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

2023-3-20 15:04

Quick Take As UBS bought out Credit Suisse for $3.2 billion yesterday, stocks head lower in pre-market moves. This is a 73% discount on Friday on Credit Suisse’s closing price. The biggest losers of this trade were the holders of Additional Tier 1 (AT1) bonds. This a debt instrument where holders are repaid before shareholders. But that didn’t happen as Credit Suisse confirmed shareholders would get $3 billion, and $17 billion of AT1 holders would get nothing. In a Bloomberg article.”Wiping out AT1 holders while paying substantial amounts to shareholders goes against all the resolution principles and rules that were agreed internationally after 2008.” Could other countries repeat the same as what the Swiss government did?

Pre Market Moves

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

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