House bubble to burst - 40%? SERIOUSLY

[Sunfish]

Very, very different from covered bonds or any other secured debt

Speaking of covered bonds, one of the banks issued some last week. What was the premium?

The real difference between covered bonds and unsecured notes is the ranking in the case of insolvency. How do you rate the chance of WBC becoming insolvent? [I am aware that they were so in the '80's but they were protected then as they are now]

 

[Aaron_C]

If they are borrowing at 7% and lending at 6% then they will become insolvent very, very quickly. But subordinated debt like convertible notes only comprise a very small fraction of any bank's pool of funds. Plus when/if the notes are converted into equity the interest payment ceases and it becomes a dividend instead.