A few days after investors in the Additional Tier 1 bond market were jolted by the wipeout of Credit Suisse Group AG’s notes, those holding similar debt in Asia are staring at dozens of securities with call dates this year.
(Bloomberg) — A few days after investors in the Additional Tier 1 bond market were jolted by the wipeout of Credit Suisse Group AG’s notes, those holding similar debt in Asia are staring at dozens of securities with call dates this year.
At least 113 AT1s have an option to call them back in 2023, according to data compiled by Bloomberg. About 50 of those securities come with a feature that may result in them getting temporarily or permanently written down, while only 18 have an option that allows holders to convert to equity. Data wasn’t available on the rest.
The scrutiny on bonds with impending call dates shows how investors are rattled about the stability of the broader market after a shotgun deal to rescue Credit Suisse rendered its AT1s worthless and sparked huge losses for bank debt on Monday. Notes of some of the biggest lenders in the Asia-Pacific region have since rebounded as regulators helped boost confidence, with about half of the dollar AT1 debt tracked by Bloomberg posting gains on Thursday morning.
“Major Southeast Asian banks’ Additional Tier 1 appear to face low non-call risks given ample capital reserves and minor refinancing needs. This is despite a possible freeze on new issuance of AT1s due to negative sentiment after Credit Suisse’s wipeout.”
– Rena Kwok, BI
Call Them CoCos or AT1s, Here’s Why They Got Zeroed: QuickTake
Five of the bonds from Asian issuers are dollar-denominated, totaling more than $6 billion, and callable in the second half of 2023. The remainder are in other currencies, ranging from the Korean won to Indian rupee.
The table below shows the AT1 notes with call dates this month. Click here for an Excel sheet of all the bonds.
(Adds bond move third paragraph, comment from BI analyst)
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