Bond Alert : Unicredit SPA SGD Sub Debt

It is all grey and getting murky grey in the european bank bond world.

The Cyprus deal is setting a dramatic precedence for the bank bond market and its the senior debt holders who should be cowering now.

Unicredit just did a sub debt in SGD a couple of months back and the price has been marked on the high side at 98/99 level on this SGD corporate bond indicative price page on Bloomberg . The real market is much lower. We are talking about 95 to 97 level.

Not to raise any alarm bells because I would really like to see any SGD bond holders take on the Italian courts on the loss absorption clause yet Cypriot bank depositors were definitely not told when they opened a bank account that their money could be subpoenaed from them unless they went to made that deposit in the London or Greek branch of their local banks.

The constant changes to the rule books are starting to get slightly dreary for the markets and the SNS bankruptcy last month has rattled the sub debt market.

We have 2 european bank subs issued recently. ABN 4.7% 10/2022 rated BBB (callable 2017) and Unicredit Spa rated BBB/Baa3 5.5 07/2023 (callable 2018).

ABN is trading 103.25/103.50(3.92/3.86%). Unicredit is not so lucky.

But if the Cyprus deal does tell us anything, we better make sure the country can bail the banks out too.