American investors in Credit Suisse and corporate litigators are preparing to take on the government of Switzerland over its decision to wipe out $17 billion worth of Credit Suisse bonds.
Swiss bank Credit Suisse was sold to one of its main competitors, UBS, in a sale brokered by the Swiss government . As part of this deal, UBS was forced to pay out $3.25 billion to shareholders. But the government also used an emergency ordinance to write down the value of the bonds to zero. (Related: Credit Suisse merger with USB could destroy Western bond market after bank zeroed out BILLIONS in bonds .)
These bondholders own securities that are known as Additional Tier 1 (AT1) bonds. Those that hold AT1s purchased these securities on the expectation that, in the event of a bank collapse, they stood ahead of equity holders on the balance sheet.
The emergency […]
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