Shares of Deutsche Bank have been on a wild ride in the last two weeks with a proposed $14 billion settlement for the U.S. Department of Justice raising concerns on its capital position.
The German banking giant insists that it has a "comfortable" cushion but that didn't stop a whole bunch price fluctuations in the company's bonds and the cost of insuring its debt.
CNBC highlights four of the major moves in the last few trading sessions:
This is the cost of insuring Deutsche Bank's debt against default for five years. This metric jumped by 21 basis points on Friday morning alone, according to data from Markit, after a report that some hedge funds were reducing their exposure to the embattled bank.
"Measured by the movement in share price (equity value) and CDS (debt value), 2016 continues to be an exceptionally challenging year for Deutsche Bank," analysts at Goldman Sachs said in a research note last week.
So-called "CoCo" bonds - widely-watched contingent convertible bonds - set a new record low last week. These bonds are converted into equity once a specified event has occurred (if the bank were to undergo a precautionary recapitalization, for instance). They are designed as an instrument to both bolster banks' capital levels.
On Wednesday, Reuters reported that trading in these bonds during the month of September had soared to levels more than seven times those of the previous month.
"When a company or bank goes bust, there are some creditors first in line for payment. This is what is called senior debt," financial analyst Louise Cooper, founder of CooperCity, explained in note this week.
She added that the price of the Deutsche Bank's senior bond maturing in 2026 had fallen last week from 105 euros in August to 99 euros.
"That is a big move in a bond price and again this senior bond is almost back to the levels seen in February," she added.
Junior debt is seen as having less protection for bondholders and Louise Cooper suggested, quoting calculations from Ioan Smith, the founder at Semaphore Macro Limited, that the above charts (including junior debt) show that around a 15 percent to 20 percent probability of Deutsche Bank going under was priced in last week.
"Although letting Deutsche Bank go under should never be an option, markets are starting to price it in. For a bank that relies on confidence (as all do) that is terrible news," she said in the note.
