Some investors see value in beaten-down AT1s

CoCos are trading at a discount on fears that European issuers won’t call the bonds. But buy-siders say this risk is overstated

European banks bond distress montage

Amid the fallout from Credit Suisse’s writedown of its Additional Tier 1 bonds last month, one group of investors sees opportunity.

European bank AT1 bonds plunged in value after Credit Suisse’s rescue by UBS in March. AT1s are still trading at a price that suggests other banks will ignore market convention and choose not to call the bonds at their first call date.

But some buy-siders think the chance of that happening – known as extension risk – is overpriced. And they spy a bargain in

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