[HN Gopher] Credit Suisse's $17B of Risky Bonds Are Now Worthless
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Credit Suisse's $17B of Risky Bonds Are Now Worthless
Author : nairboon
Score : 44 points
Date : 2023-03-19 21:31 UTC (1 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| TheOtherHobbes wrote:
| If the casino always wins, why is it so hard to identify who owns
| this[1] casino?
|
| [1] Not CS, but the entire "serious" financial system.
| codetrotter wrote:
| And they wonder why we want to replace the traditional banking
| system.
|
| Here's a hint: it's not got anything to do with either
| "metaverse" bs nor with silly "NFT" JPEGs.
|
| Read the original Bitcoin whitepaper.
|
| https://bitcoin.org/bitcoin.pdf
| qwytw wrote:
| Using an ultra deflationary token like bitcoin as a global
| currency would literally be the most stupid thing that ever
| happened in human history.
|
| Basically people who held significant amounts of bitcoin from
| early on would become billionaires (if not trillionaires...) by
| having provided zero value to the economy. As awful and unfair
| what we have currently is it's still several magnitudes
| superior in almost any conceivable way than a global financial
| system based on bitcoin.
|
| I can imagine some sort of a crypto currency possible becoming
| dominant in the future. But Bitcoin itself is pretty much the
| worst option I can imagine.
| justinzollars wrote:
| The competing system is BRICS + Saudi Arabia, Egypt, Iran,
| Turkey and Pakistan. They will probably transact in gold -
| certainly not bitcoin. In the West, if there is a collapse of
| our system, they will make bitcoin illegal. I just don't see it
| as anything other than a short term speculation.
| georgeplusplus wrote:
| The problems with the gold standard is we had one and
| everyone lied about how much gold they had, Causing the lost
| decade in the 70s/80s.
|
| Maybe BRICS will propose a solution that uses Blockchain to
| verify gold ledgers.
| adhesive_wombat wrote:
| The ledger is verified but how do you know the gold is
| really there?
| Yoric wrote:
| How could blockchain verify anything physical?
| tuyguntn wrote:
| issues are coming up mostly because of interest based economy
| and multitude of instruments built on top of it.
|
| IMHO, even if whole banking system will be replaced with
| bitcoin, interest based economy will be built on top of it and
| same instruments will be built with similar level of issues
| pfannkuchen wrote:
| The difference is that a central authority doesn't control
| the size of the bitcoin supply. It wouldn't be a utopia, it
| would only fix a certain class of problems we have today.
| ClumsyPilot wrote:
| If the national goverbment loses control of thr moneu
| supply you will have auch a total disaster that current
| issues will look rosy.
|
| Just look at what happened to Greece, they cant control
| their fiscal policy and they have been stuck in the mud for
| 20 years. The same will happen to the world as a whole
| georgeplusplus wrote:
| You wouldn't want a central authority to control the size
| of your money supply this would certainly lead to abuse
| oppression and a dystopia.
| r_hoods_ghost wrote:
| A central authority doesn't control the size of the money
| supply in our current economy either, as the vast majority
| of money is created by private banks and other institutions
| issuing loans.
| zhoutong wrote:
| I was initially surprised about this because AT1 notes are
| supposed to rank higher than equity. It seems that almost no one
| saw this coming (CS AT1 bonds traded higher this weekend before
| the write-down announcement), and traders presumed that
| bondholders should be made whole if equity holders get something.
|
| However then I looked at the information memorandum of these AT1
| bonds (e.g. https://www.credit-suisse.com/media/assets/about-
| us/docs/inv...). Credit Suisse titled their issues as "Perpetual
| Tier 1 Contingent Write-down Capital Notes". Note that it's
| "contingent write-down" rather than the more typical "contingent
| convertible". The IM also doesn't contain an explicit conversion
| price or conditions.
|
| Almost everyone would call this a "CoCo bond", even though its
| terms are exceedingly clear -- if CET1 falls below 7%, a
| Contingency Event, which is a Write-down Event, occurs, and "the
| full principal amount of the Notes will automatically and
| permanently be written-down to zero on the Write-down Date." In
| other IM issued by other banks I've seen, usually such event is
| followed by a mandatory conversion to ordinary shares rather than
| an immediate write-down. I wonder if this nuance was fully
| considered and priced in the trading of such instruments.
| CaliforniaKarl wrote:
| https://archive.md/EmhLs
| cpncrunch wrote:
| The Reuters article has more background information, and isn't
| behind a paywall:
|
| https://www.reuters.com/business/finance/credit-suisse-write...
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(page generated 2023-03-19 23:00 UTC)