European Banks: AT1 Primer

Summary

Since their first issuance in 2013, European bank AT1s have grown into a sizeable asset class with almost €200 bn equivalent outstanding. Simon Adamson, Head of Global Financials Research, and Puja Karia, Senior European Banks Analyst, summarize the historical evolution of AT1s and dissect the current market by currency, structure, triggers, ratings, and call history. Other topics include:

• Pricing supply, accounting treatment, and the contractual features that make AT1s such complex instruments
• The main risks for investors, including principal, coupon, and extension risk
• Notable events that have shaped the market, including the March 2023 write-down of CreditSuisse AT1s