easy · Debt Capital Markets bond-instruments-structures
A bank issues an Additional Tier 1 (AT1) bond with a 7% CET1 trigger.
If the bank's CET1 ratio falls to 6.5%, what happens to the AT1 bondholders?
- The bank must immediately pay all deferred coupons
- Their investment is either written down or converted to equity
- The bond becomes senior to all other debt tranches
- The maturity of the bond is automatically shortened to one year
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