Credit Suisse Crash: Western Bond Market Under Threat after Swiss Bank RescueCredit Suisse was forced to write down to zero an eye-watering $17bn of its Additional Tier 1 bonds, while shareholders will receive payouts as part of the govt-brokered UBS takeover.
AT1 bonds were introduced after the 2008 financial crisis, to increase banks’ safety buffers, while tackling the “too big to fail” risk that they might need govt support in a crisis.
The move has triggered renewed pressure on the global banking system - usually, equity investments would be classed as secondary to AT1 bonds - with investors scrambling to assess whether the same could happen for their holdings of AT1 debt in other banks - a market worth more than $275bn.
@RiseGS
