Deutsche Bank jolted bond and equity investors on Wednesday when it became the first big bank to say it would not repay â¬1bn ($1.4bn) of a particular kind of bond as expected in January. http://www.ft.com/cms/s/0/0ae474aa-cc6e-11dd-acbd-000077b07658.html?nclick_check=1
They said to the bondholders they didn't ask nicely so f.u. Remember to be respectful when going to cash in your bonds, it could happen to you
http://www.bloomberg.com/apps/news?pid=20601085&sid=a69ID2.NUYxc&refer=europe Looks like it is most likely other banks holding them. Anyone know of a closed end fund holding callable bonds?
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLH25709820081217 reuters article explain well the problem imo new not senior now must have at least 200bp spread with euribor going down it's better euribor+0.88
Banks issue these as capital but to count as capital they must have at least five years to maturity, so they make them callable with a punitive rate if they don't call them. In this case euribor +88bp. Problem is most people assume they will be called and so price them as normal bonds with the call date as the maturity date. OOPs