—— UBS-Credit Suisse Deal Angers Bondholders; Evergrande May Reveal Restructuring Plan; Amazon to Cut 9,000 More Jobs; First Republic Downgraded Amid Stock Crash; AI Advances Stir Regulatory Alarm; Virgin Orbit Faces Bankruptcy Threat; Cambridge University Adds £30 Billion to Economy Annually
1. UBS-Credit Suisse Deal Angers Bondholders
On Sunday, UBS announced it would acquire Credit Suisse for over $3 billion.
Following the deal, Swiss financial regulator Finma (Financial Market Supervisory Authority) declared that $17 billion worth of Credit Suisse’s high-risk AT1 bonds would be written down to zero. The move shocked markets and outraged bond investors.
AT1 bondholders said Finma severely disrupted the capital structure, warning of long-term damage to Switzerland’s financial and bond markets. A banker remarked that bondholders losing more than shareholders defies normal protocol and would haunt markets.
AT1 bonds carry risk: if a bank’s capital ratio falls below required levels, they can be converted into equity—or wiped out entirely.
While hedge funds and institutional investors are the primary holders of AT1s, the bonds have also attracted retail and high-net-worth investors in Asia.
Given AT1s’ debt-to-equity convertibility, Credit Suisse’s collapse left many bondholders with nothing.
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2. Evergrande May Reveal Restructuring Plan
In 2021, the default of Chinese property developer Evergrande triggered a real estate crisis and dragged on growth in the world’s second-largest economy.
Today, at a court hearing in Hong Kong, Evergrande said it may reveal the details of its debt restructuring plan as soon as Wednesday.
Evergrande owes a staggering $300 billion, including $20 billion in offshore bonds. The company has repeatedly missed previous deadlines to disclose restructuring plans.
Evergrande hasn’t released financial statements in two years, and its stock has been suspended for over a year. Earlier this year, PwC ceased to serve as its auditor.
Last year, China’s central bank extended credit support to developers—but only those labeled “high quality” were eligible.
Evergrande has not published annual reports for two years and repeatedly delayed its restructuring disclosures.
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3. Amazon to Cut 9,000 More Jobs
Today, Amazon CEO Andy Jassy announced internally that the company will cut 9,000 more jobs in the coming weeks, affecting its cloud division (AWS), HR, advertising, and Twitch streaming unit.
During the pandemic, Amazon expanded rapidly and hired aggressively. Now, with a weaker economic outlook and reduced business scale, it is reassessing its workforce and expenses.
After years of expansion, tech firms are downsizing amid falling valuations and sluggish business growth.
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4. First Republic Downgraded Amid Stock Crash
On Sunday, S&P Global downgraded First Republic Bank’s rating from BB+ to B—its second downgrade in one week.
S&P said that although the $30 billion First Republic received would ease short-term liquidity pressure, the bank still faces serious long-term profitability and funding challenges.
Today, First Republic shares plunged another 30%. Since the start of the year, deposit outflows have totaled $70 billion.
Last Friday, the Financial Times reported that 11 major U.S. banks had injected $30 billion into First Republic, temporarily stemming customer withdrawals.
Today’s UBS-Credit Suisse merger boosted banking stocks, despite First Republic’s continued decline.
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5. AI Advances Stir Regulatory Alarm
Janet Haven, Executive Director at New York-based nonprofit Data & Society, said that the release of OpenAI’s ChatGPT demonstrates that AI development is no longer under control. She argued that companies are recklessly releasing socially disruptive technologies and regulators must impose stricter legal frameworks.
In 2021, the EU proposed the first AI regulation to ban AI use in high-stakes decisions such as employment and legal matters, while allowing experimental use in lower-risk areas.
In the U.S., federal and state governments are drafting rules, and some financial firms have already banned the use of chatbots. UK AI ethics professor Will McNeill said as AI becomes more powerful, trust in online information is eroding.
Steven Mills, Chief AI Ethics Officer at Boston Consulting Group (BCG), said his biggest concern is corporations commercializing AI irresponsibly, since humans still don’t fully understand its potential.
AI is evolving too quickly for regulators to keep pace with appropriate legislation.
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6. Virgin Orbit Faces Bankruptcy Threat
Last week, rocket launch company Virgin Orbit halted operations and furloughed all staff. Facing a cash crunch, it is seeking either a buyer or new funding to avoid bankruptcy.
Sources say CEO Dan Hart and other executives met with potential investors over the weekend and hope to update employees by Wednesday. One buyer reportedly offered $200 million—below the company’s closing valuation last Friday.
Roughly 750 employees, including executives, senior engineers, and project managers, have begun job-hunting. Though bankruptcy isn’t guaranteed, panic has gripped the company.
Virgin Orbit has hired bankruptcy law firms Alvarez & Marsal and Ducera Partners to prepare for the worst.
The company’s last rocket launch failed, and it missed the window to capitalize on the SPAC boom.
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7. Cambridge University Adds £30 Billion to Economy Annually
According to analysis by Consultancy London Economics, the University of Cambridge contributes at least £30 billion to the UK economy annually and supports 86,000 jobs.
For every £1 invested, Cambridge generates £11.70 in economic value—four times more than the English Premier League—highlighting higher education’s role in innovation and economic growth.
The study found that Cambridge’s research generates £23 billion in commercial value, including companies spun out from the university, such as fast-charging battery firm Nyobolt and leading protein tools manufacturer Abcam.
Cambridge’s research and spinouts contribute billions annually to the UK economy.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.