Swiss banking giantFollowing the acquisition agreement by the UBS Group,About 16 billion Swiss francs ($22 billion) worth of bonds of Credit Suisse Group AG have become worthless.
According to a statement on its website by the Swiss Federal Financial Market Supervisory Authority (FINMA), following the acquisition agreement, Credit Suisse’s “other Tier 1 bonds” (AT1 bonds) will be “fully funded” to boost core capital. principal reduction” will be implemented.
This is the biggest loss ever for the $275 billion European AT1 bond market. Spain’s bankruptcy avoidance in 2017to Santander BankThat would greatly outweigh the €1.35 billion ($1.8 billion at today’s exchange rate) losses suffered by the junior bond holders of Banco Popular Espanyol, which was acquired.
Credit Suisse Chairman Axel Lehmann Talks About Acquisition by UBS
Source: Bloomberg
A number of asset managers holding Credit Suisse AT1 bonds include Pacific Investment Management (PIMCO), Invesco and BlueBay Funds Management, according to Bloomberg data. The companies’ holdings may have changed or been sold altogether since their last filings with regulators.
Pimco and BlueBay declined to comment to Bloomberg News on Tuesday, before announcing the deal. An Invesco spokeswoman said the investment team will continue to monitor the situation closely.
By Wednesday, Credit Suisse AT1 bonds were already trading at levels typically seen in distressed companies. Some of the $1.65 billion bonds less than a year old were trading at regarding 35 cents on the dollar, according to Trace.
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