, as yields on Deutsche Bank AG's 4.6 billion euros (S$7.2 billion) of CoCos have soared and its shares have plummeted.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Great Eastern chairman appeals for patience as shareholders fume over share price ‘disaster’
S&P Global first-quarter profit beats estimates on strong product demand
Thai banks cut rate for some borrowers after push from PM
Money laundering accused who faces 22 charges to plead guilty on May 14
BNP Paribas beats estimates as lower costs offset trading slump
Japan brokerage Daiwa’s Q4 profit more than doubles as markets recover