2) Existing AT1 holders will start dumping their stock in fear of similar subversion in future as well.
3) This can lead to a potential escalation in yields. Raising Cost of capital in future for other players
4) There have been cases of PSU bank mergers previously as well
3) This can lead to a potential escalation in yields. Raising Cost of capital in future for other players
4) There have been cases of PSU bank mergers previously as well
But never have AT1 bond holders suffered like this. Even the interest payments were not missed, leave aside capital being eroded.
5) Completely marking down the value to zero and keeping equity at 10Rs is not a legally tenable course of action.
5) Completely marking down the value to zero and keeping equity at 10Rs is not a legally tenable course of action.
6) Changing the capital structure unilaterally ushers in a unique scenario which changes the way financing has been done or taught.
7) Not sure how deeply it will impact PSU banks in future who raise a lot of AT1 capital. Cost will increase dramatically and will hit them badly.
7) Not sure how deeply it will impact PSU banks in future who raise a lot of AT1 capital. Cost will increase dramatically and will hit them badly.
8) Finally, think of those investors who thought bonds were atleast safer than equity -- are they wrong in thinking this ?
9) Debt investment for HNIs in this country are gradually becoming taboo with so many defaults. Why should anyone invest in debt (read credit) products
9) Debt investment for HNIs in this country are gradually becoming taboo with so many defaults. Why should anyone invest in debt (read credit) products
10) Credit risk, interest rate risk etc etc - and now deal with "regulator whims & fancy" risk as well, before investing in debt products !
#YesBankcrises #RBI #Banking
#wealthmanagement #bonds
#personalfinance
#YesBankcrises #RBI #Banking
#wealthmanagement #bonds
#personalfinance
