AHAM Asset Management’s bond funds have negligible exposure to Credit Suisse’s ATIs

A Credit Suisse branch illuminated at night in Geneva, Switzerland. — Bloomberg

PETALING JAYA: The total fund size of AHAM Asset Management Bhd’s AHAM Single Bond Series 2 and AHAM Single Bond Series 4 represent less than 0.1% of the firm’s total assets under administration of RM77bil as at Feb 28, 2023.

A spokesperson from AHAM Asset Management said all of its other bond funds have negligible or zero exposure to Credit Suisse’s additional Tier-1 (AT1s), thus emphasising that any further impact is minimal.

“The announcement by the Swiss Financial Market Supervisory Authority (Finma) was unprecedented in nature, which led to the complete write-down of the bonds as part of the rescue package.

“We are currently working closely and proactively with our distributors and clients to manage the situation,” said the spokesperson.

In a statement to its investors, AHAM Asset Management said it would be suspending the dealing of units of its AHAM Single Bond Series 2 and AHAM Single Bond Series 4 funds.

AHAM Asset Management (formerly Affin Hwang Asset Management Bhd), said it will continuously monitor and assess the situation, adding that it will inform unit holders should the funds undergo an early termination as described in the respective fund information memorandum.

“We understand that this news may be disappointing for our investors and we want to assure you that we are committed to taking the necessary actions to rebuild trust in our business.

“Please contact your sales representative should you have any queries or require further clarification on this matter,” AHAM Asset Management said.

It noted that Finma had earlier approved the takeover of Credit Suisse Group by UBS Group.

“The Credit Suisse Group is experiencing a crisis of confidence, which has resulted in considerable outflows of deposits. This was intensified by the upheavals in the US banking market over the past two weeks.

“There was a risk of the bank becoming illiquid, even if it remained solvent, and the regulators deemed it necessary to act in order to prevent serious damage to the Swiss and international financial markets.”

As of Dec 31, 2022, Credit Suisse’s Common Equity Tier-1 ratio was 14.1% and liquidity coverage ratio was 144%, said AHAM Asset Management.

“According to Finma, while the transaction has prevented the bankruptcy of Credit Suisse, the extraordinary government support will trigger a complete write-down of the nominal value of all AT1 bonds of Credit Suisse in the amount of around 16 billion Swiss francs (US$17bil or RM77bil).”

AHAM Asset Management said this has a direct impact on AHAM Single Bond Series 2 (formerly known as Affin Hwang Single Bond Series 2) where the underlying bond is the CS 6.375% AT1; and AHAM Single Bond Series 4 (formerly known as Affin Hwang Single Bond Series 4) where the underlying bond is the CS 5.25% AT1.

“As it stands now, AHAM Capital, as manager of the funds and CIMB Commerce Trustee Bhd, as trustee of the funds, have decided to suspend the dealing of units of both funds.”

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AHAM Asset Management , Credit Suisse , FINMA ,


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