Chaos continued yesterday in bank-subordinated bond markets. Subordinated debtholders should be prepared to face losses in times of trouble; the complete wipeout of Credit Suisse’s AT1 layer as part of the emergency rescue deal orchestrated with UBS came, however, as a shock to many. The Swiss authorities didn’t respect the normal creditor 'waterfall'. While AT1 bonds will be wiped out, shareholders get to walk away with CHF3bn. Other European bank regulators rushed to confirm that the Swiss way should not be seen as the blueprint for future bank trouble in Europe as a whole. This has calmed the AT1 markets somewhat ... (full story)