The Swiss bank first sold this form of notes in 2016 as a way of reducing the capital it was required to hold against operational risk.
Zurich Insurance Group provided the underlying insurance contract, part of which was securitised into the cat bonds that are issued from a Bermuda vehicle. Zurich declined to comment, citing client privacy.
Credit Suisse pitched the bonds to investors in its prospectus as a win-win for both the bank and bondholders: the lender benefited from a reduction in its risk-weighted assets, while investors got the coupons. Yet in the aftermath of scandals caused by the collapse in 2021 of specialty-finance firm Greensill and hedge fund Archegos Capital Management – both of which left multi-billion-dollar headaches for Credit Suisse – the cat bonds traded at a heavy discount to par.
The notes required more than one operational risk event to occur for the bonds to be written down, leading some in the market to wonder if those two blunders could see the noteholders lose their principal. In the end, the original notes were retired, and a new set were issued earlier this year.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Aussie fintech to power alternative to Swiss bank-style wealth adviceFinancial planning technology start-up Lumiant wants to disrupt the traditional investment advice provided by the likes of UBS and Credit Suisse.
Read more »
Swiss watch sales hit a record $37b despite half the number being madeIf we’re being asked to pay more than ever for wristwear, it’s because we’re buying more than time.
Read more »
Why the writing was on the wall for the Swiss banking sectorSwiss bankers kept subsidising high-risk investment banking products with their consumer business. And the authorities let them do it, writes Adrian Blundell-Wignall.
Read more »
Sell your stock: bankers fret post Credit SuisseIt’s seven days since Credit Suisse’s rapid capitulation to rival UBS, and seven uneasy sleeps for Australian investment bankers across the street.
Read more »
Banking stress puts US, Europe on watch for credit crunchThe sudden spike in tensions for banks has raised questions about whether major central banks will continue to pursue aggressive interest rate hikes.
Read more »
The great Qantas flight credit racketQantas is riding the fine line between appearing to reunite people with their money and making it maximally difficult for that to occur.
Read more »