Write-off of the century｜Creditors are afraid of losing their money? CDDC: Credit Suisse AT1 bond write-down will not trigger CDS payment conditions

2023-05-18 11:41:54

Write-off of the century｜Creditors are afraid of losing their money? CDDC: Credit Suisse AT1 bond write-down will not trigger CDS payment conditions

The Swiss financial market regulator (FINMA) of the Swiss government facilitated the acquisition of Credit Suisse by Swiss Bank (UBS) on March 19, but Credit Suisse issued a batch of 16.3 billion Swiss francs (about 176 Billion US dollars) of Additional Tier 1 Capital Bond (AT1) was scrapped by the authorities forcibly “full write-down”, and creditors lost all their money, triggering a century of write-offs in the financial world. The bondholders have been studying taking legal action against the Swiss government to recover their losses. In the latest development, the Credit Derivatives Resolutions Committee (CDDC), which oversees the credit default swaps (CDS) market, said that Credit Suisse’s AT1 writedown would not trigger the CDS’ payout conditions.

Related reports:Saudi Arabia’s loss of hand event book｜SNB chairman resigned today and said “refusal to increase holdings” was accused of triggering Credit Suisse to be acquired to pay for the loss of 80%, involving more than 9 billion

Banking Crisis｜Credit Suisse Falls to UBS, and the Swiss Government “Insured the Bottom”

Credit Suisse’s AT1 bonds cleared for lazy people｜PIMCO Invesco became two major suffering hosts, and the host plans to collectively defend rights and claim compensation

The crisis spread｜Credit Suisse’s approximately US$17.6 billion AT1 bonds were “completely written down” and turned into waste paper! Creditors lost everything! HSBC fell more than 6% in bank stocks

Financial Dismantling｜Crazy Weekend: Apocalypse of Credit Suisse’s Defeat｜Yan Baogang

The CDDC, which covers Europe, the Middle East and Africa, ruled at a meeting on Wednesday that a writedown on Credit Suisse’s controversial, high-risk bonds would not trigger a payout on CDS linked to the bank’s subordinated debt. In the committee’s view, the AT1 securities were effectively ranked behind the subordinated bonds due 2020 underlying the CDS contract.

Market participants asking the CDDC for its ruling were referring to sterling-denominated bonds issued 23 years ago and maturing in 2020. The panel ruled that holders of these bonds were entitled to compensation in priority over holders of AT1 bonds.

A group of 11 financial firms, including Bank of America, Barclays, BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Mizuho Securities, Citadel, and Elliot Investment Management and PIMCO voted unanimously, the CDDC statement said. Pass the ruling. As of April 29, Credit Suisse was part of the panel but not involved in the deliberations.

According to data from the Depository Trust & Clearing Corporation (DTCC), the gross notional outstanding CDS linked to Credit Suisse bonds totaled more than $19 billion in March.

Related reports:Vice President of the Swiss National Bank: If Credit Suisse is not sold to UBS, it will go bankrupt the next day, which may lead to a global financial crisis

Chairman of Saudi National Bank resigns after refusing to increase holdings to aid Credit Suisse

Credit Suisse AT1 North American creditor organization reported that it has given up the cause of litigation, and the bond clauses set out the risk of writedown

Big banks such as Morgan Stanley, BNP Paribas and others are reported to have offered a 98% discount on Credit Suisse’s AT1 bonds at a low price of 2 cents, and amended the terms of the transaction to give them the right to claim compensation

PIMCO, Invesco Reported to Be Credit Suisse’s AT1 Bond Hurricanes

Saudi National Bank’s investment in Credit Suisse is likely to lose more than 9.1 billion, and its strategy will not be affected

Credit Suisse AT1 bondholders discuss recovering losses

Credit Suisse fell to UBS and became the biggest loser

UBS agreed to acquire Credit Suisse for 3 billion Swiss francs, a discount of about 60% to the closing price of Credit Suisse last Friday

Since the outbreak of the Credit Suisse crisis, it has been full of turning points. Whether CDS can be compensated has become the focus of the market, and it has also caused huge differences. For one thing, funds including FourSixThree Capital and Diameter Capital Partners have been buying CDS linked to another group of Credit Suisse junior bonds, betting that the panel will rule in favor of the payout. On the other hand, market participants such as traders and strategists at Citigroup, Barclays and JPMorgan Chase have been telling their clients that AT1 bonds may be seen as lower in the ranking than CDS-related subordinated debt, so Unlikely to trigger a payout.

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