loader image

UBS takeover results in Credit Suisse's $17B of risky bonds becoming worthless! Big Shock for the investors

Credit Suisse recently suffered a significant loss due to the default of one of its prime brokerage clients. The impact of this event has been felt across the $275 billion market, and Credit Suisse and other market participants are taking steps to address the situation.

The loss for Credit Suisse has been historic, with around $17.3 billion worth of risky bonds wiped out after a takeover by UBS. This loss triggered a “complete write-down” of Credit Suisse’s additional tier 1 (AT1) bonds to increase core capital, while the bank’s shareholders are set to receive 3 billion Swiss francs. The bond write-down is the most significant loss yet for Europe’s AT1 market. It far eclipses the only other write-down of this type of security: a €1.35 billion loss suffered by junior bondholders of Spanish lender Banco Popular SA in 2017.

AT1 bonds were created in Europe during the global financial crisis to act as shock absorbers when banks begin to collapse. If a bank’s capital ratios fall below a predefined level, they are supposed to result in irreversible losses to bondholders or be converted into equity, thus supporting the bank’s balance sheet and enabling it to continue operating. However, these bonds are risky, and Credit Suisse’s losses highlight the risks of investing in such bonds.

If you need some ideas about what to read next, here they are:

 

Credit Suisse’s bond issuance practices are worth noting in the context of this loss. The bank issued different types of bonds, including traditional and hybrid bonds, such as AT1. Traditional bonds are issued to finance the bank’s operations and pay a fixed interest rate to investors. Hybrid bonds, such as AT1 bonds, have more complex structures and offer higher yields but come with higher risks. Credit Suisse’s losses and the write-down of these risky bonds could affect the broader financial market.

The risks involved in investing in risky bonds, such as those issued by Credit Suisse, include the risk of default, credit risk, liquidity risk, and market risk. These bonds may offer higher yields, but investors must be aware of the potential risks involved. Investors who hold these bonds effectively provide capital to the issuer and should be aware of the issuer’s financial health and business operations.

In response, Credit Suisse and other market participants are taking steps to address the risks associated with such bonds. Credit Suisse plans to cut its exposure to risky assets and increase its capital buffers to ensure it meets regulatory requirements. Other market participants are also taking similar steps, and regulators are increasing their oversight of these bonds to prevent such losses from happening again.

In conclusion, Credit Suisse’s loss due to the default of its prime brokerage client highlights the risks involved in investing in risky bonds, such as AT1 bonds. The loss has wiped out around $17.3 billion worth of risky bonds, and the broader market for these bonds has tumbled in the past two weeks. Credit Suisse and other market participants are taking steps to address the situation, including cutting exposure to risky assets, increasing capital buffers, and increasing regulatory oversight of these bonds. The event serves as a reminder to investors that high yields come with higher risks and the importance of understanding the risks associated with their investments.

How much has Credit Suisse lost? 

The loss has wiped out around $17.3 billion worth of risky bonds

Join Our Newsletter

Elevate your financial game & join the ranks of elite investors with Secvolt’s exclusive newsletter. 

Join Our Newsletter

Elevate your financial game & join the ranks of elite investors with Secvolt’s exclusive newsletter. 

Don’t just dream of wealth; achieve it with Secvolt. Schedule a call today for personalized guidance on your investment strategy and join the ultra-successful.

Ready to unlock your wealth’s truest potential & cherish affluence?

Secvolt, our hedge fund, sets the bar high with a record-breaking performance of 262% returns in 2022. With the brilliance of our highly advanced quant models and the efficiency of our risk mitigation protocols, we are yet to see a loss!

We’re the perfect ally to help you succeed financially and build the lasting legacy you have always aspired for.

Get in touch today. YOUR LEGACY AWAITS YOU…

Scroll to Top

Subscribe to our Newsletter

Stay up-to-date with the latest news and insights from our team at Secvolt. Subscribe to our newsletter and receive exclusive content delivered straight to your inbox.

Our newsletter includes market analysis, investment strategies, and updates on our hedge funds. By subscribing, you'll gain valuable insights that can help you make informed decisions about your investments.

Permission Required!

To get access to our data room, you need to schedule a call with our team.

Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!