These Credit Suisse Bonds Signal the Bank’s $54 Billion Lifeline May Not Be Enough
- Bail-in bonds may be converted to equity if regulators step in
- Some investors start to see buying opportunity after lifeline
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A category of Credit Suisse Group AG bonds is warning that a liquidity lifeline from Switzerland’s central bank may not be enough to stabilize the embattled lender.
The bank’s holding company has almost 76 billion Swiss francs ($82 billion) of bail-in senior bonds and additional tier 1 notes that are trading at distressed levels. If the regulator steps in to protect Credit Suisse’s depositors, the AT1s would be written off while bail-in-able senior holding company debt would be converted to equity, according to Finma, which regulates banks in Switzerland. AT1s can also be written down if the bank’s capital ratio falls below a predetermined level.