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Deutsche Bank's Woes Threaten CoCo Coupons, CreditSights Says

  • Bank is likely to make payment in 2016 coupons on CoCos
  • Bonds, CDS, stock hurt by questions on this year's payouts
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Deutsche Bank AG may struggle to pay coupons on its riskiest bonds next year if operating results disappoint or litigation costs are higher than expected, according to analysts at CreditSights Inc. The bank said it has sufficient capacity this year and next.

Bonds and stock of Germany’s largest bank have plunged this year, with the shares shedding 39 percent of their value and its contingent convertible bonds -- known as CoCos, or additional Tier 1 securities -- turning in a similar performance. The cost of protecting the company’s subordinated debt from default for five years using credit-default swaps has more than doubled since the end of 2015, rising to 438 basis points, a four-year high, from 187.