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Credit Suisse AT1 Bonds
Old 03-20-2023, 12:09 PM   #1
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Credit Suisse AT1 Bonds

I am soooo glad I didnít hang on to a Credit Suisse bond I bought last year! It looks like they are writing them off to zero.
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Old 03-20-2023, 12:23 PM   #2
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I am soooo glad I didnít hang on to a Credit Suisse bond I bought last year! It looks like they are writing them off to zero.
Is that true for individual investors?
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Old 03-20-2023, 12:26 PM   #3
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Is that true for individual investors?

Hereís the link to the article I read about it. I didnít see any differentiation for individual investors.

https://www.wsj.com/articles/credit-...arket-10be7d04
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Treasury Bills, Notes, and Bonds Discussion
Old 03-20-2023, 12:35 PM   #4
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Treasury Bills, Notes, and Bonds Discussion

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Originally Posted by lawman View Post
Is that true for individual investors?

Itís for a special type of bond called AT1 bonds. I canít confirm thatís what I had, but the description sounded like it.

Thereís a similar discussion going on in the ďGolden PeriodĒ thread if you want to check it out.
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Old 03-20-2023, 12:43 PM   #5
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Itís for a special type of bond called AT1 bonds. I canít confirm thatís what I had, but the description sounded like it.

Thereís a similar discussion going on in the ďGolden PeriodĒ thread if you want to check it out.

You didn't have AT1s. They are only available to other banks, funds, and other whales only.
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Old 03-20-2023, 01:04 PM   #6
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Is that true for individual investors?
Yes, these were COCO bonds. Info here.

https://www.google.com/amp/s/www.mar...-zero-634a65e5
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Old 03-20-2023, 01:07 PM   #7
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You didn't have AT1s. They are only available to other banks, funds, and other whales only.
Not true, as mentioned in the article link.

Most of the demand for CoCos in recent years has come from private banks and retail investors, especially in Europe and Asia, along with big U.S. institutional investors who were attracted by the higher yields in the low-interest-rate environment that prevailed from the crisis until the Federal Reserve started raising interest rates last year.

https://www.google.com/amp/s/www.mar...-zero-634a65e5
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Old 03-20-2023, 02:01 PM   #8
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It’s for a special type of bond called AT1 bonds. I can’t confirm that’s what I had, but the description sounded like it.

There’s a similar discussion going on in the “Golden Period” thread if you want to check it out.
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You didn't have AT1s. They are only available to other banks, funds, and other whales only.
Are you saying Dash man is a minnow and not a whale?
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Old 03-20-2023, 02:57 PM   #9
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Are you saying Dash man is a minnow and not a whale?
Apparently I'm wrong, but I did not think something as sophisticated as hybrid AT1 bonds, intentionally "designed as a part of total loss-absorbing capacity (TLAC) bonds to provide a 'bail-in' or a way for banks to transfer risks to investors" would be something that would show up on Fidelity's bond search tool for retail investors.
I have to tweak my investor profile for the Fidelity search tool to show me below-investment-grade (BBB-) bonds. I wonder what switches you have to throw to get AT1's... I would imagine it would be a grade above qualified/accredited investors.
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Old 03-21-2023, 07:25 AM   #10
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Are you saying Dash man is a minnow and not a whale?

My scale would say otherwise!
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Old 03-21-2023, 08:33 AM   #11
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My scale would say otherwise!
Funny!
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Old 03-21-2023, 09:33 AM   #12
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Retail investors in the US can only buy AT1 bonds through ETFs. CS bonds/Notes will transfer to UBS. UBS has an issuer rating of AA- with a negative watch after the merger with CS. The rating for UBS is higher than most high grade bonds. Fitch also put CS bonds on "evolving watch" (RWE) which means:

"The RWE reflects the heightened likelihood that the ratings will be upgraded if the bank's merger with UBS Group AG proceeds as planned, because the resulting business combination will likely result in improvements to Credit Suisse's franchise and business model, risk management and funding and liquidity profiles. The transaction is expected by UBS to close in 2Q23. The RWE also signals the risk of a downgrade should the transaction fail."


https://www.fitchratings.com/researc...ger-21-03-2023

https://www.fitchratings.com/researc...sse-21-03-2023
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Old 03-22-2023, 06:37 AM   #13
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For your amusement/concern, biggest holders of CS AT1 "Bonds"
https://t.me/tradingrumors/50508
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Old 03-22-2023, 06:47 AM   #14
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For your amusement/concern, biggest holders of CS AT1 "Bonds"
https://t.me/tradingrumors/50508
Maybe it displays better in the telegram app but I couldn't read any of it.


