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Glossario

Senior Non-Preferred Bond

Categoria — Tipi di obbligazioni
Senior Non-Preferred Bond (Tier 3 Capital) is a rank of debt securities available for banks.

In case of liquidation/bankruptcy of a company, Senior Non-Preferred Notes will be ranked higher than Subordinated Bonds yet remaining inferior to Senior Preferred Bonds or Senior Unsecured Debt.

Senior Non-Preferred Bonds come with an intrinsic "bail-in" procedure, that is, if the bank is on the verge of bankruptcy, creditors will receive shares, and if the value of shares rises, creditors will be able to return their money.

In addition, Senior Non-Preferred Bonds are subject to the MREL (Minimum Requirements for Own Funds and Eligible Liabilities) or TLAC (Total Loss-Absorbing Capacity) rules.
Senior Non-Preferred Bonds may be issued either in the form of bonds or certificates of deposit.

Main features:

Their principal amount and the interest accrued must be known in advance, except in cases of Indexed Bond or applying a floating coupon rate;
The term to maturity – a minimum of one year;
Senior Non-Preferred Notes are direct, unconditional, senior and unsecured obligations.
Terms and conditions of bonds may include an issuer call option provided that the maturity value is predetermined.
EU legislation obliges banks to have documentation on this type of debt instruments and indicate the rank.

An example of a Senior Non-Preferred Bond: BNP Paribas, 0.5% 30may2028, EUR
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