Canada Banks Urged to Limit Early Redemptions on Hybrids

Canada’s banking regulator urged the country’s lenders to avoid early redemptions of so-called hybrid bonds, which have plunged in the last six months on concern the lenders may buy the notes back at below current prices.

Banks are urged “to the maximum extent possible” to redeem “instruments at their regular par redemption date” rather than relying on redemption “due to a regulatory event,” the Office of the Superintendent of Financial Institutions said today in an advisory on its website.