{"id":20413,"date":"2023-12-21T11:31:40","date_gmt":"2023-12-21T03:31:40","guid":{"rendered":"https:\/\/www.tejwin.com\/?post_type=insight&#038;p=20413"},"modified":"2024-06-06T16:08:58","modified_gmt":"2024-06-06T08:08:58","slug":"what-are-at1-bonds","status":"publish","type":"insight","link":"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/","title":{"rendered":"What are AT1 bonds? The Risks Behind its High\u00a0Yield"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-398.png\" alt=\"What are AT1 bonds? Understanding Risks Behind High Yield\" class=\"wp-image-20415\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-398.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-398-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-398-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-398-768x432.png 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69f4936e6b463\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69f4936e6b463\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Preface\" >Preface<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#What_are_Additional-Tier_1_bonds\" >What are Additional-Tier 1&nbsp;bonds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Categories_of_CoCo_Bonds_A_Comparison_Between_AT1_and_T2_Bonds\" >Categories of CoCo Bonds: A Comparison Between AT1 and T2&nbsp;Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Differences_Between_CoCo_Bonds_and_Convertible_Bonds\" >Differences Between CoCo Bonds and Convertible Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#The_Reasons_Behind_the_Cancellation_of_Credit_Suisses_AT1_Bonds\" >The Reasons Behind the Cancellation of Credit Suisse\u2019s AT1&nbsp;Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#International_Issuance_of_AT1_Bond\" >International Issuance of AT1&nbsp;Bond<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#United_States\" >United States<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#China\" >China<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#AT1_Bonds_Risky_Business_or_Rewarding_Gamble\" >AT1 Bonds: Risky Business or Rewarding Gamble?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Unveiling_the_Risks_and_Allure_of_AT1_Bonds\" >Unveiling the Risks and Allure of AT1&nbsp;Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Investor_Demographics\" >Investor Demographics<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tejwin.com\/en\/insight\/what-are-at1-bonds\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Preface\"><\/span>Preface<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Since March 2022, the US Federal Reserve has consistently raised interest rates, prompting a shift in market sentiment. Investors seeking higher returns than bonds turned to banks, triggering a mass bond sell-off and subsequent price decline. However, by Q4 2023, expectations of a more accommodative stance from the Fed led investors back to the bond market, anticipating gains as prices rebound at the end of the rate hike cycle.<\/p>\n\n\n\n<p>In 2023, global financial markets faced turbulence, marked by the collapse of Silicon Valley Bank and a crisis at Credit Suisse. UBS Group&#8217;s acquisition of Credit Suisse unexpectedly led to the cancellation of all previously issued Credit Suisse Additional Tier-1 (AT1) bonds, causing substantial losses for investors. While some stability returned with Sumitomo Mitsui Financial Group&#8217;s successful sale of $1 billion yen-denominated AT1 bonds, the Credit Suisse incident remains a market focal point.<\/p>\n\n\n\n<p>This article explores the nature of AT1 bonds, why investors engage during interest rate hikes, the impact of bond cancellations, and strategies to avoid pitfalls, shedding light on the hidden risks behind their high yields.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Additional-Tier_1_bonds\"><\/span>What are Additional-Tier 1&nbsp;bonds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In 2023, UBS Group\u2019s acquisition of Credit Suisse unexpectedly led to the cancellation of all previously issued Credit Suisse AT1 bonds. However, looking at the bank\u2019s capital redemption order, stocks have the lowest priority for redemption; even in the case of cancellation, stocks should be addressed first. This move surprised the market. Nevertheless, AT1 bonds have their uniqueness; although categorized as bonds, their issuance reasons and conditions differ significantly from commonly seen bonds.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/1BdPkr1XuNsqjQMaSEHL5zg.png\" alt=\"Bond redemption priority chart.