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Following #Aviva's shocking announcement the situation unfolding in the UK #pref space is quite fascinating following #Aviva's announcement. Bear with me for an analysis. 1/n
Basically we are talking about fixed income instruments, issued a long time ago, with vey high coupons and counting as regulatory capital for banks and insurers. 2/n
Because they have coupons in the range of 8% - 13% they trade very high, sometimes above 200% of par. Because they are regulatory capital instruments, they cannot be redeemed and are perpetual. Every single prospectus says "non redeemable" bond. 3/n
