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Descending to greater heights

With many credits offering disappointing returns, subordinated bank debt is revelling in a surge in demand from yield-hungry investors. But some managers have resisted the temptations of tier one debt, cautioning against its risk and return. Hardeep Dhillon reports

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The banking sector has long been viewed as a safe haven in the face of turbulent market conditions. So it is not beyond the realms of reason that, in the search for higher yielding paper, investors’ attention has turned to subordinated bank debt. Investor appetite has meant the sector has seen significant growth in recent years and European new issuance totalled some e40 billion in 2001.

With the

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