Banks Embrace High-Risk Bonds.

Banks are changing their approach to AT1 bonds, which are high-risk perpetual bonds that were typically repaid after five years. Some smaller banks are no longer repaying the bonds and opting instead to keep them open-ended beyond five years and paying interest on them instead. This trend highlights the vulnerability of global finance as it grapples with rocketing borrowing costs and the impact of war in Ukraine. The wipeout of billions of dollars of Credit Suisse AT1 bonds still reverberates around this market, which is estimated at roughly $275 billion.