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.

It’s International Talk Like A Pirate Day, which will make it interesting for UBS trying to persuade once-bitten, twice-shy investors to buy new AT1 CoCo Bond after what happened to Credit Suisse investors.. “Arrr… You know it makes sense, young Jim-me-lad… Shiver-me-timbers… “

A 4 week old French AI has achieved a first funding round value of $240mm and that’s as cheap as chips (literally). Meanwhile, AT1/CoCo zombie bonds return from the grave of bad financial ideas, confirming Blain’s mantra: The Market Has No Memory!

Just how vulnerable are banks to further contagion and crisis? With inflation still running loose, central banks still set to hike, while consumer and corporate pressures mount, the banking crisis may only just have started.

The “rescue” of Credit Suisse, thereby averting a European banking  crisis, is getting less comment than the nixing of its $17.5 bln of CoCo Bonds. I’ve been warning about CoCos since 2011. Finally I got something right!

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.