Last week, UBS kicked off a wave of bond buybacks from banks when it offered to repurchase its Lower Tier 2 bonds. Banco de Sabadell of Spain followed suit with a buyback of Tier 1 bonds, while Lloyds Banking Group and Royal Bank of Scotland made similar moves. The action is seen as a win for both the banks and their bondholders, but only because of the strange reality of today's market.

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