The Phaserl


Bank bond investors should fear fast-tracked EU bail-in

Contagion effects hugely underestimated

by Helene Durand and Aimee Donnellan, Reuters:

European Union plans to force bond investors take their share of losses in failing banks by 2016 could risk undermining appetite for bank debt and make it more difficult for weaker lenders to fund themselves, credit market experts said.

EU plans agreed late on Wednesday mean bondholders will be on the hook two years earlier than expected for any bank that hits trouble. The so-called “bail-in” of bondholders is aimed at ensuring all investors not just shareholders bear the brunt of saving a bank, sparing taxpayers.

The credit market has not yet come to terms with the full implications of the EU bail-in plan.

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