Casino Aficionados Will Have A Busy Day
Moon of Alabama, Mar 2023
Only when the tide goes out do you discover who’s been swimming naked. – Warren Buffet
Credit Suisse Bonds Gain in a Weekend Trading Session
Bloomberg, Mar 18, 08:21 UTCOne large dealer was quoting Credit Suisse bonds at levels that were as much as 6.5 points higher than Friday, according to a person with knowledge of the matter, who asked not to be identified discussing private activity in the over-the-counter market.
Credit Suisse says $17b of its debt now worthless, angering bondholders
Reuters, Mar 19 20:46 UTCHolders of Credit Suisse bonds suffered a historic loss when a takeover by UBS wiped out about 16b Swiss francs ($17.3b) worth of risky notes. The deal will trigger a “complete write-down” of the bank’s Additional Tier 1 (AT1) bonds in order to increase core capital, Swiss financial regulator FINMA said in a statement on its website. Meanwhile, the bank’s shareholders are set to receive 3b francs. Pacific Investment Management, Invesco and BlueBay Funds Management were among the many asset managers holding Credit Suisse AT1 notes, according to data compiled by Bloomberg. Their holdings may have changed or been sold entirely since their last regulatory filings. AT1 bonds were introduced in Europe after the global financial crisis to serve as shock absorbers when banks start to fail. They are designed to impose permanent losses on bondholders or be converted into equity if a bank’s capital ratios fall below a predetermined level, effectively propping up its balance sheet and allowing it to stay in business.
HSBC Tumbles in Hong Kong as AT1 Debt Selloff Weighs on Banks
Bloomberg, Mar 20 05:01HSBC Holdings Plc fell as much as 6.6% in Hong Kong trading, the biggest drop in nearly six months, with its newly issued AT1 bond declining more than 5 cents. Standard Chartered Plc slid as much as 5.6%. The complete write-down of Credit Suisse’s AT1 debt as part of a Swiss bailout has investors in the $275b market scrambling to determine how much protection the notes offer in a crisis.
Investors dump Credit Suisse stock and bonds after UBS rescue
Bloomberg, Mar 20 07:18 UTCA $1b AT1 bond with a coupon of 4.5% was bid as low as 1 cent on the dollar, Tradeweb pricing showed.
Stocks plunge despite Credit Suisse buyout, central banks’ pledge
AFP, Mar 20 8:32 UTCHong Kong plummeted 2.7%, with heavyweight HSBC off nearly 6% on worries about its exposure to risky bonds related to Credit Suisse. Standard Chartered also sank. The losses came even as the city’s de facto central bank said its banking sector had “insignificant” exposure to Credit Suisse. Other regional bank shares were also hit, including Japan’s Mitsubishi UFJ Financial, National Australia Bank and India’s ICICI. London, Frankfurt and Paris all fell in early Monday trade. Tokyo, Sydney, Seoul and Mumbai were also in the red. Shanghai rose after the Chinese central bank cut the amount of cash banks must keep in reserve, hoping to boost the country’s economy.
Geopolitical Rumblings Leave US Behind
Over the last month we have seen astonishing geopolitical developments. In February, China publicly lambasted US hegemony, launched a global security initiative and offered a peace plan for Ukraine. On Mar 10, China mediated an agreement which restored relations between Saudi Arabia and Iran. On Mar 15, Moscow rolled out the red carpet for the President Assad. Yesterday al-Assad and his wife Asma arrived in the UAE for talks with Sheikh Mohammed bin Zayed (MbZ). Also yesterday Iran and Iraq signed a security cooperation agreement that will stop the CIA-sponsored Kurdish activities against Iran. Also yesterday King Salman of Saudi Arabia invited the President of Iran to a visit in Riyadh.
For the last 30 years the US considered the Middle East as its backyard. Twenty years ago, it illegally invaded Iraq and caused hundreds of thousands of death and decades of chaos. Now, by peaceful means, China changed the balance in the Middle East within just one month. Today President Xi arrived in Moscow for three days of talks with President Putin. An article by President Putin was published in the People’s Daily while Russian media published a signed article by President Xi. The US is afraid that China’s peace initiative for Ukraine will gain ground. It has openly come out against a ceasefire and peace talks. I had thought that was for Ukraine to decide.
It is likely that Putin will publicly endorse the Chinese peace plan while the US is paranoid that peace might indeed happen. It may even want to sabotage the Saudi Iranian deal. China’s people are by the way the most happy in the world. Xi and Putin are now running the multilateral global show. Biden and the hapless ‘unilateral’ people around him are left aside.
Niqnaq 