About our AT1 Bonds news
Latest news on AT1 bonds, also known as Additional Tier 1 bonds, a type of bond that is issued by banks to raise capital. They are a form of hybrid security because they have both debt and equity-like features. AT1 bonds are a type of subordinated bond, which means that they rank lower in priority than other types of bonds in the event of a bankruptcy or liquidation.
The main feature of AT1 bonds is their ability to absorb losses. If a bank's capital levels fall below a certain threshold, the AT1 bonds can be converted into equity or written off entirely. This means that AT1 bondholders bear some of the risk of the bank's operations, and in return, they receive a higher yield than other types of bonds.
AT1 bonds are typically issued with a perpetual maturity, meaning that they have no set maturity date. However, there are usually call options that allow the bank to redeem the bonds after a certain period of time. AT1 bonds are also subject to regulatory approval, and banks must meet certain capital requirements to be able to issue them.
They are also known as contingent convertibles or cocos, because they can be converted into equity or written down to zero if the bank's capital ratio falls below a certain threshold. AT1 bonds are risky but offer high yields to investors. However, they can also be wiped out in extraordinary circumstances, such as the recent takeover of Credit Suisse by UBS, which left AT1 bondholders with nothing while shareholders received some compensation.