\"\/><figcaption class=\"wp-element-caption\">Bond redemption priority chart. Source: BNP Paribas, compiled by&nbsp;TEJ.<\/figcaption><\/figure>\n\n\n\n<p>AT1 bonds, or Additional Tier 1 Capital Bonds, fall under the category of Contingent Convertible bonds, also known as CoCo Bonds. CoCo Bonds serve to avert a bank\u2019s operational crisis that could lead to bankruptcy due to a rapid increase in liabilities. In times of crisis, CoCo Bonds can be forcibly converted into common stocks, allowing bondholders and shareholders to share losses, thereby reducing the debt ratio and obtaining more substantial capital buffers. This mechanism prevents the escalation of systemic risks and safeguards the entire financial system.<\/p>\n\n\n\n<p>Basel III, published by regulatory authorities in 2010, imposed stricter regulations and mandated systemically important banks to meet capital requirements. AT1 bonds represent a form of Total Loss Absorbing Capacity (TLAC) and are part of Basel III\u2019s stipulation for \u201cbanks issuing long-term debt instruments with conversion terms to common stocks,\u201d aimed at absorbing losses in times of crisis. These instruments contribute to minimizing the impact on the overall market during periods of bad debt or bankruptcy risks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Categories_of_CoCo_Bonds_A_Comparison_Between_AT1_and_T2_Bonds\"><\/span>Categories of CoCo Bonds: A Comparison Between AT1 and T2&nbsp;Bonds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CoCo Bonds can be categorized into T2 and AT1 types based on their product structure. T2 bonds have a specified maturity date, while AT1 bonds are perpetual, with no expiration. Since the primary purpose of AT1 bonds is to absorb losses, and T2 bonds are intended for liquidation when a bank ceases operations, AT1 bonds have a lower trigger threshold and lower priority in the liquidation hierarchy than T2 bonds.<\/p>\n\n\n\n<p>In normal circumstances, AT1 bonds are similar to regular bonds. However, when the issuing bank faces an operational crisis, the principal may be written down or converted into common stock. For example, writing down the principal means the bank redeems the bonds, reducing the burden of future interest payments and principal repayments. Conversion into common stock allows investors to become shareholders, sharing losses and protecting the bank from bankruptcy due to insufficient capital. Therefore, according to Basel III, if a bank is in a loss situation or its capital falls to a certain level, AT1 bonds may suspend interest payments without default, unlike T2 bonds, which must continue interest payments to avoid default.<\/p>\n\n\n\n<p>Due to the risk of bank failure, CoCo Bonds generally have lower liquidity compared to regular bonds. However, they offer higher interest rates to investors. To anticipate a bank\u2019s operational crisis, observing whether a bank chooses not to redeem CoCo Bonds during the redemption period can be indicative. Before a crisis occurs, the bank may already lack the surplus capital to redeem the bonds. TEJ\u2019s bond database includes information on whether a bank has redeemed bonds, providing investors with valuable insights for evaluation.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large caption-align-center\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\/8-2-1024x576.png\" alt=\"Comparison of CoCo Bonds: AT1 Type and T2 Type.\" class=\"wp-image-20427\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2-768x432.png 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2-1536x864.png 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-2.png 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Comparison of CoCo Bonds: AT1 Type and T2 Type. Source: Reasearch by the Central Bank of Taiwan in 2018\u200a\u2014\u200a\u61c9\u6025\u53ef\u8f49\u63db\u50b5\u5238\u4e4b\u5546\u54c1\u67b6\u69cb\u8207\u6548\u76ca\u5206\u6790, compiled by&nbsp;TEJ.<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Differences_Between_CoCo_Bonds_and_Convertible_Bonds\"><\/span>Differences Between CoCo Bonds and Convertible Bonds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The distinguishing factor between CoCo Bonds and commonly seen convertible bonds lies in their conversion mechanisms. CoCo Bonds have an automatic conversion mechanism triggered when a bank\u2019s capital falls below the required level, forcibly converting the CoCo Bonds held by investors. Essentially, investors have no choice in the matter. In contrast, regular convertible bonds allow investors to decide whether to convert when the triggering conditions are met. Due to these differing conversion mechanisms, the two types of bonds have distinct positions in the market.