D Bank decides not to repay €1bn bond

[Banjo]

Deutsche Bank jolted bond and equity investors on Wednesday when it became the first big bank to say it would not repay €1bn ($1.4bn) of a particular kind of bond as expected in January.

http://www.ft.com/cms/s/0/0ae474aa-cc6e-11dd-acbd-000077b07658.html?nclick_check=1

 

[Rocko1]

Anyone know what those bonds are and who's holding them?

 

[Illum]

Id bet its retail, old people.
otherwise they'd pay it.

 

[stock777]

They said to the bondholders they didn't ask nicely so f.u.

Remember to be respectful when going to cash in your bonds, it could happen to you

 

[Vinny1]

Sounds like it's time to buy some puts on DB.

 

[AAA30]

http://www.bloomberg.com/apps/news?pid=20601085&sid=a69ID2.NUYxc&refer=europe

Looks like it is most likely other banks holding them. Anyone know of a closed end fund holding callable bonds?

 

[kaciara]

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLH25709820081217

reuters article explain well the problem


imo new not senior now must have at least 200bp spread

with euribor going down it's better euribor+0.88

 

[dont]

Banks issue these as capital but to count as capital they must have at least five years to maturity, so they make them callable with a punitive rate if they don't call them.
In this case euribor +88bp.

Problem is most people assume they will be called and so price them as normal bonds with the call date as the maturity date.

OOPs