Report that PIMCO lost US$340 mln with Credit Suisse AT1 bonds write-off | Forexlive

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.

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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.

Also:

• 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.