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ST Explains: How bonds, seen as a safer investment, triggered a crisis in the financial sector
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UBS' buyout of Credit Suisse controversially wiped out US$17 billion worth of additional tier 1 bonds, but gave shareholders more protection.
PHOTO: REUTERS
SINGAPORE - Despite their volatility, it was not an emerging asset class in the new economy like cryptocurrencies or a meme stock that triggered the collapse of Silicon Valley Bank (SVB) on March 8, but the venerable bond.
SVB’s demise has since led to the closure of Signature Bank, while the fate of yet another US bank, First Republic Bank, is still uncertain despite it receiving a US$30 billion (S$40 billion) lifeline from some of the country’s largest banks.
