Introduction
The market for Additional Tier 1 (AT1) perpetual non-cumulative coupon bonds has gained significant traction in recent years, driven by regulatory changes and a growing demand for capital from banks. As of 2023, the global AT1 bond market is valued at approximately $250 billion, with a compound annual growth rate (CAGR) of around 15% over the past five years. These instruments are increasingly seen as vital for maintaining banks’ capital adequacy ratios while offering investors attractive yields. Notably, the surge in issuance in 2022 reflected a strong recovery from the pandemic, with a reported issuance volume of $50 billion, underscoring their vital role in financial markets.
Top 20 Additional Tier 1 Perpetual Non-Cumulative Coupon 2026
1. HSBC Holdings plc
HSBC’s AT1 issuance reached $2.1 billion in 2022, contributing significantly to its Tier 1 capital base. The bank’s robust capital position has helped it maintain a strong market presence, with a market share of approximately 8% in the global AT1 bond market.
2. Banco Santander S.A.
Banco Santander issued $1.5 billion in AT1 bonds in 2022, reflecting a solid demand for its perpetual instruments. The bank’s strong credit rating and diversified operations across Europe and Latin America enhance its appeal to investors.
3. Barclays PLC
Barclays has been active in the AT1 market, with a total issuance of approximately $1.8 billion in recent years. The bank’s focus on strengthening its capital buffer has positioned it favorably amid regulatory scrutiny, with a market share of about 7%.
4. Credit Suisse Group AG
Credit Suisse’s approach to AT1 bonds has been cautious, issuing $1.2 billion in the past year. The bank’s ongoing restructuring efforts aim to stabilize its financial position and regain investor confidence.
5. Deutsche Bank AG
Deutsche Bank has issued around $2.2 billion in AT1 bonds as part of its strategy to bolster capital. The bank’s focus on risk management and profitability improvements has led to a market share of approximately 6%.
6. UBS Group AG
UBS’s AT1 issuance totaled $1.7 billion in 2022, reflecting strong investor interest. With a focus on wealth management, the bank has effectively leveraged its capital structure to enhance returns for shareholders.
7. BNP Paribas S.A.
BNP Paribas stands out with an AT1 issuance of $3 billion in 2022, making it one of the top players in the market. The bank’s solid financial fundamentals and diversified portfolio contribute to its significant market presence.
8. Société Générale S.A.
Société Générale issued approximately $1.6 billion in AT1 bonds, showcasing its commitment to maintaining strong capital levels. The bank’s diversified operations across Europe provide stability and growth potential.
9. Standard Chartered PLC
Standard Chartered has actively participated in the AT1 market, issuing $1.4 billion in bonds in the past year. The bank’s focus on emerging markets supports its growth, making it an attractive option for AT1 investors.
10. Rabobank
Rabobank’s issuance of $1 billion in AT1 bonds highlights its strong capital position. The bank’s focus on agricultural financing and sustainability initiatives enhances its appeal to socially responsible investors.
11. Intesa Sanpaolo S.p.A.
Intesa Sanpaolo’s AT1 bond issuance reached $1.3 billion, reflecting a solid capital strategy amid a competitive European banking landscape. The bank’s focus on digital transformation positions it favorably for future growth.
12. Banco Bilbao Vizcaya Argentaria (BBVA)
BBVA issued $1.1 billion in AT1 bonds, focusing on strengthening its capital base in a challenging market environment. The bank’s diversification across regions enhances its resilience.
13. Lloyds Banking Group PLC
Lloyds has issued approximately $1.5 billion in AT1 bonds, maintaining a strong capital position in the UK banking market. The bank’s commitment to customer service and digital innovation supports its growth strategy.
14. National Australia Bank (NAB)
NAB’s AT1 issuance reached $1.2 billion in 2022, driven by a robust demand for its capital instruments. The bank’s strong market position in Australia enables it to attract a diverse investor base.
15. ANZ Banking Group Limited
ANZ issued $1.4 billion in AT1 bonds, as it continued to strengthen its capital and risk management framework in a competitive banking environment. The bank’s focus on sustainable finance enhances its market appeal.
16. Westpac Banking Corporation
Westpac’s AT1 issuance totaled $1.1 billion, underlining its commitment to maintaining a strong capital position. The bank’s focus on digital banking solutions supports its long-term growth strategy.
17. Commonwealth Bank of Australia (CBA)
CBA’s AT1 bond issuance reached $1.5 billion, reflecting strong market demand for its capital instruments. The bank’s focus on customer experience and technological innovation positions it well in the competitive landscape.
18. Bank of America Corporation
Bank of America has issued $2 billion in AT1 bonds, focusing on maintaining a strong capital base. The bank’s diversified operations across various segments contribute to its robust performance.
19. Citigroup Inc.
Citigroup’s AT1 issuance reached $2.3 billion, supported by its strong global presence and diversified business model. The bank’s commitment to innovation and sustainability enhances its attractiveness to investors.
20. Wells Fargo & Company
Wells Fargo issued approximately $1.6 billion in AT1 bonds, emphasizing its focus on capital stability and growth. The bank’s efforts to enhance risk management have improved its market standing.
Insights
The Additional Tier 1 perpetual non-cumulative coupon market is poised for continued growth, driven by regulatory requirements and a surge in investor interest. With an expected increase in global issuance to approximately $60 billion by 2024, the AT1 market is becoming a fundamental component of banks’ capital strategies. As financial institutions seek to enhance their capital buffers in an evolving regulatory landscape, the demand for AT1 instruments will likely remain strong. Moreover, with the ongoing transition to sustainable finance, banks are increasingly integrating environmental, social, and governance (ESG) factors into their capital strategies, further expanding the market’s appeal.
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