Advertisement
Canada markets open in 2 hours 14 minutes

  • S&P/TSX

    22,011.72
    +139.76 (+0.64%)
     

  • S&P 500

    5,070.55
    +59.95 (+1.20%)
     

  • DOW

    38,503.69
    +263.71 (+0.69%)
     

  • CAD/USD

    0.7307
    -0.0013 (-0.18%)
     

  • CRUDE OIL

    82.77
    -0.59 (-0.71%)
     

  • Bitcoin CAD

    90,886.61
    +265.22 (+0.29%)
     

  • CMC Crypto 200

    1,434.50
    +10.40 (+0.73%)
     

  • GOLD FUTURES

    2,328.60
    -13.50 (-0.58%)
     

  • RUSSELL 2000

    2,002.64
    +35.17 (+1.79%)
     

  • 10-Yr Bond

    4.5980
    -0.0250 (-0.54%)
     

  • NASDAQ futures

    17,700.75
    +94.00 (+0.53%)
     

  • VOLATILITY

    15.85
    +0.16 (+1.02%)
     

  • FTSE

    8,084.94
    +40.13 (+0.50%)
     

  • NIKKEI 225

    38,460.08
    +907.92 (+2.42%)
     

  • CAD/EUR

    0.6834
    -0.0002 (-0.03%)
     

Derivatives that track bonds at the heart of Credit Suisse rescue slide

Reuters
·1 min read
The logo of the Swiss bank Credit Suisse is seen in Zurich

LONDON (Reuters) - Derivatives that track the value of key bank debt fell sharply on Monday, after UBS agreed to rescue rival Credit Suisse, forcing a massive writedown of the latter's additional tier-one debt as part of the deal.

Invesco's AT1 Capital Bond exchange-traded fund, which tracks the value of AT1 debt, dropped 14% in early trading, while WisdomnTree's AT1 CoCo bond ETF was indicated 3% lower.

Additional tier-one bonds, known as AT1s, are a type of contingent convertible debt that make up part of the capital buffers that regulators require banks to hold to protect themselves in times of market turmoil.

If a bank's capital levels fall below a set threshold, AT1s can either be converted into equity or are written off, as they were in the case of Credit Suisse, which had to write off around $16 billion worth.

(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)