I did read a couple of articles last night that suggested several items, the biggest of which was the insurance and pension fund exposure to AT1s. All of the institutions were already taking hits in the NBV of their treasuries after rates rose, but they supposedly have significant exposure to AT1s which are suddenly unloved. The gist of the article was "buckle up. the default+bailout ride is just getting started".
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Old 03-22-2023, 06:51 AM   #15
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Maybe it displays better in the telegram app but I couldn't read any of it.


I did read a couple of articles last night that suggested several items, the biggest of which was the insurance and pension fund exposure to AT1s. All of the institutions were already taking hits in the NBV of their treasuries after rates rose, but they supposedly have significant exposure to AT1s which are suddenly unloved. The gist of the article was "buckle up. the default+bailout ride is just getting started".

A little better on the tweet bird: https://twitter.com/runews/status/16...131485186?s=20
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Old 03-22-2023, 06:59 AM   #16
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Thanks for posting.

Zoomed in and grabbed a screenshot. I see Cohen and Steers, PIMCO, Nuveen, and Invesco a lot in there. Looks like all the "smart" money got burned.
Attached Images
File Type: jpg Top AT1 bondholders.jpg (174.3 KB, 18 views)
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Old 03-22-2023, 07:15 AM   #17
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If you want more details here are the list of AT1 notes that were reset to zero.

https://www.credit-suisse.com/about-...struments.html

If you want to know who are the owners, use the ISIN number on the right hand side and Google: fintel <ISIN Number>

For example:

fintel US225401AS71

Gives you:

https://fintel.io/so/ch/225401as7

and so on...

https://fintel.io/so/ch/225401ar9

https://fintel.io/so/ch/225401al2

What you will find is preferred funds, bond funds, and insurance trusts are the owners but they lost "other peoples money" not their own.
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Old 03-22-2023, 08:39 AM   #18
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If you want more details here are the list of AT1 notes that were reset to zero.

https://www.credit-suisse.com/about-...struments.html

If you want to know who are the owners, use the ISIN number on the right hand side and Google: fintel <ISIN Number>

For example:

fintel US225401AS71

Gives you:

https://fintel.io/so/ch/225401as7

and so on...

https://fintel.io/so/ch/225401ar9

https://fintel.io/so/ch/225401al2

What you will find is preferred funds, bond funds, and insurance trusts are the owners but they lost "other peoples money" not their own.
Freedom, thanks for posting this. One of the issues for us "little guys" who were never or are no longer in the business is access to heavy duty research tools (like a Bloomberg terminal). A lot of it is out there, we just don't know how to find it.

The resources provided in this thread and others is a great thing about ER.org.
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Old 03-22-2023, 08:53 AM   #19
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New AT-1 issuance is pretty much dead for now. No one is going to buy these bonds after the Swiss debacle.

Credit Suisse fallout threatens to halt issuance of risky bank debt
https://www.ft.com/content/3f405e6d-...a-3ec9cf4f7054

Quote:
The fallout from the Credit Suisse deal “changes the whole nature of the [AT1] market, and I think the ability to issue going forward is probably close to zero”, said Greg Peters, co-chief investment officer of PGIM Fixed Income. “Basically, it’s a zombie market going forward in my mind.”

As the old adage goes, “People should be more concerned with the return OF their principal than the return ON their principal.”
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Old 03-22-2023, 09:54 AM   #20
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New AT-1 issuance is pretty much dead for now. No one is going to buy these bonds after the Swiss debacle.

Credit Suisse fallout threatens to halt issuance of risky bank debt
https://www.ft.com/content/3f405e6d-...a-3ec9cf4f7054




As the old adage goes, ďPeople should be more concerned with the return OF their principal than the return ON their principal.Ē
It doesn't change the fact that there are still $275B in AT1 debt lurking in funds.
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