Regulators Asked If Credit Suisse Bond Wipeout Should Trigger Insurance Payout
- Derivatives panel asked to decide if credit event occured
- Funds have been piling into swaps tied to bank’s junior debt
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Two months after many investors were caught off guard by the writedown of Credit Suisse Group AG’s Additional Tier 1 bonds, the securities are once again at the center of a market debate. This time the divide is over whether the event will trigger an insurance payout.
Funds including FourSixThree Capital and Diameter Capital Partners have been buying credit default swaps linked to another set of junior Credit Suisse bonds, betting that the derivatives panel tasked with overseeing the market will rule that a credit event has occurred. Law firm Kramer Levin has been helping with efforts to make a case for a triggering event.