AT1 perpetual bonds of banks in question
While bond investments happen based on yields (as against coupon rate), in case of AT1 bonds, it is advisable to check the PCA status and secondary market price against the face value
Over the past few years, perpetual bonds issued by banks as part of Additional Tier 1 (AT1) requirements under Basel III norms, have caught the fancy of institutional investors (mutual funds and other big boys) as well as individuals (high networth individuals and the mass affluent segment). Rightly so. This instrument presents a classic case of ‘calculated risk’ where there is a marginally higher risk but there is compensation in the form of relatively higher yield.