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/1yEaNJUdiMpK9J9bniohPQQ.png\" alt=\"Comparison between CoCo Bonds and Convertible Bonds.\"\/><figcaption class=\"wp-element-caption\">Comparison between CoCo Bonds and Convertible Bonds. Source: compiled by&nbsp;TEJ<\/figcaption><\/figure>\n\n\n<div style=\"border: 1px black; border-style: solid none; text-align: center; border-color: #296580; padding: 24px; margin-top: 24px; margin-bottom: 24px;\">\n<p style=\"margin: 0px; font-size: 24px; font-weight: bold; line-height: 1.5;\">Learn More About the High-Quality Investment Database by TEJ! <br \/>Monitor Credit Risk With Bonds Data.<\/p>\n<div style=\"margin-top: 32px;\"><a style=\"border: none; border-radius: 4px; background-color: #296580; color: white; font-size: 20px; width: fit-content; text-decoration: none; padding: 12px 30px 12px 30px;\" href=\"https:\/\/www.tejwin.com\/en\/databank-solution\/bonds-data\/\">TEJ Bonds Databank<\/a><\/div>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Reasons_Behind_the_Cancellation_of_Credit_Suisses_AT1_Bonds\"><\/span>The Reasons Behind the Cancellation of Credit Suisse\u2019s AT1&nbsp;Bonds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The full cancellation of Credit Suisse\u2019s AT1 bonds can be traced back to the prospectus of conventional bonds. In addition to providing basic information such as name, tenure, interest rate, etc., the prospectus outlines redemption conditions or other events that may lead to default or cancellation.<\/p>\n\n\n\n<p>In this case, Credit Suisse\u2019s issuance of AT1 bonds included a \u201cViability Event\u201d clause in the prospectus. This clause stated that when regulatory authorities deem the bank incapable of sustained operation with insufficient capital, the AT1 bonds can be directly written off to zero. It doesn\u2019t involve converting the bonds into common stock or reducing the principal through bond redemption to lower future interest payments. Instead, it directly cancels the bonds. With equity still intact, the held AT1 bonds become worthless, and the redemption priority of common stock even surpasses that of AT1 bonds. This implies that after Credit Suisse\u2019s acquisition, Credit Suisse stock still holds some value, but AT1 bonds are rendered entirely meaningless.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/0btQqFS0-n3Tl59Lw.png\" alt=\"\"\/><figcaption class=\"wp-element-caption\">The Viability Event indicated in the Credit Suisse AT1 Bond Prospectus. Source: Credit&nbsp;Suisse<\/figcaption><\/figure>\n\n\n\n<p>In the context of the recent events, the Swiss Financial Market Supervisory Authority (FINMA) made the strategic decision to prioritize the interests of AT1 bond investors over common stock shareholders. This move triggered a market backlash. Despite subsequent joint statements from European regulatory bodies attempting to reassure the market by labeling it an exceptional case, AT1 bondholders persist in protecting their rights and interests.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/0M3xj1hfFEKYI57t1.png\" alt=\"\"\/><figcaption class=\"wp-element-caption\">The Credit Suisse AT1 bonds affected and canceled. Source: Swiss Financial Market Supervisory Authority (FINMA)<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"International_Issuance_of_AT1_Bond\"><\/span>International Issuance of AT1&nbsp;Bond<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Despite the high issuance cost, Taiwan has yet to see banks issuing CoCo bonds. How is the situation with AT1 bond issuance in other countries?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"United_States\"><\/span>United States<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to the Financial Stability Oversight Council (FSOC) research, U.S. banks prefer issuing preferred stocks over CoCo bonds to meet capital requirements. The U.S. government is hesitant about AT1 bonds. Regulatory factors contribute to the limited issuance of AT1 bonds in the United States, with reasons including:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Non-deductibility of CoCo bond interest from taxable income.<\/li>\n\n\n\n<li>Complex accounting treatment, requiring a split between regular corporate bonds and derivative financial instruments, making market valuation challenging.<\/li>\n\n\n\n<li>Regulatory authorities still harbor concerns about CoCo bonds, demanding further research and supportive measures.