Question
AT1 bonds, also known as Additional Tier 1 bonds, are a
type of debt instrument issued by banks and financial institutions to raise capital. AT1 Bonds are also commonly known as _________ÂSolution
AT1 bonds or additional tier 1 bonds are perpetual bonds as these do not have any maturity date.  These are allowed as part of the Tier I capital for Banks under Basel III guidelines. These bonds are riskier than other normal bonds because of the following features: The issuing bank has the discretion to skip coupon payment. Under normal circumstances it can pay from profits or revenue reserves; however in case losses for the period, the coupon payment can be skipped.  The bank has to maintain a common equity tier I ratio of 5.5%, failing which the bonds can get written down or converted into equity.Â
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