What’s the canary in the overpriced-asset coal mine? One obvious tweety bird is the riskiest type of bank debt, known as perpetual additional tier one bonds. These securities allow regulators to wipe out investors if a bank fails, but to compensate they offer the highest yields for lending to financial firms. This specialized asset class’s credit spreads are tightening despite a surge in issuance. But it’s not the red flag you might at first think.
www.bloomberg.com
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Risky Bank Debt Is Rationally Exuberant
