Credit Suisse Shows How Banks Couldn’t Lose in Pre-Crisis Bonds
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Bonds structured to favor arrangers even when loans defaulted
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Credit Suisse asking London court to rule on pre-crisis notes
Credit Suisse Group AG’s bid to recoup interest on soured commercial mortgage-backed securities is shining a spotlight on more than 14 billion euros ($15.3 billion) of pre-financial crisis bonds in Europe that were structured to favor arrangers.
The Swiss bank’s asset-management unit is requesting a London court determine the amount of interest owed on its holdings of a class of securities that were designed to pay out even after the underlying loans defaulted. These notes, known as Class X, are also part of deals originated before the crisis by banks including Bank of America Corp., Barclays Plc, Citigroup Inc., Deutsche Bank AG, Morgan Stanley and Royal Bank of Scotland Plc, according to data compiled by Bloomberg…
Credit Suisse Shows How Banks Couldn’t Lose in Pre-Crisis Bonds
