Jeffrey Gundlach, the top of the hedge fund, said Credit Suisse’s outraged creditors, facing a $17 billion loss under rival UBS Group’s bailout deal, should “look within the mirror” and put on “big boy pants” as a substitute of complaining to regulators.
Gundlach, CEO of DoubleLine Capital, had little sympathy for bondholders after revealing that the extra Tier 1 Credit Suisse bonds can be “fully written off” within the UBS deal – meaning their investments were worthless.
“Bloomberg reports gunslingers who unwisely held Credit Suisse bonds are furious that they’ve been worn out,” Gundlach wrote on Twitter.
“Seriously? Put on your big boy pants and look within the mirror. That is where the ‘fault’ lies. Learn to administer your risks!” he added.
Gundlach went on to suggest that some debt managers simply couldn’t judge the situation properly.
“Members of my investment team met with a really significant asset allocator last Wednesday who reported that ALL of their ‘Non-performing Debt’ managers were of the opinion that Credit Suisse bonds were ‘good’ meaning they might be back on equals,” Gundlach said. “Only 100 points less. To cite Rick Perry: “Oops.”
![Credit Suisse](https://nypost.com/wp-content/uploads/sites/2/2023/03/NYPICHPDPICT000008498176.jpg?w=1024)
The $17 billion write-down sparked outrage from Credit Suisse bondholders, who questioned how the government-mediated takeover of UBS could have proceeded on such terms.
As a part of the acquisition, Credit Suisse shareholders will receive CHF 3 billion.
In most situations, shareholders suffer losses before bondholders – an element that has contributed to the outrage and led to accusations that Swiss regulators ignored well-established precedent when overseeing the arrangement. Bond giant Pimco was amongst the businesses affected by the deal, losing around $340 million on AT1 bonds it held, in response to Reuters.
“For my part, that is against the law” – Patrik Kauffman, fund manager at Aquila Asset Management, a firm that invests in AT1 bonds, told the Financial Times.
![Jeff Gundlach](https://nypost.com/wp-content/uploads/sites/2/2023/03/NYPICHPDPICT000008569125.jpg?w=1024)
“We have never seen this before. I do not think that may occur again,” Kauffman added.
AT1 bonds bring a high yield but are considered dangerous investments because they might be converted into shares – or liquidated entirely – if the lender is at risk of bankruptcy. They were first introduced as a hedge after the shock of the Great Recession in 2008.
Jérôme Legras, head of research at Axiom Alternative Investments, which holds Credit Suisse AT1 bonds, told the FT that the choice meant “reversing the standard hierarchy”.