up call to sub debt market

LONDON, Feb 6 (IFR) The Dutch government shock canada goose clearance move to wipe out SNS Reaal junior bondholders has prompted a sharp buy canada goose jacket cheap widening in subordinated bank spreads canadian goose jacket which could ultimately make it more expensive for some banks to beef up capital buffers, bankers say.

Tier 1 canada goose uk black friday and Lower Tier 2 SNS Reaal bonds sank close to zero and the widening in subordinated bank bond spreads accelerated, after Canada Goose Outlet the Dutch Finance Ministry said on Friday it was nationalising the bank and would expropriate a number of its securities.

SNS Reaal 11.25% perpetual callable in November 2019 and its 6.258% perpetual callable in July 2017 are now jacketstock canada goose black friday sale bid at canada goose uk outlet less than 1 point on a uk canada goose price basis, according to Tradeweb.

had expected less drastic action before the government resorted to nationalisation, said Simon Adamson, an analyst at independent research firm CreditSights. a tender offer, for the subordinated bonds, rather than expropriation.

Haircuts of around 80%, as were imposed on Irish cheap canada goose uk subordinated bank bonds back in 2010, were canada goose coats considered to be a more likely outcome. Some hedge funds are believed to have positioned for a similar coercive tender, and have been left badly burned having made the wrong bet.

SCARY PRECEDENT Experts now fear that the Canada Goose Parka Netherlands has set a precedent, canada goose store especially as the government has proved it is Canada Goose Online possible to change national laws on bank debt even before the EU resolution regime becomes buy canada goose jacket effective in 2018.

Adamson said the move proved willingness of politicians and regulators to use their new powers to intervene.

The market is already assessing which other bank bonds could be vulnerable. SNS rival ABN subs have come under pressure.

to this precedent the downside recovery for Lower Tier 2 was generally assumed to be 20%. This canada goose coats on sale should now be 100%, BNP Paribas credit strategists said.

This could put pressure on troubled lenders such as Bankia and cheap Canada Goose other distressed Cajas, Monte dei Canada Goose Coats On Sale Paschi, and HSH Nordbank, and canada goose clearance sale as a result investors may be justified in demanding higher yields to canada goose factory sale buy their bonds.

CORE THREAT However, some analysts argued that subordinated bondholders in core European jurisdictions were most at risk, as peripheral countries are more nervous about destabilising their fragile banking sectors and the risk of contagion.

The Netherlands is one of only four eurozone countries along with Germany, Finland and Luxembourg still assigned the highest Canada Goose online credit rating by all three major rating firms after a slew of downgrades during the bloc three year old debt crisis.

European regulators tend to take the capital structure very seriously, said one hybrid capital banker.

1 and Tier 2 is created as a buffer for situations just like this, and I think we are likely to see other regulators performing similar moves should they canada goose need to.

SENIOR RELIEF The only comfort was that SNS Reaal senior bondholders were left untouched hence the relative stability of senior spreads.

fact that they (Dutch government) chose not to explore canada goose outlet haircutting the bank senior bondholders will provide some comfort to investors if it comes to other regulators looking at precedents in future, said Rupert Carter, FI syndicate banker at Societe Generale.

The iTraxx Subordinated Financials index widened by 47bp over the past two weeks, Canada Goose Jackets while the spread to the Senior Financials Index moved out Canada Goose sale sharply to 115bp. Although that margin is still canada goose uk shop well below the wides of 209bp seen in May 2012, it is a long way from the 78bp tights from early uk canada goose outlet January when investors grew more confident in the health of the financial sector and support from governments.

Denmark is so far the only country to have imposed loses on senior bondholders, but even then in 2011, a sharp sell off prompted the government to retract bail in language. (Reporting by Aimee Donnellan Christopher Whittall; Editing by Natalie Harrison, Julian Baker).