“Credit Suisse AT1 Notes declared worthless by CDDC: Hedge funds believe it will trigger CDS payouts”

The Credit Derivatives Determination Committee (CDDC), which oversees the credit default swap (CDS) market, has announced that Credit Suisse Group’s Other Tier 1 Notes (AT1 Notes) have been declared worthless in a credit event. I was asked to judge whether it would be.

CDDC on websiteannouncementMarket participants have submitted a letter asking whether Credit Suisse’s AT1 bonds experienced a so-called government intervention credit event, the statement said. CDDC consists of 13 banks and asset managers.

Switzerland’s Federal Financial Market Supervisory Authority (FINMA) has rendered worthless about $17 billion worth of Credit Suisse AT1 bonds as part of UBS’s deal to buy Credit Suisse.

Hedge funds such as ForsixThree Capital and Diameter Capital Partners are buying the CDS of Credit Suisse AT1 bonds because they believe that the devaluation corresponds to a credit event that leads to the payment of the CDS. Bloomberg News reported. Spreads on the CDS that guarantees Credit Suisse’s subordinated debt for five years widened by 36 basis points (0.01%) to 397 basis points in Thursday’s trading, according to CMAI data.

Credit S Subordinated Bonds Rise in Guarantee Costs as Credit Events Aim

Market participants may seek judgment from the CDDC if they believe that the conditions triggering the payment of the CDS have been met.

Original title:Swaps Panel Asked if Credit Suisse AT1 Wipeout to Trigger Payout(excerpt)