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Yields on AT1 bonds shoot up in secondary market on MFs' liquidation move

Banks had issued these bonds as additional tier 1 (AT1) bonds to raise capital in the past

mutual funds
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mutual funds

Anup Roy Mumbai
Yields on perpetual bonds issued by banks have shot up in the secondary market as mutual funds (MFs) — the primary investors in these bonds — jostle to sell the papers to avail of liquidity.
 
Banks had issued these bonds as additional tier 1 (AT1) bonds to raise capital in the past. These bonds have a clause that if the issuer is going through financial constraints, the issuer may choose to not honour the bonds. This is precisely what happened with YES Bank in mid-March when it said AT1 bondholders won’t get their money back.
 
Now, most of such bonds

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First Published: Apr 30 2020 | 11:55 PM IST

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