On Tuesday, Spain's biggest bank Santander announced a plan to issue up to 2.5 billion euros ($3.28 billion) in contingent convertible "CoCo" bonds. This kind of bond, which is relatively high yielding but can be written off entirely if the bank's capital levels drop below a certain level has caused concerns about increasing risks to investors.
There are expected to be a number of new peripheral euro zone bank bond issues of these kinds of bonds in coming months.
"The time to worry about bank capital is when the weaker banks try to deluge the markets," Bill Blain, strategist at Mint Partners, warned.
- By CNBC's Catherine Boyle