Cocos market is back on the move
📍 The AT1 bond market is once again gaining momentum among banks. After several central banks criticized the procedure followed with Credit Suisse CoCos by FINMA and Swiss National Bank, a large Japanese bank (Sumitomo Mitsui Financial Group) has just announced an additional issue of AT1 bonds worth $1.04 billion in two tranches of 5 and 10 years.
📍 This is an important step for CoCos world as it is the first major issuance (after the purchase of Credit Suisse) by a major bank. So far, this new issue has been well received by the market and demonstrates the great strength of the Japanese financial system.
📍 Although this is good news for banks, the reality in the US and Europe is different from that in Japan. It should be remembered that unlike the ECB and the Fed, the Japanese central bank continues to maintain a very loose monetary policy. Moreover, the fact that Switzerland is part of Europe makes investors doubt that an event similar to the Credit Suisse CoCos could happen again.