TLAC Bonds: What you should know
Beyond Markets
00:00
How Are Tier-Liability Liabilities Different From AT-1 and Tier-2?
After the global financial crisis, regulators don't want any more of these unrealistic expectations of government bailouts. So therefore, these instruments are now labeled with bail-in risk to clearly spell out the potential loss absorption risk related to investing in these instruments. And if you think about it, it is not that different from investing in regular corporate bonds where investors are generally expected to incur losses if the issuer runs into an extreme financial distress situation.
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