What are AT1 bonds and why is Credit Suisse's $17bn wipe-out controversial?

$260bn market

Valeria Martinez
clock • 3 min read

Holders of $17bn of Credit Suisse’s additional tier one (AT1) bonds will have their holdings wiped out as part of the historic takeover of the bank by UBS, a move that has sparked controversy across European debt markets.

The decision came as a surprise, given unsecured bondholders traditionally rank above equity holders in the capital structure, and forced the Bank of England and EU regulators to step in with veiled disagreement to the Swiss regulator's move, in order to stem a potential market rout.  The wipe out of Credit Suisse's AT1 bonds following UBS's decision to acquire the bank marks the largest loss to date for the market in these securities, also known as contingent convertible bonds or ‘CoCos' - but what are they exactly? AT1 bonds have grown into a roughly $260bn market since their introd...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Bonds

Trump policies spark volatility for US Treasuries and add pressure to rising national debt levels

Trump policies spark volatility for US Treasuries and add pressure to rising national debt levels

'Expect the unexpected'

Sorin Dojan
clock 25 November 2024 • 5 min read
Partner Insight: Navigating bond markets in a volatile post-election market

Partner Insight: Navigating bond markets in a volatile post-election market

Kris Atkinson, portfolio manager, Fidelity Short Dated Corporate Bond Fund
clock 19 November 2024 • 6 min read
BlackRock unveils set of iShares bond UCITS ETFs

BlackRock unveils set of iShares bond UCITS ETFs

iBonds surpass $6.3bn AUM in EMEA

Cristian Angeloni
clock 07 November 2024 • 1 min read
Trustpilot