Last week’s proposal on regulatory capital instruments by the Basel Committee on Banking Supervision could harm the market for subordinated bank debt, bond investors have warned.
Despite broad acceptance of the proposal’s aim to ensure that, in future, creditors pay for bank losses before taxpayers, investors are worried that the initial consultative paper lacks clarity in key areas and makes it hard for investors to run risk scenario tests on subordinated debt.
“It is quite a stance [the regula
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