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U.K. Bank Bonds Ignoring Risk of House Price Drop, JPMorgan Says

Investors are underpricing risks to U.K. bank debt if house prices fall as the country moves toward leaving the European Union, according to JPMorgan Chase & Co.

A 35 percent drop in home prices could lead to principal losses on the riskiest debt issued by Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, credit strategists led by Matthew Bailey wrote in a July 1 note.