Additional Tier 1 market faces pressure amid global bond selloff

Additional Tier 1: Additional Tier 1 (AT1) bonds are a form of subordinated bank debt designed to absorb losses while counting toward a bank’s regulatory capital. They are especially sensitive to interest-rate movements and market stress because of their junior ranking and complex loss-absorption features; in the reported selloff, AT1 issued by property-focused lenders has come under particular pressure as rising rates strain those businesses. Market backdrop: The current global bond selloff has pushed borrowing costs higher across major markets, creating pressure on rate-sensitive and subordinated bank debt. Property lending: Banks with substantial property-lending operations are particularly vulnerable when higher borrowing costs weaken real-estate markets and increase concern about asset quality. Interest-rate sensitivity: Recent market commentary says AT1 bonds have become more exposed to rate moves as issuers extend maturities and investors accept thinner compensation for risk.