DoubleLine Capital’s Jeffrey Gundlach said Credit Suisse Group AG’s bondholders, who are irate after the takeover by UBS Group AG wiped out about 16 billion Swiss francs ($17.3 billion) of risky notes, have only themselves to blame.
Debt owners who “foolishly kept holding Credit Suisse’s bail-in bonds” need to “look in the mirror,” the billionaire money manager said in a tweet. “Learn how to manage risk!”
The deal will trigger a “complete write-down” of the bank’s additional tier 1 notes in order to increase core capital, Swiss financial regulator Finma said. Shareholders are set to receive 3 billion francs — sparking a furious response from some of Credit Suisse’s AT1 debt owners.
Bloomberg reports the gunslingers who foolishly kept holding Credit Suisse’s bail-in bonds are angry they are being wiped out. Seriously? Put on your big boy pants and look in the mirror. That’s where the “blame” lies. Learn how to manage risk!
— Jeffrey Gundlach (@TruthGundlach) March 20, 2023
In a typical writedown scenario, shareholders are the first to take a hit before AT1 debt faces losses. The bond wipeout, the biggest loss yet for Europe’s $275 billion AT1 market, triggered a plunge in other banks’ notes in Asia on Monday.
Members of my investment team met with a very significant asset allocator last Wednesday, who reported that ALL of their “distressed debt” managers opined that Credit Suisse’s bonds were “money good”, meaning would return par. Only off by 100 points. To quote Rick Perry: “Oops.”
— Jeffrey Gundlach (@TruthGundlach) March 20, 2023
Goldman Sachs Group Inc. traders were preparing to take bids on claims against the Credit Suisse notes, people with knowledge of the matter said.
Fast moving situation: Goldman readies claims trading for wiped out Credit Suisse Debt.”
— Jeffrey Gundlach (@TruthGundlach) March 20, 2023
Hmmm.
Maybe the “Angry Distressed Debt Traders” (good name for a band!) are calling in some chits.
Gundlach is the chief investment officer of DoubleLine, which manages more than $92 billion in assets. He founded the firm in 2009 after a bitter split from TCW Group. DoubleLine’s Total Return Bond Fund gained 1.46% in the first two months of this year, its website shows.
Gundlach also tweeted about the outlook for US bonds, saying the yield on 10-year Treasuries will head “much lower” if it breaches the 3.37% level. “May you live in interesting times,” he wrote.
