Credit Suisse said 16 billion Swiss francs ($17.24 billion) of its Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator as part of its rescue merger with UBS , angering bondholders on Sunday.
A logo is pictured on the Credit Suisse bank in Geneva, Switzerland, March 15, 2023. REUTERS/Denis Balibouse/File Photo
It means AT1 bondholders appear to be left with nothing while shareholders, who sit below bonds in the priority ladder for repayment in a bankruptcy process, will receive $3.23 billion under the UBS deal. "It's stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders," said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse's AT1 debt.on bondholders as part of the rescue deal.
The bonds had sunk into distressed territory before the weekend due to mounting concerns over the health of the Swiss lender.
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