TLAC callables all the rage

摘要

US banks unleashed a torrent of callable senior debt in US dollars and euros this week, finding strong investor demand for the structure, which is designed to cut the cost of new regulations. Banks issued more than US$10bn-equivalent of senior debt with call options one year before maturity - intended to allow them to redeem the debt before it stops counting towards their Total Loss Absorbing Capacity requirement. Market participants said the structure was clearly now accepted by investors and issuers alike - despite the fact that the Federal Reserve has not yet released its final TLAC rules. "It is here to stay," said a syndicate banker involved in one of the deals. "It will be a large component of US bank issuance going forward."