LONDON, April 3 (Reuters) – Customary Chartered (STAN.L) has redeemed a $1 billion so-called further tier one (AT1) bond in a transfer introduced earlier than holders of comparable securities had been worn out in final month’s rescue of Credit score Suisse.
The Asia and Africa-focused financial institution exercised its choice to redeem the securities on April 2, it mentioned in a inventory trade submitting on Monday, having initially flagged its intention earlier than the latest bout of banking sector turmoil.
The $275 billion world marketplace for AT1 bonds, a part of financial institution capital buffers that insulate taxpayers from funding bailouts, was rocked by Swiss authorities’ resolution on March 19 to write down down $17 billion of the Credit score Suisse securities.
Jitters over the worth of AT1 bonds have since despatched their costs to report lows.
Banks usually redeem AT1 bonds on the earliest alternative, analysts have mentioned, that means StanChart’s resolution to name its bond as deliberate may present some reassurance.
Issuing new AT1 debt might be very costly for banks till the market regains extra confidence, analysts have mentioned.
StanChart didn’t say in its submitting whether or not it intends to difficulty a substitute AT1 bond and the financial institution didn’t reply instantly to a request for remark.
The financial institution’s CEO, Invoice Winters, final month informed a monetary discussion board in Hong Kong that the Swiss resolution to wipe out AT1s – taken as a part of an emergency rescue of Credit score Suisse by rival UBS – would have wider implications for sector regulation and the way banks handle themselves.
In step with a big a part of the AT1 market, different AT1 debt issued by Customary Chartered touched a report low – in an indication of the broader stress available on the market – on March 24, buying and selling at 88 cents on the greenback. The notes had been buying and selling as excessive as 103 cents on the greenback at the beginning of March.
Reporting by Iain Withers and Chiara Elisei
Enhancing by David Goodman
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