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At1 Bonds

All articles tagged with #at1 bonds

business2 months ago

Legal Battles and Revival Prospects for Credit Suisse's AT1 Bonds

A Singapore law firm, Drew & Napier, plans to sue the Swiss government for approximately $300 million, seeking compensation for Asian bondholders of Credit Suisse AT1 debt that was wiped out in 2023. The firm is pursuing claims based on bilateral investment treaties with Switzerland, Singapore, Japan, and Hong Kong, following a Swiss court ruling that the bond writedown was unlawful. The legal action targets the Swiss government's handling of the Credit Suisse rescue, with the process expected to take time and uncertain outcomes.

via Bloomberg.com|
#at1-bonds#business#credit-suisse
finance2 years ago

UBS Resumes Selling Controversial Bonds Amid Credit Suisse Fallout

UBS has resumed selling Additional Tier 1 (AT1) bonds, the same type of bonds that caused controversy during its emergency rescue of Credit Suisse. The Swiss banking giant is marketing two tranches of U.S. dollar AT1 bonds, with yields around 10% and 10.125%. AT1 bonds are considered risky and were introduced after the 2008 financial crisis to divert risk away from taxpayers. Fitch has assigned the new AT1 notes a BBB rating, four notches below UBS Group's overall viability rating. The bonds will initially have a permanent write-down mechanism, but UBS plans to replace it with an equity conversion mechanism if approved by the annual general meeting.

via CNBC|
#at1-bonds#bond-market#credit-suisse
finance2 years ago

Banks Embrace High-Risk Bonds.

Banks are changing their approach to AT1 bonds, which are high-risk perpetual bonds that were typically repaid after five years. Some smaller banks are no longer repaying the bonds and opting instead to keep them open-ended beyond five years and paying interest on them instead. This trend highlights the vulnerability of global finance as it grapples with rocketing borrowing costs and the impact of war in Ukraine. The wipeout of billions of dollars of Credit Suisse AT1 bonds still reverberates around this market, which is estimated at roughly $275 billion.

via Reuters|
#at1-bonds#banks#finance
finance2 years ago

Swiss Regulator Defends Controversial Writedown of Credit Suisse Bonds Amid Takeover Talks.

Switzerland's financial market regulator, FINMA, has defended its decision to impose losses on some of Credit Suisse's bondholders, saying the decision was legally sound. As part of the multi-billion franc rescue of Credit Suisse, the regulator said 16 billion Swiss francs ($17.49 billion) of the lender's Additional Tier 1 debt would be written down to zero, while shareholders received some compensation. The decision prioritised shareholders over AT1 bondholders, causing a sharp fall in prices on Monday. Some Credit Suisse AT1 bondholders are seeking legal advice.

via Reuters|
#at1-bonds#bondholders#credit-suisse
finance2 years ago

UBS's potential plan to end Credit Suisse's investment bank preservation raises concerns.

Swiss regulator FINMA has defended its decision to instruct Credit Suisse to write down its AT1 bonds to zero, saying it was a "viability event" triggered by the loan Credit Suisse received from the Swiss National Bank last week, backed by the federal government. The regulator's decision upended the usual European hierarchy of restitution in the event of a bank failure under the post-financial crisis Basel III framework, which ordinarily places AT1 bondholders above stock investors. Bondholders are exploring legal action over the contentious writedown.

via CNBC|
#at1-bonds#credit-suisse#finance
finance2 years ago

Credit Suisse's AT1 bond write-off causes turmoil in bank convertible bond market.

PIMCO lost around $340 million on Credit Suisse's Additional Tier 1 (AT1) bonds that were wiped out by the takeover by UBS, with the American investment manager's overall exposure to the Swiss lender running into billions. Swiss authorities decided to wipe out some $17 billion worth of Credit Suisse's AT1 debt under a deal which saw shareholders receive $3.23 billion. PIMCO's current holdings of Credit Suisse bonds, excluding the AT1 debt, were worth over $4 billion.

via Reuters|
#at1-bonds#credit-suisse#finance
finance2 years ago

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.

via Reuters.com|
#at1-bonds#credit-suisse#european-banks
finance2 years ago

Credit Suisse's CoCos Cause Concern for Investors and Insurers Alike

Credit Suisse's additional Tier 1 bonds, also known as CoCos, have been written down to zero by Swiss regulators as part of the bank's merger with UBS, spooking investors of the $275bn AT1 market. CoCos are hybrid capital instruments that absorb losses in times of stress and are structured to convert into equity when a bank's capital falls below a certain threshold. They were introduced after the 2008 financial crisis to steer risk away from taxpayers and onto bondholders. The move has wiped out bondholders but not shareholders, even though bondholders typically rank above equity holders in capital structure.

via MarketWatch|
#at1-bonds#bondholders#cocos
finance2 years ago

Banking Turmoil Eases, Global Stocks and European Banks Rally

European bank shares rebounded from four-month lows after UBS rescued Credit Suisse, but bank bonds remained under pressure after the merger deal wiped out some bondholders. The Swiss authorities' handling of the Credit Suisse rescue has upended the markets' expectation that shareholders would take a bigger hit than bond investors in such a scenario. The write-down to zero at Credit Suisse will produce the largest loss in the $275 billion AT1 market to date, dwarfing the 1.35 billion euros ($1.44 billion) bondholders of Spain's Banco Popular lost in 2017.

via Reuters|
#at1-bonds#bondholders#credit-suisse
finance2 years ago

Credit Suisse's Bailout Sends Shockwaves Through Global Banks.

Banking shares in London and Europe fell after the emergency rescue of Credit Suisse by UBS failed to calm markets. Credit Suisse shares plunged 63% while UBS was down 12%. The rescue deal saw holders of $17bn of Credit Suisse’s bonds wiped out, spooking investors over concerns of a potential slump in the value of AT1 bonds at other institutions. Central banks took coordinated action on Sunday night to try to shore up confidence by agreeing measures to ensure banks in Canada, Britain, Japan, Switzerland and the eurozone would have the dollars needed to operate.

via The Guardian|
#at1-bonds#banking-shares#central-banks
finance2 years ago

AT1 Debt Selloff Causes HSBC to Fall in Hong Kong

Shares of European banks traded in Asia, including HSBC and Standard Chartered, tumbled as investors weighed the collapse in the value of additional tier 1 (AT1) bonds issued by lenders following the terms of Credit Suisse's rescue. The complete write-down of Credit Suisse's AT1 debt as part of a Swiss bailout has investors in the $275 billion market scrambling to determine how much protection the notes offer in a crisis. The repercussions can be twofold, with banks such as HSBC potentially needing to find new sources of capital if there's a loss of confidence while their holdings of such debt issued by peers may see a significant loss of value.

via Yahoo Finance|
#at1-bonds#banks#credit-suisse