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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (10679)	3/20/2023 1:53:48 AM
From: Snowshoe	Read Replies (4) \| Respond to of 13784

Thanks for the explanation on those Credit Suisse CoCo bonds. I imagine we'll see many more financial haircuts like this during the great post-covid unwinding.

To: Elroy Jetson who wrote (10679)	3/20/2023 2:48:56 AM
From: elmatador	Respond to of 13784

Swiss authorities made a blunder; Devil Lies In Details. The UBS-Credit Suisse merger involves some terrifying details. While the equity shareholders will receive CHF3 billion, in a surreal move, the AT1 bondholders (around CHF16 billion) would get nothing. This is against the usual waterfall (hierarchy of claims) , which says that AT1 bondholders are preferred over the equity shareholders, and AT1 would get nothing “ONLY” when equity shareholders are wiped out. CS AT1 bonds were in the form of CoCo (Contingent Convertible) Bonds which would either get written down or converted to equity once a certain trigger is hit, usually an amount of total capital. Nevertheless, European banks have raised over $250 billion via AT1 bonds in the past decade. This precedent will mean that risk will be repriced in these bonds, which may lead to further instability and “CAN” lead to contagion among weaker European banks. Desperate men, do desperata=e ethings UBS CDS has inched up since the deal was announced. Keep a close watch! Is this a potential Lehman Moment for Europe? Time will tell!