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  • Jim Costa

Dear Jim: BONDS, ECB urges global rules for debt erased in Credit Suisse rescue.

From the Luxembourg Times. Have link but on this rare occasion I was able to open the article without a subscription to cut and paste.

See my *** below....bonds canceled?? So what happens to those entities or persons holding those bonds???

See [***] bail-in notes.

Global rules?? ECB urges global rules. Jim can you expound when you get a chance?

Source: Bloomberg 16/11/2023

The European Union’s top bank regulator urged global rules for a type of hybrid debt issued by lenders, after the market for the securities was rattled this year when such bonds were wiped out in the rescue of Credit Suisse.

Global rules would help additional tier 1 bonds fulfill their regulatory purpose because then “everybody understands how these instruments work in times of stress,” Andrea Enria, the head of the European Central Bank’s supervisory arm, said at a conference. He suggested the international standard-setting body known as Basel Committee should standardize the debt.

AT1 securities played a pivotal role in the government - engineered takeover of Credit Suisse by UBS Group AG in March, when a last-minute tweak to Swiss law allowed roughly $17 billion worth of the bonds issued by Credit Suisse to be canceled. ***

The move sweetened the deal for UBS, but many AT1 investors decried the decision because it left them empty-handed even though Credit Suisse shareholders weren’t completely wiped out.

Typically, equity holders take losses in the collapse of a lender before holders of other forms of funding.

While the decision to bail in [***] AT1 securities in the case of Credit Suisse was the right one, several of their unique features such as their permanent writedown “created the impression that AT1 is junior to equity,” Enria said on Thursday.

The wipe-out of the Credit Suisse securities triggered the biggest daily loss in the market’s history, and sent yields soaring above 15% for the first time, according to a Bloomberg index.

It has since recovered, with UBS carrying out its first issuance of AT1 bonds since the March events. The securities, which were heavily over-subscribed, had features that set them apart from the Credit Suisse ones


Response: During the 1972 oil crisis, I saw a political cartoon of President Jimmy Carter, wearing a plaid Suit, holding a deed to the Brooklyn Bridge. He had a most shocked look on his face with the caption "You mean he LIEEED?"

Desperate people do desperate things. This was my survival motto in working for companies in trouble trying to turn them around. I had to make certain I was protected at all times.

Tier 1 Securities are given a "special" jump in the creditors line to go to the very front, ahead of the stockholders. This is contrary to most law. The people in the back of the line are pissed because they were lied to by the law they depended on. The stockholders are pissed because they may have been lied to by the special legislation/ government deal". This is what happens when you leave the world of law behind, making it a two tiered system.

So now the Banking Industry is asking for special rules on protecting the Banksters, who just got a bail out, to make sure they weren't lied to. Perhaps what was promised needs to be backed up now as new law before every bank in the world is hit with this problem as the Global Banking System is about to fall.

My bet is nothing will come from this. First there is no time left to make it happen for the Banksters. Secondly, when the banks fall there is no need to open the door on all debts by anyone on the planet to be sued as the banks fail. When a debt is forgiven, it is forgiven. Period. The game is over.

A true global collapse cannot be litigated away after the fact. The Game is Over.

The Banksters can't litigate their way back into the game as winners.

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