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Banks and bank holding companies issued $45 billion of subordinated debt in the short period from late 2020 through 2022 and a wave of sub debt refinancings is just beginning to reach the market. Are we ready?

Differences between bank and bank holding company (BHC) capital requirements provide BHCs greater flexibility to optimize their capital structure, creating incentives for the issuance of subordinated debt (sub debt). Sub debt issuance spiked from late 2020 through 2022 as companies sought to take advantage of pandemic-era near-zero interest rates and a flood of investors seeking meaningful yield.

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