Credit Suisse investors suffered a $17 billion wipeout of AT1 bonds when the bank was taken over. Now the acquirer UBS, has been testing the waters among investors for the same type of bond.
During talks with investors on a recent roadshow, UBS executives discussed changing the terms and conditions of future Additional Tier 1 securities, to make them more appealing to bondholders, a «Financial Times» report citing unnamed sources.
This comes after the bondholders’ confidence in the instrument was knocked after $17 billion of Credit Suisse AT1 bonds were wiped out as part of the bank’s government-instructed Credit Suisse takeover by UBS.
Creditor Hierarchy
Finma’s decision to prioritize shareholders over AT1 bondholders, was widely criticized and has resulted in some investors taking Switzerland’s financial regulator to court.
In the coming years, UBS is looking to replace up to $17 billion of Credit Suisse AT1 bonds to improve the efficiency of the enlarged bank’s capital structure and free up funds for shareholder returns and potential acquisitions, the report added.
