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Riskiest Bank Debt Is a Tough Sell After Credit Suisse Wipeout

  • Soaring refinancing costs has increased risk of skipped calls
  • Demand for AT1s may be permanently impaired, analyst says
A Credit Suisse Group AG bank branch in Geneva, Switzerland.

A Credit Suisse Group AG bank branch in Geneva, Switzerland.

Photographer: Jose Cendon/Bloomberg
Updated on

The $256 billion market for additional tier 1 debt is still reeling from Credit Suisse Group AG’s debt wipeout.

For all the soothing words from bank regulators and politicians, the controversial writedown of risky debt as part of the Swiss bank’s emergency rescue has caused big ripple effects. Yields have stayed near record highs and concern is growing that the market convention of buying back AT1s will be broken in the coming months, leaving investors stuck with the debt.