Pacific Investment Management and Invesco are among the largest holders of Credit Suisse's so-called additional tier 1 or AT1 bonds that have been wiped out after the bank's takeover by UBS.
California-based asset manager Pimco is the largest holder of the Swiss lender's AT1 bonds with around US$807mln of the securities, Bloomberg reported.
The Credit Suisse notes are set to fall to zero and were quoted at prices of a few cents on the dollar on Monday.
Because of the extraordinary government support, the takeover is set to trigger a complete write-down of 16bn Swiss francs (£14bn) of the bank's AT1 bonds in order to increase core capital.
The Swiss authorities’ decision to leave AT1 bondholders with nothing has turned upside down the long-established norms of debt investors being prioritised over equity holders in a debt recovery.
Some investors said reversing the market norms could herald a significant reduction in appetite for AT1s. “This could be the end of that market for the foreseeable future,” said Jim Leaviss, chief investment officer of public fixed income at M&G, quoted by the Financial Times.
Holders of AT1 bonds are already mobilising to take legal action against the Swiss National Bank.
Global litigation firm Quinn Emanuel Urquhart & Sullivan said it had put together a multi-jurisdictional team of lawyers from Switzerland, the US and the UK with discussions already underway with holders of a “significant percentage” of Credit Suisse’s AT1 capital instruments
Pimco also holds almost US$3bn of Credit Suisse senior bank bonds, some of which have risen by around 25 cents on the euro on Monday compared to Friday’s levels, sources said.
Elsewhere, Invesco holds around US$370mln of Credit Suisse's AT1 debt.
BlackRock's AT1 exposure at the end of February was around US$113mln. BlackRock has reportedly reduced some of its holdings in recent weeks.