Cyprus Bail-Out Highlights Risk of Bail-In

Here is a link to an interesting FT article regarding recent developments on the subject of bail-in.

As the dust settles on the bail-out of Cypriot banks, attention is returning to the way in which bail-in will operate in the future.  Investors are rightly looking at factoring bail-in risk into the price of bank debt, particularly senior unsecured debt which before the Cyprus crisis had not really been subject to bail-in.  In addition, banks are looking at new types of debt instrument, such as contingent convertible (Coco) bonds and “priority bail-in bonds”, designed primarily it seems to provide additional protection to holders of senior unsecured debt.