Holders of Credit Suisse’s fallen AT1 bonds are reportedly seeking to sue the Swiss government over what they say is an unfair wipeout of value.
A group of about 30 investors in Singapore, which includes individual investors and family offices, are seeking to sue the Swiss government over Credit Suisse's AT1 bond wipeout, according to a «Straits Times» report.
The group is currently speaking to law firms WilmerHale and Engelin Teh Practice.
Accredited investors and family offices in Singapore as well as other parts of Asia are likely to account for a sizeable part of losses with some $750 million of Credit Suisse’s AT1 bonds denominated in Singapore dollars.
EFTA Agreement
According to the Swiss government, the 16 billion franc ($18 billion) devaluation was justified as an emergency law was passed to authorize the Swiss Financial Market Supervisory Authority (Finma) to take such action.
But Credit Suisse’s bondholders in Singapore argue that the move had breached their rights protected under the Singapore-European Free Trade Association (EFTA) free trade agreement signed in 2003 which involves the city-state and a bloc of four countries, including Switzerland.
Under this agreement, Singapore investors have some unique protections that require «fair and equitable» treatment of foreign investors, according to WilmerHale partner Jonathan Lim, since AT1 debt typically ranks higher than shares on the capital structure.
