Investing
Credit Suisse writes down $17 billion of bonds to zero, angering holders
![](https://personalfinancedefined.com/wp-content/uploads/2023/02/LYNXNPEAAP0BV_L.jpg)
© Reuters. FILE PHOTO: A logo is pictured on the Credit Suisse bank in Geneva, Switzerland, March 15, 2023. REUTERS/Denis Balibouse/File Photo
By Pablo Mayo Cerqueiro and Chiara Elisei
LONDON (Reuters) – Credit Suisse has written down its Additional Tier 1 bonds to zero as part of its takeover by UBS, angering some bondholders who thought they would be better protected in a rescue deal announced on Sunday.
The Swiss regulator and Credit Suisse said that the bonds, which are a riskier type of debt than traditional bonds, have a notional value of 16 billion Swiss francs ($17.24 billion). Credit Suisse said it had been informed by the regulator, FINMA, on Sunday of the decision to write the bonds down.
FINMA president Marlene Amstad, when asked about the decision at a press conference following the UBS takeover announcement, said the regulator had chosen to stick to the too-big-to-fail framework and trigger the bonds.
Engineered in the wake of the global financial crisis, AT1 – or CoCo – are a form of junior debt that counts towards banks’ regulatory capital. They sit just above equity in the priority ladder for repayment in a bankruptcy process, and are designed to be converted into shares when a lender’s capital buffers are eroded beyond a certain threshold.
Some bondholders were angry at the move to write down the bonds to zero, especially as it appears bondholders will fare worse than shareholders in the deal.
“It’s stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders,” said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse’s AT1 debt.
($1 = 0.9280 Swiss francs)
Read the full article here
![](https://personalfinancedefined.com/wp-content/uploads/2023/02/pf-logo.png)
-
Personal Finance5 days ago
Americans reveal their biggest financial regret about potential retirement
-
Investing6 days ago
Israel stocks lower at close of trade; TA 35 down 0.88% By Investing.com
-
Side Hustles6 days ago
5 Key Strategies for Attracting and Retaining Top Talent
-
Passive Income4 days ago
5 Ways to Push Past Your Comfort Zone
-
Passive Income6 days ago
Work Smarter with 12 Months of Microsoft 365 for Just $45
-
Make Money6 days ago
A Labor Day Salute to You — the American Worker
-
Personal Finance6 days ago
Fed interest rate cuts won't help your credit card debt
-
Side Hustles5 days ago
Don’t Wait to Fire That Toxic Client — It’s Vital For Your Business Health