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Deutsche Bank's CoCo Payments Hinge on Obscure Accounting Metric

  • German accounting law defines `Available Distributable Items'
  • Limit to coupon payment unrelated to EU law and ECB oversight
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There's a Time to Bet on Deutsche Bank... But When?

Deutsche Bank AG’s ability to pay the coupons on its 4.6 billion euros ($5 billion) of additional Tier 1 bonds hinges on an accounting metric that is separate from the standard results investors focus on.

The limiting factor for the bank’s capacity to make coupon payments -- which aren’t mandatory, unlike interest payments on senior debt -- are its “available distributable items,” a category defined in Germany’s commercial code.