Company Update Following Credit Suisse Takeover

21 March 2023

TwentyFour Select Monthly Income Fund Limited

(a non-cellular company limited by shares incorporated in the Island of Guernsey under the Companies (Guernsey) Law 2008, as amended, with registered number 57985 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission. LEI: 549300P9Q5O2B3RDNF78)

Re: Company update following Credit Suisse takeover

Markets were digesting the ramifications of the actions of the Swiss authorities on Sunday evening, as FINMA, the Swiss regulator, has overseen the takeover of Credit Suisse by UBS, which included a payment to equity holders, while AT1 debtholders are wiped out, which is unprecedented.

However, other regulators have been quick to highlight the differences in their regimes, with the ECB and BOE releasing statements already highlighting the seniority waterfall - and reaffirming that AT1s clearly rank ahead of equity holders.  These statements have, in turn, helped to support the markets for European banks.  The market for AT1s on Monday morning had been lower by 15-20pts, but recovered to be down by 3-7pts by close yesterday, depending on Issuer. With prices for AT1s another 3-5 points higher today, valuations seem to be stabilising.

The TwentyFour Select Monthly Income Fund Limited (LSE: SMIF) does have a small amount of exposure to Credit Suisse Senior Unsecured bonds, which have not been impacted by the changes, and did not hold any Credit Suisse AT1 bonds. Furthermore, the Fund does not hold debt from any other Swiss banks.  The Fund does have exposure to other AT1s, and currently holds 25.3% in this asset class, with 8.2% exposure to other, non-AT1 bank debt (which includes the Credit Suisse Senior Unsecured bonds).

TwentyFour Asset Management LLP (the Portfolio Manager) believe the rationale for holding European and UK subordinated debt is sound and was re-endorsed by the Eurozone regulators yesterday, confirming that the seniority waterfall put equity holders behind debt holders.  The comment from ECB President, Christine Lagarde, last night saying “Switzerland does not set standards in Europe”, was another strong statement about the difference in regulation in Europe.

For further information, please contact:

Numis Securities Limited:
Hugh Jonathan   [phone]
George Shiel

TwentyFour Select Monthly Income Fund Limited:
John Magrath   [phone]
Alistair Wilson