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US investors to fight the Swiss government.

 

US dis­tressed debt investors and cor­por­ate lit­ig­at­ors are pre­par­ing to fight the Swiss gov­ern­ment for writ­ing down $17bn of Credit Suisse bonds as part of the bank’s shot­gun mar­riage with UBS. Switzer­land pro­voked the ire of bond investors when the gov­ern­ment used an emer­gency ordin­ance to write down the bonds to zero, even as it orches­trated a deal where UBS will pay $3.25bn to share­hold­ers. AT1s are a class of debt designed to take losses when insti­tu­tions hit trouble but are believed to rank ahead of equity on the bal­ance sheet.

Tep­per is among the most suc­cess­ful investors in troubled fin­an­cial com­pan­ies, mak­ing bil­lions of dol­lars on a 2009 wager that US banks would not be nation­al­ised dur­ing the last crisis. Appa­loosa bought a range of Credit Suisse debt as it des­cen­ded into chaos.

Mark Dowding, chief invest­ment officer at RBC Blue­Bay, which held Credit Suisse AT1 bonds, said Switzer­land was «look­ing more like a banana repub­lic». Gold­man Sachs is one of the banks facil­it­at­ing claims trad­ing and has offered prices at single-digit cents on the dol­lar.

Quinn Emanuel Urquhart & Sul­li­van and Pal­las Part­ners are among the law firms rep­res­ent­ing bond­hold­ers, with Quinn host­ing a call yes­ter­day joined by more than 750 par­ti­cipants.

Quinn part­ner Richard East told the FT the deal was «a res­ol­u­tion dressed up as a mer­ger» and poin­ted to state­ments by the European Cent­ral Bank and Bank of Eng­land, which dis­tanced them­selves from the Swiss approach.

www.sba.tax

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Comments

  1. Max23 March 2023 at 12:26

    The Swiss approach is bad. It shows the whole Swiss banking system is broken. You can't just clap your hands and fix the whole Credit Suisse debacle. It doesn't work like this.

    ReplyDelete
    Replies
    1. Connor23 March 2023 at 12:41

      Yes, they've literally just written down $17bn and that's with a B! It just goes to show that when it comes to banks anything can happen. They can mess up and destroy people's savings and then they just get away with it.

      Delete
  2. Frank23 March 2023 at 13:01

    Of course bond investors (and not just them) are angry. You can't do things like these. It undermines the whole banking system and will lead to serious problems, especially in Switzerland.

    ReplyDelete

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