Why are banks buying back their own debt?


Banks issue a wider array of bonds than most “normal” companies. Regulation, especially after the financial crisis, has created different classes of debt that serve a variety of purposes. 

Riskier bank bonds are designed in such a way that they take or “absorb” losses when financial institutions run into trouble, and they pay investors a high coupon to compensate for this risk.


New rules for bank debt mean that senior unsecured debt — previously close-to-untouchable in a crisis and ranked alongside deposits — is now exposed to losses when banks fail. These new rules are being implemented in different ways in across Europe.


FT 3 March 2016

Why coco bonds are worrying investors 

FT February 9, 2016

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