AT1 Buyers Are ‘Far Too Complacent’ to Risks, Man Group Says

Investors in Additional Tier 1 bonds, the riskiest category of bank debt, may be underestimating risks relative to current market pricing, according to Man Group. AT1 spreads have compressed to levels that do not adequately compensate for the risk profile of the instruments, Man Group stated. AT1 bonds are subordinated debt that can be written down or converted to equity if a bank's capital falls below regulatory thresholds.

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