News: CBA CBA Launches Commbank Perls XVI Capital Notes Offer, page-10

Hi ,
I have owned a fair amount of the bank debt instruments since NABHA days , but always uneasy about the tier 1 terms.
Sold the 10% of my portfolio that was left in them ,after Credit Suisse.
No matter what anyone ''says '' , the terms are what are actually written down.
They can be written down to zero at the whim of regulators.
The Credit Suisse tier 1 's should have returned 25 to 30% on the dollar to the bond holders.
Instead , to sweeten the pot for the bailout , that money was given to shareholders.
In my view the risk makes them mis-priced.
The argument that it could never happen here , is true , right up until it does.

These days , I concentrate on debt instruments that get paid before equity.
Or just take the extra yield that the equity brings.

cheers