Additional Tier 1 bonds are seeing a resurgence in Asia following the Credit Suisse collapse, but now investors are looking for local insurances and systemically important banks to ensure the safety of the investments.
Across Asia, AT1s have proven an attractive bond due to their higher rates and the comfort of investing in a recognised institution, like a global bank. Also called contingent convertible or coco bonds, the investments can be converted from bonds into equity, but only if certain conditions are met. With an in-built loss-absorption mechanism, AT1s are among the highest yielding bonds, due to the additional risks.
