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Post by gravitykillz on Feb 21, 2019 8:44:23 GMT
After doing some research i found that AT1 bonds are more risky than standard bonds. At1 bonds can be devalued at any time the bank or the regulators think the bank is low on cash. Especially during uncertain times like now! Brexit is bringing alot of uncertainty. AVOID.
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jaswells
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Post by jaswells on Feb 21, 2019 9:02:24 GMT
Which bonds on the wisealpha website are AT1 bonds. What history is there of banks devaluing these?
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Post by gravitykillz on Feb 21, 2019 9:12:46 GMT
When you go to main market and select perpetuals. Just google at1 and do your own research. Not sure if any bank has devalued them so far. Just found them alot riskier than standard bonds as at1 bonds can be devalued when the bank is still alive.
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Post by gravitykillz on Feb 21, 2019 9:14:28 GMT
Was thinking of investing in them until i did some research because i was unsure what at1 meant.
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kaya
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Post by kaya on Feb 21, 2019 9:17:53 GMT
Hey, what great way to avoid paying your debts!
But what else should we expect from the banksters that now run the show.
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rick24
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Post by rick24 on Feb 27, 2019 12:47:42 GMT
I would expect the kind of crisis where the bonds would be converted/cancelled or not pay their coupon to be where the bank is in imminent danger of collapse (2007/2008?). Not sure that Brexit is that kind of crisis.
Most banks now have a better cushion than they did at the time of the financial crisis. They have to meet higher regulatory requirements and undergo "stress tests".
I would say these bonds are intended to ensure that the taxpayer is less likely to have to bail them out.
The conditions are clearly stated in the prospectus, which should be read.
Personally, I decided to take a punt in an amount that I wouldn't miss if I lost it.
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Post by gravitykillz on Feb 28, 2019 10:54:19 GMT
Fair enough if you are willing to risk losing your money. But there are many amateur investors who just look at the rate and dont read the prospectus. I mean just yesterday i was looking at the problems with metro bank. Its shares have plummeted recently due to accounting errors. Yet its bond is still available on wisealpha. Is that wise  |
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macq
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Post by macq on Feb 28, 2019 11:40:43 GMT
and then a couple weeks after that news came out something called The Independent Banking competition Remedies Body gave them £120m so someones taking an even bigger chance (RBS money as part of it's govt bailout)
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Post by gravitykillz on Mar 1, 2019 10:40:29 GMT
I would expect the kind of crisis where the bonds would be converted/cancelled or not pay their coupon to be where the bank is in imminent danger of collapse (2007/2008?). Not sure that Brexit is that kind of crisis. Most banks now have a better cushion than they did at the time of the financial crisis. They have to meet higher regulatory requirements and undergo "stress tests". I would say these bonds are intended to ensure that the taxpayer is less likely to have to bail them out. The conditions are clearly stated in the prospectus, which should be read. Personally, I decided to take a punt in an amount that I wouldn't miss if I lost it. Hi everyone, first post here. I invest on the platform and equity of WA.
I have also taken a similar position on 2 Bonds. One I felt was likely to be able to work through it's presnt troubles, or be forced to merge, the other after reading commentary on the debt. A belief that it was better capitalised than many believe ( commentary from a large high yield bond fund).
Certainly a "wipe out" wouldn't give me a sleepless night.
I look forward to following the discussion here.
Just out of curiousity which banks did you invest in ? I was thinking of santander and barclays.
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rick24
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Post by rick24 on Mar 1, 2019 11:18:26 GMT
I'm not too worried about the solvency of Santander and Barclarys. Tier 1 capital, a core measure of strength, is around 15 and 17 respectively.
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Post by gravitykillz on Mar 1, 2019 11:19:56 GMT
Just tried to invest in barclays and santander and was not permitted due to my retail investor categorisation. I guess wisealpha do have safeguards. Well done.
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rick24
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Post by rick24 on Mar 1, 2019 11:21:23 GMT
One question I would have though is whether these instruments will qualify for the next upgrade to the regulations and what happens if they don't. I don't remember in detail what it said in the prospectus but I'm pretty sure it is in there. I think they would issue equivalent securities but I can't swear to it. Certainly worth checking it out.
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