Eurozone problems weigh on bank sub debt holders

The escalating crisis surrounding Ireland and other peripheral Eurozone economies affected investor sentiment last month – particularly towards subordinated bank debt.

Holders of peripheral Eurozone subordinated bank debt were left reeling in November, as the Irish crisis ignited panic over the prospect of bondholders sharing in the pain of bank rescues. Subordinated bank debt or lower tier 2 capital was hit across the peripheral Eurozone, with Irish banks delivering the heftiest blows to investors.

Nationalised bank Anglo Irish pointed the way, after bondholders last month agreed to a bond exchange of the bank’s 2017 sub debt at a ratio of 20 cents on the