Deutsche Bank’s Assurance Exposes Tip of CoCo Iceberg: Analysis
CoCo problems show the extent to which investors have been chasing yield down the capital structure.
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The volatility and credit spread gyrations seen in the financial space over the past 24 hours may be the consequence of more than just investor unease over Deutsche Bank AG’s ability or otherwise to meet obligations on its riskiest bonds and other debt service costs, Bloomberg strategist Simon Ballard writes.
Rather it probably highlights the extent to which investors have chased yield down the capital structure over the past couple of years and are now left exposed to possible re-pricing risk.