$250 Topics: Banks, Bank Capital Requirements
Summary: Credit Suisse Group AG's emergency
merger with UBS Group AG will wipe out the
bank's riskiest bonds, rattling investors in the
quarter-trillion-dollar market for similar bank debt.
About 16 billion Swiss francs, or about $17.3
billion, of the bank's additional tier 1 bonds will be
completely written down, Switzerland's financial
regulator, Finma, said in a Sunday statement.
Credit Suisse also said it was informed by Finma
that the bonds would be "written off to zero."
Questions:
• What are AT1 bonds?
• Why have banks liked issuing them?
• Why have investors liked buying them?
What is unusual about the Credit Suisse
AT1s being written off?