Europe's bank bonds battered after Credit Suisse debt wipeout
The Credit Suisse rescue has shaken the European banking sector and fears of wider fallout remain. Central banksto help to calm the turmoil, but the cost of insuring against bank defaults continued to climb, with UBS credit default swaps rising on Monday to levels last seen more than a decade ago.
Under the Credit Suisse rescue deal, 16 billion Swiss francs worth of Credit Suisse Additional Tier 1 debtSo such bonds, known as AT1s or "CoCos" bondholders of Spain's Banco Popular lost in 2017. A UBS AT1 bond callable in January 2024 was trading at a yield of 27%, up from 12% on Friday, demonstrating how much more costly this type of debt could become in the wake of the Credit Suisse rescue.
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