Bond investors should remember that haircuts are only a last resort in EC proposals

Pain coming – but how much?

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After months of speculation, investors finally got the news many had been dreading. On January 6 the European Commission issued a consultation paper on a framework to deal with future bank failures, in which it made specific reference to writedowns of senior bank debt.

In some ways, the announcement could not have come at a worse time given the wall of bank bonds maturing in the next couple of years. According to Dealogic, European banks have to refinance EUR622.5 billion of debt this year and

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