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03-20-2023, 12:09 PM
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#1
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,164
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Credit Suisse AT1 Bonds
I am soooo glad I didn’t 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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03-20-2023, 12:23 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,129
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 Quote:
Originally Posted by Dash man
I am soooo glad I didn’t 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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Is that true for individual investors?
__________________
Life is good. Then you die.
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03-20-2023, 12:26 PM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,164
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Quote:
Originally Posted by lawman
Is that true for individual investors?
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Here’s the link to the article I read about it. I didn’t see any differentiation for individual investors.
https://www.wsj.com/articles/credit-...arket-10be7d04
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Treasury Bills, Notes, and Bonds Discussion
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03-20-2023, 12:35 PM
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#4
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,164
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Treasury Bills, Notes, and Bonds Discussion
Quote:
Originally Posted by lawman
Is that true for individual investors?
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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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03-20-2023, 12:43 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,710
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Quote:
Originally Posted by Dash man
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.
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03-20-2023, 01:07 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2015
Posts: 2,520
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Quote:
Originally Posted by Spock
You didn't have AT1s. They are only available to other banks, funds, and other whales only.
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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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03-20-2023, 02:01 PM
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#8
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gone traveling
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 34,002
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03-20-2023, 02:57 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,710
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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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03-21-2023, 07:25 AM
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#10
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,164
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My scale would say otherwise! 
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03-21-2023, 08:33 AM
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#11
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gone traveling
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 34,002
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03-21-2023, 09:33 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,262
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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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03-22-2023, 06:37 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,789
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For your amusement/concern, biggest holders of CS AT1 "Bonds"
https://t.me/tradingrumors/50508
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03-22-2023, 06:47 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,710
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Quote:
Originally Posted by copyright1997reloaded
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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".
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03-22-2023, 06:51 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,789
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Quote:
Originally Posted by Spock
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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A little better on the tweet bird: https://twitter.com/runews/status/16...131485186?s=20
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03-22-2023, 06:59 AM
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#16
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Recycles dryer sheets
Join Date: Oct 2016
Posts: 404
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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.
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03-22-2023, 08:39 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,789
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Quote:
Originally Posted by Freedom56
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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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03-22-2023, 08:53 AM
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#19
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Recycles dryer sheets
Join Date: Oct 2016
Posts: 404
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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:
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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.”
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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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03-22-2023, 09:54 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,262
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Quote:
Originally Posted by Go-NoGo
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, “People should be more concerned with the return OF their principal than the return ON their principal.” |
It doesn't change the fact that there are still $275B in AT1 debt lurking in funds.
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