The Financial Post reports in its Saturday edition Royal Bank of Canada has sold $1-billion of junior-ranking bonds that comply with Basel III regulatory capital requirements. A Bloomberg dispatch to the Post says RBC's bond issue marks the first by a Canadian bank that is considered non-viability contingent capital by regulators. The notes are designed to convert to equity if a bank gets into financial distress, according to Standard & Poor's. NVCC debt will be used to replace existing subordinated securities, which are being phased out to comply with international banking standards designed to prevent a rerun of the 2008 financial crisis. Canada's market for securities that can be converted into capital in a crisis could reach $20-billion. Moody's rated the notes Baa1, four levels lower than the bank's senior rating of Aa3; S&P rates the debt A-, two levels below the bank's rating of A+. A trigger event will convert the bonds into equity without the holder's consent. For example, it defined such as events as Canada's bank regulator publicly announcing it has advised a bank that the lender has ceased to be viable. Conversion could also come if the bank needs government support to stay afloat.