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Rules For Thee but Not for Me: Holders of AT1 Credit Suisse bonds get nothing as shareholders get billions

quick take

  • Yesterday, UBS bought Credit Suisse for $3.2 billion, causing shares to drop in a pre-market move.
  • That’s a 73% discount to the closing price on Credit Suisse on Friday.
  • The biggest losers in this deal were holders of Additional Tier 1 (AT1) bonds. This is an instrument of debt in which the holder is repaid before the shareholder.
  • But that didn’t happen as Credit Suisse confirmed that shareholders would receive $3 billion and $17 billion of AT1 holders would get nothing.
  • in a Bloomberg article“Wiping out AT1 holders while making large payments to shareholders is contrary to all internationally agreed resolution principles and rules since 2008.”
  • Could other countries repeat what the Swiss government did?

Premarket movement

  • UBS: -4%
  • Credit Suisse: -7%
  • First Republic: -33%
  • Deutsche Bank: -2%
At1 Holder: (Source: Financial Times)

Post rules for you, not for me: AT1 Credit Suisse bond holders first appeared on CryptoSlate as shareholders earn billions of dollars.

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