Holders of Credit Suisse AT1 bonds have forced the Swiss regulator to hand over the decree that ordered the wipeout of $17bn of the bank's riskiest bonds. 

A group of Swiss and international investors representing over CHF 4.5bn ($5bn) of Credit Suisse AT1 bonds sued the Swiss Financial Market Supervisory Authority (FINMA) on 18 April for the wipeout that followed the bank's acquisition by rival UBS in March.

According to a report by the Financial Times, the investors and Quinn Emmanuel, the law firm representing them, launched the claim largely in the dark due to the regulator's secrecy on the wording of the decree that ordered Credit Suisse to write-off the instruments to zero.

However, the judge overseeing the case ordered FINMA to release the decree last week, giving the bondholders a more secure position from which to challenge the writedown. 

Credit Suisse AT1 bond investors sue Swiss regulator

A copy of the regulator's decree seen by the Financial Times states the government-backed liquidity facilities that Credit Suisse drew on in the days before its rescue by UBS had "a direct positive effect on the liquidity and capital situation". 

This satisfied the "viability event" clause in the bond's documents and meant Credit Suisse "was therefore able to write off the AT1 instruments in its own initiative". 

FINMA declined to comment. 

The Swiss regulator has been hit by 150 lawsuits over the wipeout order. A spokesperson for the Swiss Federal Administrative Court told Investment Week it had registered around 150 appeals which represent between 2,000 and 2,500 individual appellants as of 4 May. 

Swiss court registers 150 lawsuits against FINMA over Credit Suisse AT1 wipe-out

The AT1 bonds were issued by Credit Suisse as part of its capital structure to meet regulatory capital requirements. These had a clause allowing Swiss authorities to write them off regardless of what happened to the shares if the bank fell insolvent. 

However, the law firms behind the suits are contesting the legitimacy of FINMA's decision to pass through last-minute legislation to write down the bonds, which they say upended the established hierarchy given unsecured bondholders traditionally rank above equity holders in the capital structure.