Minimal exposure to Credit Suisse AT1 debt for unit trusts, but far more for fund houses

FUND houses have turned out to be sizeable holders of Credit Suisse’s now-worthless Additional Tier-1 (AT1) bonds. But the exposure appears minimal at the individual fund level.

Based on Morningstar’s database of funds available for sale in Asia, the exposure to Credit Suisse’s AT1 debt is generally less than 1 per cent.

AT1 bonds – also known as contingent convertible bonds (CoCos) – are a debt instrument issued by banks to meet their regulatory capital requirements. CoCos are high-risk, high-yield perpetual securities that can be converted into equity under certain conditions.