There's a lot of uncertainty these days if you're a holder of big banks bonds. The nervousness is apparent from the soaring CDs spreads and tanking prices of subordinated debt. Breakingviews notes that most likely the worst-case scenarios will not come to pass. The government certainly seems bent on preventing another major collapse, and the government owns so much in common shares, they likely want to retain some value. So it's doubtful the banks will collapse by the traditional definition.

There is still the risk that the government will ask bond holders to take haircuts. Or that they will be asked to swap their debt for equity. We'll see. With the economy still tanking, you never know. 

For more:
- here's the article via the New York Times

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