Credit Suisse said $17.24 billion Tier 1 debt will be written down to zero， while shareholders, who sit below bonds in the priority ladder for repayment in a bankruptcy process, will receive $3.23 billion under the UBS deal.
The move reflects authorities' desire to see private investors share the pain from Credit Suisse's troubles， sending $275 billion market for bank funding into a tailspin, while threatening blowback for European policy makers in crisis-fighting mode.
"It's stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders," said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse's AT1 debt.
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