Pacific Investment Management Co. and Invesco Ltd. are among the largest holders of Credit Suisse’s so-called Additional Tier 1 bonds that have been wiped out after the bank’s takeover by UBS Group AG.
Newport Beach, California-based asset manager Pimco is the largest holder of the Swiss lender’s AT1 bonds with around $807 million of the securities — the riskiest in the bank’s debt stack — according to a person familiar with the matter who isn’t authorized to speak publicly.
Because of the extraordinary government support, the takeover is set to trigger a complete write-down of 16 billion francs ($17.3 billion) of the bank’s AT1 bonds in order to increase core capital.
Pimco also holds almost $3 billion of Credit Suisse senior bank bonds, some of which have risen by around 25 cents on the euro on Monday compared to Friday’s levels, the person said. That may have offset some of the losses from its AT1 exposure.
Elsewhere, Invesco holds around $370 million of Credit Suisse’s AT1 debt, according to data compiled by Bloomberg.
BlackRock Inc.’s AT1 exposure at the end of February was around $113 million, according to Bloomberg-compiled data. BlackRock has reduced some of its holdings in recent weeks, according to a person familiar with the matter.
Representatives for Pimco and BlackRock declined to comment, while Invesco did not immediately respond to requests for comments.
AT1 bonds are a legacy of the European debt crisis, and are the lowest-ranked bank debt, offering attractive returns in good times but taking the first hit when a bank runs into trouble.
Some holders of the bank’s AT1 bonds are preparing to push back on the regulator’s decision to write off the debt. Traders at Goldman Sachs Group Inc. are preparing to take bids on claims against Credit Suisse that could see investors recover some value, potentially through litigation, people with knowledge of the matter have said.
--With assistance from Tasos Vossos.
This article was provided by Bloomberg News.