Business & Finance
Buyers of $22 Billion Bank Securities Are Trapped in Losing Bet
Key Points
Buyers of $22 Billion Bank Securities Are Trapped in Losing Bet A $22 billion group of US bank preferred shares has been slumping harder than even the riskiest junk bonds this year — and investors have no good way out of the trade. Some fixed-for-life preferred shares sold by banks during the pandemic era have lost 8.5% in total return terms this year, making the group one of the worst-performing parts of the global credit market.
Buyers of $22 Billion Bank Securities Are Trapped in Losing Bet
A $22 billion group of US bank preferred shares has been slumping harder than even the riskiest junk bonds this year — and investors have no good way out of the trade.
Some fixed-for-life preferred shares sold by banks during the pandemic era have lost 8.5% in total return terms this year, making the group one of the worst-performing parts of the global credit market. The securities have plummeted nearly 40% since they were sold and every issuer so far has skipped repayment options that would have been investors’ way out without a loss. A pending decision by Morgan Stanley may make it a clean sweep.