The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content


(Gloria Nieto/The Globe and Mail)

Bond investors rankled by RBC’s $1-billion debt offering

The group that represents Canada’s biggest bond investors is frustrated with the way Royal Bank of Canada sold its latest debt offering – a deal worth $1-billion – and has requested that regulators do something to address the issues.

In early July, RBC became the first Canadian bank to sell bonds that that can be treated as non-viability contingent capital (NVCC). This form of debt was required by the Basel Committee on Banking Supervision coming out of the Great Recession, and its terms allow the bonds to be converted into equity in the event of a financial crisis. In short: bond investors, who usually rank higher in the capital structure, can quickly become measly shareholders.