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Credit Suisse’s Asian AT1 holders plan lawsuits against Swiss government over debt write-off

Several Asian investor groups are planning to file lawsuits against the Swiss government after Credit Suisse cut the value of $17 billion of Additional Tier 1 (AT1) financial instruments to zero as part of its takeover agreement with UBS. The move has caused market tremors globally and has led to fears of a similar crisis in Asia.

AT1 is a popular trading instrument in Asia due to the high interest rates it offers, making it an attractive security amid a low-interest-rate environment over the past several years. Most AT1 issuers are European banks with a high reputation and credit rating, but Credit Suisse’s write-off has caused concerns among Hong Kong and Singapore investors, who are among the major holders of AT1 Credit Suisse bonds.

Law firms in Hong Kong and Singapore have received numerous inquiries from investors, including hedge funds, seeking to pursue a lawsuit against the Swiss government. Quinn Emanuel Erkuhart & Sullivan, a US law firm, is already representing Credit Suisse’s Asian AT1 holders who filed a lawsuit on March 22, claiming compensation for their losses.

The Swiss government’s decision has shaken AT1 bond markets widely in Europe and Asia. Investment managers have warned that investors will not be able to easily restore confidence in AT1.

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