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