Over USD 17 billion worth of AT1 bonds were wiped out from the Credit Suisse crisis and investors from Asia reportedly form a substantial part of the exposure. Indonesia is South East Asia's largest economy and as we are receiving many approaches, Withers has formed an international team to provide support to our clients.
With several important issues still to be resolved, and as our article here does not contain legal advice under any laws and should not be relied on as legal advice, we recommend contacting your Withers partner or any member of our dedicated team for specific advice on your situation and we will get back in touch.
A global crisis with substantial impact in Asia
Since the Swiss authorities made the unprecedented move to write down Credit Suisse AT1 bonds, several regulators from key financial hubs including the Bank of England and European Central Banking Authority have issued statements to publicly affirm investors' legitimate expectations that equity instruments would be the first to absorb losses before any AT1 bonds would be written down. The Credit Suisse AT1 bond write down has far-reaching impacts across the world including in Asia.
Increasingly, questions are being asked around the extent to which a 'viability event' required to justify any write down could be said to have indeed occurred, and whether Credit Suisse had indeed reached any internal liquidity limits and fallen short of capital adequacy requirements earlier than what was publicly represented by the Swiss authorities.
These questions and developments surrounding them could impact the options available to investors from all over the world, including those from Indonesia.
Options for Indonesian investors
Many Credit Suisse AT1 bondholders are exploring potential claims against the Swiss government under investment treaties that Switzerland has with other countries. While Indonesia does not have in force a bilateral investment treaty, economic partnership agreement or free trade agreement with Switzerland that could form the basis of an investment treaty claim for Indonesian investors, Indonesian bondholders could have access to investment treaties of other countries in certain circumstances such as where bondholders can be characterised as having the right of permanent residence of a different country or where bonds are held through offshore entities. We have a team who can assess your qualifying investor status.
Cross border solutions
We have a specialist team with substantial public international law and investor state arbitration experience working with clients to assist them in charting a course through the difficulties and confusion arising from this black swan event at the epicentre of the global banking crisis. It is important that you have the opportunity to develop a cross border strategy tailored to your individual circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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