Exclusive: Swiss authorities mull imposing losses on Credit Suisse bondholders

FRANKFURT, March 19 (Reuters) – Swiss authorities are analyzing imposing losses on Credit score Suisse (CSGN.S) bondholders as a part of a rescue of the financial institution, two sources with information of the matter stated on Sunday.

Nonetheless, European regulators are apprehensive about such a transfer for worry that it might hit investor confidence elsewhere in Europe’s monetary sector, the sources stated, talking on the situation of anonymity.

A last choice, nonetheless, had not been taken and the phrases might nonetheless change, in response to the sources.

Losses on bondholders might must be bigger if Credit score Suisse have been wound down moderately than if it have been taken over by UBS, one of many sources stated. Authorities are attempting to engineer a UBS takeover of Credit score Suisse earlier than monetary markets reopen on Monday.

FINMA, the Swiss regulator, didn’t instantly reply to a request for remark. Credit score Suisse and UBS declined to remark.

Regardless of the prospect of losses, bond traders are hopeful {that a} takeover by UBS would imply their Further Tier 1 bonds are transformed into UBS inventory and extra of their cash protected, two bondholders instructed Reuters.

The worth of Credit score Suisse’s Further Tier 1 bonds jumped in restricted Sunday buying and selling after the Monetary Instances reported that UBS had supplied $1 billion to purchase its rival, one of many traders stated.

Credit score Suisse bonds plunged into distressed territory at or under 30 cents on the greenback this week as traders apprehensive concerning the well being of the financial institution even after the Swiss Nationwide Financial institution offered the lender with a $54 billion emergency mortgage.

Reporting by John O’Donnell and Chiara Elisei; Further reporting by Elisa Martinuzzi; Writing by Tommy Reggiori Wilkes; Modifying by Paritosh Bansal and Hugh Lawson

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