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"China\"><\/span>China<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Due to regulatory support and tax incentives, Europe and China currently lead in CoCo bond issuance. Both T2 and AT1 bonds are preferred instruments for supplementary capital in these regions. Examining 199 Chinese-issued AT1 bonds in TEJ\u2019s database, most issuers are banks, with a few from asset management and investment companies. Notably, the major Chinese banks issuing AT1 bonds include Industrial and Commercial Bank of China, China Construction Bank, Bank of China, and Agricultural Bank of China. The regulatory environment and tax incentives have contributed to the popularity of CoCo bonds in China.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/10Od7qF0gYHhtfBMqyxh8Lw.png\" alt=\"Number of AT1 bonds issued by various institutions in China from 2019 to 2023.\"\/><figcaption class=\"wp-element-caption\">Number of AT1 bonds issued by various institutions in China from 2019 to 2023. Source: TEJ Bonds Data<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"AT1_Bonds_Risky_Business_or_Rewarding_Gamble\"><\/span>AT1 Bonds: Risky Business or Rewarding Gamble?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Unveiling_the_Risks_and_Allure_of_AT1_Bonds\"><\/span>Unveiling the Risks and Allure of AT1&nbsp;Bonds<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>AT1 bonds are characterized by high risk and high interest rates. Take the Credit Suisse\u2019s AT1 bonds as example, it flaunted a 10% coupon rate, a bold move to match its risk profile. But why would anyone be drawn to this financial rollercoaster? Here are two reasons.<\/p>\n\n\n\n<p>Firstly, if the issuance rate is higher than subordinate and unsecured senior bonds, it significantly enhances attractiveness to investors. Secondly, since banks issue AT1 bonds, these banks typically boast strong credit ratings and often hold the status of globally systemically important banks. Subject to stringent regulatory requirements and supervision, investors find them trustworthy and reliable, justifying their investment.<\/p>\n\n\n\n<p>In Taiwan, the Financial Supervisory Commission annually releases a list of designated Domestic Systemically Important Banks (D-SIBs). In 2023, there are six banks on the list, including CTBC, Fubon Bank, Cathay Bank, Taiwan Cooperative Bank, Mega Bank, and First Commercial Bank. These banks must comply with domestic capital requirements and pass stress tests, ensuring trustworthiness for potential investors.<\/p>\n\n\n\n<figure class=\"wp-block-image caption-align-center\"><img decoding=\"async\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/12n0_RSVb3aA1wml0KMXPhQ.png\" alt=\"Systemically Important Banks for the Year 2023 in Taiwan.\"\/><figcaption class=\"wp-element-caption\">Systemically Important Banks for the Year 2023 in Taiwan. Source: Financial Supervisory Commission<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investor_Demographics\"><\/span>Investor Demographics<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In Taiwan, regulatory adjustments by the FSC in late 2021 restricted various fund types from investing in CoCo bonds. These restrictions include mandatory minimum credit ratings and total investment amount limitations. Capital-guaranteed funds are explicitly prohibited from CoCo bond investments due to their conservative nature.&nbsp;<\/p>\n\n\n\n<p>Following the Credit Suisse AT1 bond incident, FSC statistics reveal that regulatory constraints have dissuaded Taiwan\u2019s financial, insurance, and securities industries from AT1 bond investments. However, wealth management departments recommended professional investors to directly hold these bonds, impacting 77 clients. While domestic funds avoided direct investments in Credit Suisse AT1 bonds, foreign funds held a negligible portion. With less than a 0.1% share of the total assets under foreign funds, the impact on the overall market remains minimal.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Despite the cancellation of Credit Suisse\u2019s AT1 bonds in March 2023, there is no indication that the market has ceased issuance. In April, Japan\u2019s Mitsubishi UFJ Financial Group successfully issued AT1 bonds, and even Credit Suisse\u2019s acquirer, UBS Group, inquired in September about investor interest in issuing the first AT1 bonds post-acquisition. Following this event, central banks worldwide have reiterated that asset liquidation priorities will not change arbitrarily. UBS Group has made slight adjustments to trigger conditions to ensure that a similar Credit Suisse AT1 bond storm does not recur.