- Credit Suisse’s $17bn worth of additional tier 1 (AT1) bonds were written down ahead of its purchase by UBS, impeding banks’ ability to issue AT1s.
- Greg Peters of PGIM Fixed Income said the fallout from the decision “forever impairs the ability to issue AT1s”.
- If banks are effectively locked out of the market for AT1 bonds, they could be forced to rely more heavily on other sources of capital, such as equity.
- The decision has prompted concerns over the future viability of the $260bn segment of debt markets.
- More than $37bn worth of AT1 debt issued globally has call dates in April alone.
Credit Suisse sale ‘forever impairs’ ability of banks to issue AT1s, investors warn
Investors warn that some banks will struggle to issue risky AT1 bonds or pay a higher price for them as Credit Suisse's AT1 bonds were written down, calling into question the future viability of the $260bn segment of debt markets.