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This is really a breathtaking legal situation. Yeah, not really. They issued USD debt and chose NYC as the legal jurisdiction to make their bond more attract
by throwaway2037 3y ago
This is really a breathtaking legal situation.
Yeah, not really. They issued USD debt and chose NYC as the legal jurisdiction to make their bond more attractive to overseas buyers. There are probably a myriad of overseas entities involved. It is very unlikely this will spread back to Mainland China.
Bankruptcy law typically trumps virtually all other laws, with not much to guide the court's discretion.
No, sovereignty does. We learned that during the CoCo bond 100% write-down during the Credit Suisse forced merger with UBS.
- HWR_14 3y agoWhat CoCo bond write down? Or do you mean those special bonds bank issues that go to zero before any other assets during a run?
- throwaway2037 3y agoThanks for asking. Yes, exactly right. To be clear, I needed to Google the exact meaning of CoCo bonds. It would better to say AT1 bonds. Google defines AT1/CoCo bonds as: AT1 bonds are contingent convertable (CoCo) bonds that are designed to functon as both debt and equity. More: https://www.investopedia.com/terms/c/contingentconvertible.asp https://www.investopedia.com/terms/c/contingentconvertible.a... BTW -- The writedown is incomplete. There are numerous court battles in numerous jurisdictions that may take 5-10 years to wind down. And, no, I don't think the Swiss Gov't will lose any of them. In the end, UBS will probably throw some pennies at these poor fools.
- HWR_14 3y agoThose poor fools got a premium rate for this to happen. Like, the entire point of AT1 bonds is this can happen. Other banks have AT1 bonds, and I think they have also been written down. Far from the Swiss government pulling a bait and switch, the point of AT1 bond is to have privatized safety net like how it is being used.
- urthor 3y agoExcellent point about sovereignty and the absurd Credit Suisse merger.