Pimco and Invesco had the biggest holdings in Credit Suisse CoCo bonds: report

marketwatch2023-03-21

Investment heavyweights Pimco and Invesco will face huge losses as some of the largest AT1 bondholders in Credit Suisse, with over $1.1 billion of investment in the risky bonds written down to zero, Bloomberg reported on Tuesday.

Swiss regulator Finma announced on Sunday that as part of the merger with UBS, it would write down the value of Credit Suisse’s CS, -52.99% CSGN, -1.00% Additional Tier 1 bonds – or contingent convertible bonds or CoCo bonds – from 16 billion francs ($17.2 billion) down to zero.

The news shocked investors of the $275 billion AT1 bond market, triggering a sell-off in other European bank debt.

California-based Pimco holds around $807 million in the debt stack, while Invesco has around $370 million worth of AT1 bonds, Bloomberg said, citing a source familiar with the matter.

However, that source said Pimco could have pared back some losses as it also holds almost $3 billion of Credit Suisse senior bank bonds, which slightly rose on Monday.

Read: What are CoCos and why are Credit Suisse’s now worth zero?

Elsewhere, BlackRock’s BLK, +1.08% exposure to Credit Suisse’s AT1 debt stands at $113 million, the report said, though citing a source who said the global investment manager had recently began to reduce its holdings.

AT1 bondholders are preparing to fight back on Finma’s move. A call with Credit Suisse bondholders is set to take place this Wednesday, according to law firm Quinn Emanuel Urquhart & Sullivan, which is exploring potential legal actions on behalf of AT1 bondholders.

Pimco, Invesco, and BlackRock did not immediately respond to a request for comment.

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