The Resilience Of Additional Tier 1 Contingent Capital Market In 2023 And Outlook For 2024

2023 proved to be an eventful year for the Additional Tier 1 (AT1) Contingent Convertibles (CoCo) market, with one of the most significant occurrences being the full write-down of Credit Suisse’s AT1s. The forced takeover of Credit Suisse by UBS sent shockwaves through the banking sector and had a profound impact on the AT1 CoCo market. Unexpectedly, Credit Suisse CoCo’s were written down, while equity holders were not wiped-out. The traditional credit waterfall was not respected, to the surprise of almost the full market – a black swan had hit the CoCo market.