The report provides a comprehensive valuation guide and market update for subordinated bank and insurance bonds, including AT1, RT1, and Tier 2 instruments.
Key Takeaways
- 1.Subordinated bank bond spreads widened over the past week (AT1 by 2bps) despite solid 1Q26 results from several European banks.
- 2.Major European banks BNP Paribas, NatWest, HSBC, and BBVA reported generally solid 1Q26 performance with robust revenue drivers.
- 3.Restricted Tier 1 (RT1) insurance hybrid bonds lack redemption incentives (step-ups), and loss absorbency occurs via equity conversion or write-downs.
Table of Contents
- Highlighted research
- Highlighted education notes
- Current view on Financial capital
- Recent new issues
- Attractive rated USD bonds
- Attractive rated EUR bonds
- Hold-to-maturity recommendations USD bonds
- Hold-to-maturity recommendations EUR bonds
- Changes to bond recommendations
- RT1 bonds overview
- Hybrid bonds overview
- Dated Tier 2 bonds overview
- Issuers mentioned in this report
- Introduction to Financial Capital
- Methodology
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Authors
Elena GuglielminSebastian PetrichClaudia Sigl
Securities
Banco Santander T2Charles Schwab T1Allianz RT1American Express T2 Bond
Themes
Subordinated Debt Spread WideningEuropean Bank Earnings ResilienceLoss Absorbency and Regulatory Capital
Regions
EuropeUKNorth AmericaUnited StatesUnited KingdomFrance