What’s leading to mispricing of AT1 bonds?
Conditional coupon clauses with complex product structure keep investors on edge
Not too long ago, some exempted provident funds (PFs) and corporates invested in Basel III Tier 1 bonds (also known as Additional Tier 1, or AT1 bonds) at far higher prices — or lower spreads over government securities — than what the market could have offered.What caused the mispricing? They perhaps feared two things: a faster fall in interest rates, and higher annual interest payments to subscri...
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