The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Editor's letter: Covered bonds bail-in free

Bank debt bail-ins have prompted fierce debate in the banking industry and among fund managers. Spend time in the company of a bank-funding official or an investor in bank debt and it doesn’t take long for them to get a little hot under the collar.

On a recent visit to a prominent London fund manager, Euromoney watched one portfolio manager pound his fist on the table, incredulous that regulators were proposing to turn senior debt instruments into something that begins to resemble equity. Anathema is a word that springs to mind.

As a recent survey of investors conducted by JPMorgan shows, many investors see senior bank debt as less investable if bail-ins are imposed. That’s a worrying prospect for global banks seeking $3 trillion of funding by the end of next year. It raises the question of what will remain an investable asset within the bank debt universe?

The answer could be covered bonds. In theory, covered bonds can’t be haircut – that is, unless you radically change the law.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to and analysis and receive expertly-curated updates direct to your inbox.


Already a user?

Login now


We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree