Hong Kong and Singapore regulators seek to reassure AT1 bondholders

The Hong Kong Monetary Authority HKMA and Monetary Authority of Singapore MAS followed the example of regulators in Europe last week, by issuing statements in response to the $17 billion wipe-out of additional tier 1 AT1 bonds that followed Credit Suisse’s takeover by UBS on March 19.

Both central banks sought to assure AT1 bondholders that their traditional place above shareholders in the loss-absorbing hierarchy would be maintained, in the case of further bank collapses in either location.

“MAS said today that in exercising its powers to resolve a financial institution FI, it intends to abide by the hierarchy of claims in liquidation. This...