Bonds designed to insure Credit Suisse Group AG against disaster could outlive the bank.
Credit Suisse’s Operational Re bonds, insurance-linked securities that cover the bank against perils such as falling victim to fraud and accounting errors, should remain unaffected by the bank’s government-brokered sale to UBS Group AG, according to rating agency DBRS Morningstar.
That means holders of the so-called catastrophe bonds could end up doing far better than investors in the firm’s junior bonds, which have been written off by Swiss regulator FINMA as a part of the UBS deal. The move drew bondholder ire and spurred a global selloff in this kind of additional tier 1 debt.
