Credit Suisse bondholders face risk of permanent destruction as UBS takes over.

Goldman Sachs strategist Lotfi Karoui said that the decision by Swiss authorities to write down Credit Suisse's Additional Tier 1 (AT1) bonds to zero could lead to a "potential permanent destruction in demand" for this type of debt in the long term. However, the risk of contagion across credit markets is limited due to the relative niche nature of the asset class. AT1 bonds issued by other European banks fell sharply on Monday as the treatment of Credit Suisse AT1 bondholders highlighted the risks of investing in this type of debt.