As posted yesterday in relation to the UBS takeover of Credit Suisse:

  • 16bn CHF of high yield Additional Tier 1 (AT1) CS bonds will be written down to zero.
  • These bonds were attractive when eurozone yields were zero/negative.
  • Bank stocks are under pressure here in the region with concern over banks' bond exposures related to this write down of AT1s.
  • AT1 bonds are a form of junior debt that counts towards banks' regulatory capital.
  • They were designed as a way to transfer risks to investors and away from taxpayers if a bank gets into trouble.


Reuters reports now that Pacific Investment Management Co (PIMCO), manager of circa $1.7tln in assets, lost about $340 million on the AT1 bonds. Reuters cite a source familiar with the situation.


  • PIMCO's current holdings of Credit Suisse bonds, excluding the AT1 debt, were worth over $4 billion, said the source, who was speaking on condition of anonymity.
  • Losses on the AT1 securities have been offset by gains in PIMCO's holdings of other bonds issued by the Swiss lender, which have gone up in value after a rescue merger with UBS, said the source.
Pacific Investment Management Company (PIMCO) is a US firm that manages circa US$1.9 trillion in ass