UBS’s new $3.5 Bln ATI CoCo Bond was 10 times oversubscribed. It conclusively demonstrates the market not only has no memory, but very little understanding either. This is not a good time to be the very bottom of the bank subordination ladder.
Banks are as safe as houses, till the moment they aren’t. Investment banks think the AT1 hybrid capital market looks cheap on the basis higher rates are good for banks. Rising defaults.. not so much. Bank hybrid capital is a complex area and not for the faint-hearted or ill-informed.