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Market for Contingent Capital to Reach $18 Billion, Moody’s Says 

January 23, 2014
Cecile Gutscher, Bloomberg

The market for securities that comply with Basel III regulatory capital requirements in Canada will eventually reach C$20 billion ($18.2 billion), according to Moody’s Investors Service.

Royal Bank of Canada sold C$500 million of the non-viability contingent capital, or NVCC, notes yesterday in the first sale of the securities. The notes, designed to convert to equity if a bank gets into financial distress, were rated Baa3, the lowest investment-grade assessment by Moody’s, and BBB+ by Standard & Poor’s. They will act as a model for all the Canadian banks, Moody’s said.

“We expect this issuance could establish a precedent for future NVCC preferred shares in the Canadian market,” according to a report yesterday.

Read more: Bloomberg

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