Goldman tells Reuters Credit Suisse AT1 move could cut long-term demand

Goldman Sachs (GS) chief credit strategist Lotfi Karoui told Reuters that the decision by Swiss authorities to clear out Credit Suisse’s (CS) Additional Tier 1 bonds could lower demand for this type of bond in the long term, though a risk of contagion across credit markets was limited due to the relatively niche nature of the bond. The AT1 sell-off was a "knee jerk reaction to an outcome that took a lot of people by surprise," Karoui said, adding, "In the long term, we are a little concerned about the potential permanent destruction in demand … I do think that investors will have to re-assess how the risk-reward looks like in those instruments, particularly at times of rising financial distress." Reference Link