Prices on Zeroed Credit Suisse AT1s Rise After Court Ruling

(Bloomberg) — Prices on claims tied to Credit Suisse Additional Tier 1 bonds, which were wiped out in 2023, have risen rapidly after a Swiss court gave a partial win to investors seeking damages.

Dealers are willing to buy claims for around 30 cents on the dollar, according to three people who have seen the quotes. The last quoted prices before the court’s announcement stood at about 12 cents, the people said. Credit Suisse’s AT1s, the riskiest type of bank debt, were completely written off as part of a state-orchestrated takeover by Swiss rival UBS Group AG more than two years ago.

The AT1s are no longer treated as securities that UBS is responsible for ever since their wipeout. Instead, investors trade claims on any potential payouts, typically divided between those holders who have taken filed claims through the court and those who haven’t. For those who haven’t filed claims, the holder may risk forfeiting recovery. In trading, filed claims usually carry higher value and a clearer legal standing, while unfiled ones trade at a deeper discount given the added uncertainty.

Fresh quotes for the AT1 claims began circling after the Swiss Federal Administrative Court revoked a decree that made the writedown possible, and in a test case, sided with the complainants’ right to appeal. The court said it has not yet decided on the reversal request and that the the other cases are now suspended until the decision regarding the revocation of the decree becomes final.

(Updates with latest quote in second paragraph, explanation of claims in third.)

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