Coco bonds and the morning dip20 Mar 2023 10:57
We dipped 6.5% morning on CO CO jitters. Apparently the swill have different coco bond regs than the rest of EU. In Switzerland a coco bond holder can be wiped out ahead of shareholders rather than afterwards. Big obscure difference that spooked the market this morning. See below:
“ Eurozone regulators weigh in on AT1 bond wipeout
The euro area’s top financial regulators have just issued a statement, in an attempt to reassure markets that the Credit Suisse deal hasn’t changed their position on the hierachy of debt when a bank fails.
The Single Resolution Board, the European Banking Authority and ECB Banking Supervision say they welcome the “comprehensive set of actions taken yesterday by the Swiss authorities”.
The regulators then spell out to investors that their rules will force losses on equity holders, before moving onto investors holding AT1 bonds, despite the Credit Suisse deal inverting this order by wiping out its AT1, or CoCo, bonds “