CDS Committee Agrees to Consider Credit Suisse Payout Question

The Credit Derivatives Determinations Committee agreed to consider whether a “governmental intervention credit event” occurred when Credit Suisse Group AG’s Additional Tier 1 bonds were written down, opening the door for a potential payout on the swaps.

The acceptance by a panel of about a dozen banks and asset managers is the first step in a process that will determine if credit default swaps tied to the Swiss bank will be triggered. Funds including FourSixThree Capital and Diameter Capital Partners have been buying swaps insuring Credit Suisse’s subordinated bonds, betting that the controversial writedown could prompt a payout of the derivative contracts, Bloomberg previously reported.