BIS paper says reform to AT1 instruments ‘may be necessary’

Actual use of contingent bonds may clash with their original purpose, authors say

Credit Suisse offices

Convertible debt instruments known as “AT1” may need to be redesigned as their actual use in many jurisdictions seems to clash with their original purpose, authors with the Bank for International Settlements say in a new paper.

Rodrigo Coelho, Jatin Taneja and Rastko Vrbaski review the use of AT1 instruments in various jurisdictions. The instruments convert to equity when triggered, and were originally intended as a way of restoring an insolvent bank to a going concern.

But AT1 instruments

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