AT1 Bond Holders Left in the Dust: Shareholders Reap Billions

• UBS bought out Credit Suisse for $3.2 billion
• AT1 Credit Suisse bond holders will not be paid back
• Shareholders will receive $3 billion of the buyout price

Pre-Market Moves

UBS down 5%, Credit Suisse down 7% and First Republic down 33%. AT1 Credit Suisse bond holders are at a loss due to the buyout of the company by UBS.

International Resolution Principles and Rules

The international resolution principles and rules agreed upon after 2008 state that AT1 holders should be repaid before shareholders, however this did not occur with the UBS/Credit Suisse buyout as shareholders are receiving a large portion of the buyout price.

Impact on Bond Holders

As a result of the buyout, AT1 Credit Suisse bond holders will get nothing while shareholders will receive billions from the buyout price. This has had an immediate impact on pre-market moves with stocks such as UBS, Credit Suisse and First Republic dropping significantly.

Implications for Other Countries

The move by Swiss government to prioritize shareholders over bond holders has led to questions about whether other countries could follow in their footsteps. It remains to be seen whether this action will have any long term implications for global financial markets.

Analysis by James Van Straten

James Van Straten is a Research Analyst at CryptoSlate who is passionate about data, technology and identifying trends. He sees Bitcoin as one of the greatest inventions of the 21st century and believes that it could have major implications for global financial markets.