CDS committee to rule whether there is a successor to Credit Suisse after merger completion (updated)

Credit Suisse AG

12/06/2023 15:12

(Updates with committee accepting the question, adds
implications for CDS and context about the merger.)
       LONDON, June 12 (Reuters) - A committee that reviews
disputes in the credit default swaps (CDS) market said on Monday
that it had been asked to address a question of whether there is
a successor to Credit Suisse Group.
        This comes on the day that UBS  UBSG.S  
    completed
     its emergency takeover of embattled local rival Credit
Suisse  CSGN.S , creating a giant Swiss bank with a balance
sheet of $1.6 trillion and greater muscle in wealth management.
  
        The CDS panel said on its website it has accepted the
question by an investor and it will meet on Tuesday at 13:00 GMT
to discuss it.  CSGN5YEUAM=MG  
    If a succession event occurs, the relevant successor will
become a reference entity for the purposes of a CDS.
        An investor noted that in this case, UBS Group AG would
become the new reference entity for Credit Suisse Group's CDS
contracts, but unless there is a credit event, the CDS contracts
would not be triggered and UBS would not be liable.
  
    Investors' hopes for a payout on Credit Suisse's CDS were
dashed twice by the committee, which said that neither a
so-called government intervention credit event nor a bankruptcy
credit event had occurred.
    The state-orchestrated merger will create a group that
oversees $5 trillion in assets, giving UBS a leading position in
key markets it would otherwise have needed years to grow in size
and reach, while bringing to an end Credit Suisse's 167-year
history, marred in recent years by scandals and losses.

 (Reporting by Chiara Elisei, editing by Karin Strohecker)
 ((Chiara.Elisei@thomsonreuters.com;))