<\/p>\n\n\n\n<p>Investors must exercise caution and thoroughly review prospectuses when investing in related bonds to assess risks. TEJ compiles information on bonds from Greater China, Japan, and South Korea, detailing issuance information such as bond name, face value, total issuance, currency, and more. TEJ provides users with high-quality information through a convenient and clear interface for easy aggregation and retrieval of information.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100 has-custom-font-size\" style=\"font-size:22px\"><a class=\"wp-block-button__link has-background wp-element-button\" href=\"https:\/\/www.tejwin.com\/en\/databank-solution\/bonds-data\/\" style=\"border-radius:17px;background:linear-gradient(135deg,rgb(248,220,108) 0%,rgb(90,204,166) 50%,rgb(45,119,209) 100%)\"><strong>Learn More About the High-Quality Investment Database by TEJ! <br>Monitor Credit Risk With Bonds Data.<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:17px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p style=\"font-size:24px\"><strong>Read More:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed alignleft is-type-wp-embed is-provider-tej wp-block-embed-tej\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"sLBVRuoQkG\"><a href=\"https:\/\/www.tejwin.com\/en\/insight\/2023-bond-etfs-inverted-yield-curve\/\">Unprecedented Inverted Yield Curve Spurs Popularity in Bond ETFs<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Unprecedented Inverted Yield Curve Spurs Popularity in Bond ETFs&#8221; &#8212; TEJ\" src=\"https:\/\/www.tejwin.com\/en\/insight\/2023-bond-etfs-inverted-yield-curve\/embed\/#?secret=ZtdVfEELee#?secret=sLBVRuoQkG\" data-secret=\"sLBVRuoQkG\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-c0f41176db8292b23167f67b1ca732ad\" style=\"font-size:24px\"><strong><strong>Get Access to Our Ultimate Database!<\/strong><\/strong><\/p>\n\n\n\n<p><strong>TEJ TAIWAN DB \u2192TEJ BONDS DATA<br><\/strong>TEJ extensively covers various types of bonds, including data on T2 bonds issued by foreign institutions in Taiwan, saving you time in searching for information.<strong> <\/strong><a href=\"https:\/\/www.tejwin.com\/en\/databank-solution\/fundamental-data\/\" target=\"_blank\" rel=\"noreferrer noopener\" class=\"ek-link\"><strong>Click here for full details about our<mark style=\"background-color:#fbd66e\" class=\"has-inline-color\"> Bonds Datab<\/mark><\/strong><\/a><strong><a href=\"https:\/\/www.tejwin.com\/en\/databank-solution\/bonds-data\/\" target=\"_blank\" aria-label=\" (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"ek-link\"><mark style=\"background-color:#fbd66e\" class=\"has-inline-color\">ank!<\/mark><\/a><\/strong><\/p>\n\n\n\n<p style=\"font-size:24px\"><strong>About us<\/strong><\/p>\n\n\n\n<p>\u2b50\ufe0f <a href=\"https:\/\/www.tejwin.com\/en\/\" target=\"_blank\" aria-label=\" (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"ek-link\">TEJ Website<\/a><br>\u2b50\ufe0f <a href=\"https:\/\/www.linkedin.com\/company\/taiwan-economic-journal-co-ltd-\/\" target=\"_blank\" rel=\"noreferrer noopener\">LinkedIn<\/a><\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u2709\ufe0f E-mail\uff1a <a href=\"mailto:tej@tej.com.tw\" class=\"ek-link\"><em>tej@tej.com.tw<\/em><\/a><br>\u260e\ufe0f Phone\uff1a<em> <\/em>+886\u20132\u201387681088<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>In 2023 bank collapsed, with UBS\u2019s acquisition causing Credit Suisse\u2019s AT1 bond cancellation. As investors, do we know the intricacies of AT1 bonds and savvy strategies to navigate their potential risks?<\/p>\n","protected":false},"featured_media":19917,"template":"","tags":[2909,2916,2583],"insight-category":[689],"class_list":["post-20413","insight","type-insight","status-publish","has-post-thumbnail","hentry","tag-bond","tag-credit-risk","tag-finance","insight-category-market-research"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/20413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/types\/insight"}],"version-history":[{"count":14,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/20413\/revisions"}],"predecessor-version":[{"id":23949,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/20413\/revisions\/23949"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media\/19917"}],"wp:attachment":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media?parent=20413"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/tags?post=20413"},{"taxonomy":"insight-category","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight-category?post=20413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}