A $2.5 Billion Credit Suisse Junior Bond Is Unscathed in Wipeout

One junior bond issued by a Credit Suisse entity a decade ago seems to have escaped a wipeout of the lender’s riskiest notes as part of UBS Group AG’s takeover.

The $2.5 billion note due later this year is a rare Tier 2 contingent convertible bond, with some features similar to the 16 billion Swiss francs ($17.2 billion) of risky bonds that the lender is writing down. However, due to quirks when Swiss banks adopted post-financial crisis capital instruments, the note is counted as Tier 2 capital instead — a higher-ranking type of debt that typically only takes a hit ...