BNY Mellon, Goldman Sachs and Citizens Financial Group issued preferred shares between July 22 and July 24 at the lowest spreads on record since the 2008 financial crisis. BNY Mellon set its reset spread at 186.8 basis points, the lowest level for this type of bank capital instrument since 2008. This intense activity reflects strong investor appetite for bank-issued yield products despite historically thin returns. Banks are racing to secure cheap capital before potential reforms to capital requirements. AT1 instruments like these are designed to absorb losses first during bank stress, leaving investors potentially undercompensated for that risk.
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