Bank AT1 Bonds Bounce Back as Market Stops Panicking over Credit Suisse $1.7bn Wipeout

After the market rout on Additional Tier 1 dollar bonds yesterday following the wipeout of $17.3 billion worth of Credit Suisse AT1 bonds under the UBS-Credit Suisse merger deal, bond holders finally feel less pressure as most riskier dollar bonds sold by banks in the Asia-Pacific region bounced back in the early trading session on Tuesday.

36 or the 38 AT1 dollar bonds to trade this morning edged higher with perpetual notes of Westpac Banking Corp rose 5.4 cents against the dollar to 84.4 cents, which is the most on record. Meanwhile, perpetual notes of Macquarie Bank Ltd. gained 7.9 cents to 87.3 cents and New Zealand Banking Group’s perpetual note rose nearly 3.5 cents to 95.8 cents per dollar. Only two bonds were traded in negative territory this morning.

However, some of the major gainers this morning, unlike Credit Suisse’s AT1, have a temporary write-down clause, which gives some protections to holders instead of turning into junk.