Credit Suisse’s $17bn AT1 write-off is now seeing more court challenges by bondholders in Swiss courts. This comes on the heels of news that some holders of its AT1s from Singapore were seeking to sue the Swiss government regarding unique protections they should have received. Since its AT1 holders were hit with losses before equity investors were hit, breaking the the traditional capital structure hierarchy, bondholders have argued that they were treated unfairly. Bloomberg reports that they have pointed to a law that was changed the day before the notes were written-off.
Credit Suisse’s perps are trading at ~3-4 cents on the dollar. Bloomberg sources note that hedge funds like Marathon Asset Management, Redwood Capital Management and Sona Asset Management have bought some of CS’s AT1s following the write-off, betting that the notes may provide a solid upside in the future, potentially through litigation.
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