Credit Suisse Additional Tier 1 (AT1) Default

Japanese investors purchased approximately 140 billion yen ($1 billion) of Credit Suisse Group AG’s bonds which were written off last month when the Swiss bank was suddenly sold, according to a recent article in Bloomberg.  The Credit Suisse Additional Tier 1 (AT1) bond holders in Japan are suffering devastating losses. The AT1 bonds lost all value when the Swiss government did an emergency acquisition of Credit Suisse by UBS Group AG last month.

In a recent Reuter’s article, they stated that the decision to write down 16 billion Swiss francs ($17.5 billion) of Credit Suisse bonds, known as Additional Tier 1 or AT1 debt, to zero, was part of a forced rescue merger with UBS. Under the deal, holders of Credit Suisse AT1 bonds will get nothing, but shareholders, who usually rank below bondholders, will receive $3.23 billion.

AT1 bonds are a $275 billion sector also known as "contingent convertibles" or "CoCo" bonds. They act as shock absorbers if a bank's capital levels fall below a certain threshold, according to the Reuter’s article. They can be converted into equity or written off. These bonds make up part of the capital cushion that regulators require banks to hold to provide support in times of market turmoil. These are the riskiest type of bonds a bank can issue and so carry a higher coupon, states Reuters.

It was reported that clients of Mitsubishi UFJ Financial Group Inc. may have suffered financial losses due to Credit Suisse Group AG's AT1 Bonds. The clients of Mitsubishi UFJ Financial Group Inc.'s lost over $700 million and may have purchased these bonds through the bank's Mitsubishi UFJ Financial Group MorganStanley (MUFGMS).

A number of Credit Suisse bond holders are considering legal action after their investments went to zero. Credit Suisse has lost the confidence of investors and depositors over the last several weeks which resulted in a free-falling share price and a net asset outflow. There is also speculation that there may be a risk Credit Suisse could become illiquid or insolvent.

If you or a loved one have lost your investment in Credit Suisse Additional Tier 1 (AT1) bonds, contact Soreide Law Group and speak to an experienced securities lawyer at no cost.  Soreide Law Group has represented our Japanese clients successfully in the past before FINRA and has Japanese interpreters available to you. Please contact us at:  888-760-6552. Or, you may fill out a client form on our website at www.securitieslawyer.com.

Japanese Investors

ファイナンシャルアドバイザーがAT1債を勧めましたか？