By Frank Jackman 17 Dec 2020 European banks passed a real-life stress test in 2020 as the coronavirus pandemic threatened to topple the economy. The experience has improved the standing of subordinated debt, which is becoming more important for issuers and investors alike. Frank Jackman reports. Bank subordinated bonds went through a rollercoaster ride in 2020. A global pandemic has put the instruments through their first system-wide stress since the 2008 financial crisis, when the asset class was reimagined as a new layer of contingent capital on the balance sheet. Spreads on additional tier ones (AT1s) reached as high as 1,600bp as the coronavirus took hold in March, amid fears that the bonds might do what they were designed to do and suffer losses.