Alternative Credit Letter August 2025

AT1 reset spreads tightening increases the extension risk
Extension risk increases when the reset spread falls below the yield of new AT1 issues. The reset spread is the extra yield added to a market rate if an issuer skips its call option. Overall yields remain high, but large orders for new AT1s have allowed banks to offer historically tight reset spreads.
Read in-depth insights in our Fixed Income Credit Markets – August 2025