Bank Bondholders Helped Fuel Tumble in Share Prices, BIS Says
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A slump in financial shares was partly driven by bondholders hedging the riskiest type of banking debt, according to the Bank for International Settlements.
“Movements in the prices of bank securities have been exacerbated by market dynamics,” BIS said in a report published Sunday. Fixed-income investors may have shorted bank stocks to offset potential losses from contingent-convertible, or CoCo, notes, said the Basel, Switzerland-based coordinator of the world’s biggest central banks.