Swiss authorities mull imposing losses on Credit score Suisse bondholders -sources

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FRANKFURT — Swiss authorities are analyzing imposing losses on Credit score Suisse bondholders as a part of a rescue of the financial institution, two sources with data of the matter mentioned on Sunday.

Nonetheless, European regulators are apprehensive about such a transfer for concern that it may hit investor confidence elsewhere in Europe’s monetary sector, the sources mentioned, talking on the situation of anonymity.

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A last determination, nevertheless, had not been taken and the phrases may nonetheless change, in line with the sources.

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Losses on bondholders may should be bigger if Credit score Suisse had been wound down reasonably than if it had been taken over by UBS, one of many sources mentioned. Authorities are attempting to engineer a UBS takeover of Credit score Suisse earlier than monetary markets reopen on Monday.

FINMA, the Swiss regulator, didn’t instantly reply to a request for remark. Credit score Suisse and UBS declined to remark.

Regardless of the prospect of losses, bond buyers are hopeful {that a} takeover by UBS would imply their Further Tier 1 bonds are transformed into UBS inventory and extra of their cash protected, two bondholders instructed Reuters.

The worth of Credit score Suisse’s Further Tier 1 bonds jumped in restricted Sunday buying and selling after the Monetary Occasions reported that UBS had supplied $1 billion to purchase its rival, one of many buyers mentioned.

Credit score Suisse bonds plunged into distressed territory at or under 30 cents on the greenback this week as buyers anxious concerning the well being of the financial institution even after the Swiss Nationwide Financial institution offered the lender with a $54 billion emergency mortgage. (Reporting by John O’Donnell and Chiara Elisei; Further reporting by Elisa Martinuzzi; Writing by Tommy Reggiori Wilkes; Enhancing by Paritosh Bansal and Hugh Lawson)

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