Credit Suisse CDSs offer no reprieve for AT1 losses

Legal experts pore over credit definitions after AT1 writedown

Valerio Rosati/Alamy Stock Photo

When Credit Suisse’s Additional Tier 1 bonds were wiped out as part of its sale to UBS, some traders were left wondering whether the bail-in would trigger the $20 billion pile of credit default swaps (CDSs) referencing the bank’s debt.

One industry source says they had to “check internally” as the answer was not “immediately obvious”. A lawyer says the outcome for CDSs was not “crystal clear”, even for industry stalwarts.

Two lawyers told they fielded client queries on the matter.


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