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Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout

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Bibliographic Details
Main Authors: Valbuena, Javier Paz, Eidenmüller, Horst
Format: Book
Language:English
Published: Springer 2023
Subjects:
bailout of Credit Suisse
AT1 bondholders
Online Access:https://link.springer.com/article/10.1007/s40804-023-00292-4
https://dlib.phenikaa-uni.edu.vn/handle/PNK/9087
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spelling oai:localhost:PNK-90872023-09-18T08:12:58Z Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout Valbuena, Javier Paz Eidenmüller, Horst bailout of Credit Suisse AT1 bondholders CC-BY The recent bailout of Credit Suisse is noteworthy for many reasons. One of them is that, while AT1 bondholders were wiped out, shareholders were not. This violates the ‘absolute priority rule’ which is central to corporate reorganisation and bank resolution regimes. In this article, we analyse the motives and mechanics of the write-down and argue that, given the bond terms, the prospect for a legal challenge by the bondholders is slim. At the same time, we question the merits of the write-down. Bondholders should fare no worse than common equity, regardless of whether a financial institution is put in an insolvency proceeding or bailed out, and the applicable bond terms should reflect this. We also raise the issue of a more principled approach to bailouts more generally. 2023-09-18T08:12:58Z 2023-09-18T08:12:58Z 2023 Book https://link.springer.com/article/10.1007/s40804-023-00292-4 https://dlib.phenikaa-uni.edu.vn/handle/PNK/9087 en application/pdf Springer
institution Digital Phenikaa
collection Digital Phenikaa
language English
topic bailout of Credit Suisse
AT1 bondholders
spellingShingle bailout of Credit Suisse
AT1 bondholders
Valbuena, Javier Paz
Eidenmüller, Horst
Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
description CC-BY
format Book
author Valbuena, Javier Paz
Eidenmüller, Horst
author_facet Valbuena, Javier Paz
Eidenmüller, Horst
author_sort Valbuena, Javier Paz
title Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
title_short Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
title_full Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
title_fullStr Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
title_full_unstemmed Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
title_sort bailout blues: the write-down of the at1 bonds in the credit suisse bailout
publisher Springer
publishDate 2023
url https://link.springer.com/article/10.1007/s40804-023-00292-4
https://dlib.phenikaa-uni.edu.vn/handle/PNK/9087
_version_ 1779307153848270848
score 8.881002

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