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Basel III in Canada Seen Spawning $25 Billion in Bonds 

July 17, 2014
Cecile Gutscher, Bloomberg

Royal Bank of Canada’s offering of C$1 billion ($930 million) in subordinated debt is likely to be the first of about $25 billion in sales over the next decade by Canadian lenders seeking to meet Basel III capital requirements.

The sale of non-viability contingent capital bonds was the first attempt by a Canadian bank to meet new regulations through subordinated debt that converts to equity if a lender gets into financial distress. Toronto-based Royal Bank priced the 3 percent notes on July 11.

Lenders need to sell the notes in part because regulations designed to make banks safer mean they must phase out older forms of subordinate debt that didn’t convert into equity. The NVCC debt complies with international banking standards aimed at preventing a repeat of the 2008 financial crisis.

Read more: Bloomberg

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