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Is DB's Senior Debt Still Senior?

23 March 2015 by lberuti

Over the last week or so, the 5 year risk premia of financial institutions in general and banks in particular have been put under pressure by the tensions by Greece and European creditors. It has been one of the clear underperforming sectors since mid-March. In that weak environment, German banks, and more specifically DB ( Deutsche Bank AG ), were put under additional stress. Indeed, the German Finance Ministry published a draft law that would make senior unsecured debt subordinated on a statutory basis to money market debt, derivatives and other senior instruments. Even if the impact should eventually be limited, the 5 year CDS referencing the senior debt of DB experienced additional weakness.