As I’m sure all of you have heard by now. We finally have a conclusion to the Credit Suisse saga. Because UBS has agreed to buy out Credit Suisse, supported with a liquidity backstop from the Swiss National Bank. With things like this though – the devil is in the details. And there are two points with the “bailout” that are very concerning:

1. AT1 Bondholders (CoCo) wiped out ahead of equity holders – this will trigger repricing of AT1s across the board
2. The speed of the deal is astounding – how bad was the run on Credit Suisse last week?

I’m not going to mince words. I thought the bailout was very poorly done. The wiping out of CoCo ahead of equity holders just threw the entire rulebook (built over the past decade) for AT1 bonds out of the window. This is going to trigger forced repricing (even selling) across the board, in what is close to a $300 billion asset class....