The tech bros can’t/don’t/won’t believe that boring old traditional institutions like central banks can actually achieve their policy ends. They HAVE TO believe that only tech bros are smart.
I saw something yesterday that a group of midsized banks are asking that all deposits are fully insured for the foreseeable future.
Today I learned about AT1 bonds. Imagine owning a bond that gets zeroed out while equity holders get paid.
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Additional tier 1 bonds—also known as contingent convertible bonds, or CoCos—were introduced after the financial crisis as a way to transfer banking risk away from taxpayers and onto bondholders.
They are complex financial instruments that were designed to be converted to equity or written down if trouble at an institution emerges. They have grown popular with European banks and investors in recent years because of the extra yield they tend to offer.
Just amazing stuff. A convertible bond that just gets wiped out instead of converting. Finance Twitter is claiming that the possibility of an outcome like this was widely understood when these things were introduced, but I’m skeptical that the average investor chasing yield read the fine print.
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Would be curious if they put their wealth management clients in this garbage.
LOL beat me to it. I did not even read past that part.
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Free coffee and well stocked snack bars in the bank for active account holders would a put an end to this fast.
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hey at least they have a fun name
AT1 bonds, also known as contingent convertibles or “CoCos,”
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Lol. “I wanted the higher yield but not the downside risk!”
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Who were the primary owners of those bonds? Have to imagine retail investors or they would not have been wiped out otherwise
Timeshare scams and timeshare exit scams, with a cameo by everyone’s BFF Dave Ramsey.
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Turns out AT1 bond holders were not, in fact, in love with the coco.
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Eleven big banks banded together last week to deposit $30 billion in First Republic in an effort to restore confidence in the lender. The San Francisco-based bank’s customers have withdrawn some $70 billion since the collapse of Silicon Valley Bank earlier this month, The Wall Street Journal previously reported.