Cocos and Perls: the shock of shareholders ranking ahead of bondholders

Cocos and Perls: the shock of shareholders ranking ahead of bondholders
Credit Suisse bondholders were wiped out while shareholders got UBS shares. (Image: Getty)
Jenny Ruth
It’s never happened before and it’s one of the reasons markets remain so jittery.Normally, when any limited liability company collapses, the shareholders rank last after everybody else. So, they lose their entire investment.In the Credit Suisse bail-out/sale to UBS, the regulator decided to completely wipe out the money investors had in alternative tier 1 bonds (AT1) while allowing Credit Suisse’s shareholders to realise a fraction of their equity.So, the AT1 bondholders lost all of their more than US$17 billion (NZ$27.3b) inv...

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