AT1 Bonds

AT1 bonds are typically targeted at High Net Worth Individuals (HNIs) and institutional investors due to their high-risk nature and significant investment requirements.

Banks use AT1 bonds to secure a stable capital source while maintaining flexibility in managing their capital structure.

AT1 bonds are considered high-risk instruments for investors, especially retail investors. They can be written down by banks, as directed by regulatory authorities, in case of institutional failure. In the event of non-viability, AT1 bonds are the first to be written down, leading to potential losses for investors. As seen in the cases of Yes Bank and Credit Suisse, these bonds can be written down by banks, following regulatory directives, in case of institutional failure. During the Yes Bank crisis in 2020, AT1 bonds worth Rs 8,414 crore were fully written off. Similarly, in the case of Credit Suisse, AT1 bondholders faced significant losses as the bank decided to suspend the coupon payments on these bonds.