YES Bank recast scheme: Additional tier-I bonds see spike in yields

Market participants say ask yields for other large-sized banks' AT-1 bonds have hardened further

The yields on banks’ additional tier-I bonds (AT-1), also called perpetual bonds, have started to see a spike in the light of the Reserve Bank’s (RBI’s) move to propose write-down of YES Bank’s bonds as part of its reconstruction scheme.
 

Among the AT-1 bonds issued by banks, State Bank of India’s (SBI’s) perpetual bonds have seen a 150-170 basis points (bps) spike in yields. “The jump in SBI yields is indicative of AT-1 bond market, as it is among the most traded AT-1 bonds and has the lowest risk-perception among the AT-1 bonds trading in the market,” said a fund