In the pecking get of who will get paid to start with when a lender collapses, shareholders do not ordinarily sit really superior up the chain.

But in an strange transform of activities, all those who held shares in Credit score Suisse have in fact obtained a payout—in the billions—ahead of all those who held bonds in the financial institution.

That has intended an economic strike to Pacific Expense Administration Co (PIMCO)—one of America’s largest expense administrators. PIMCO lost $340 million when a class of bonds ended up wiped out on Sunday in UBS’s takeover of the bank, resources instructed Reuters.

The bonds were being wiped out on Sunday, with PIMCO’s overall decline estimate primarily based on the investing value the bonds experienced ahead of the weekend.

California-dependent PIMCO misplaced out on a precise style of bond, an Further Tier 1 (AT1) bond. Swiss regulators built the decision on Sunday to wipe out $17 billion-well worth of AT1 financial debt in order to permit the Credit Suisse and UBS merger to go by.

Typically, bondholders rank higher than shareholders when a bank goes bust. Nevertheless, underneath the bond stipulations in Switzerland, financial watchdogs are under no pressure to adhere to the regular money structure.

As a outcome, shareholders, who would ordinarily be among the the most significant losers, will at minimum see some return from UBS’s takeover rate of .76 Swiss francs ($.8191) per share—the equivalent of $3.23 billion, a far cry from the $8 billion the bank was truly worth Friday, but far more than the $ they might have acquired usually.

Shock and lawful action

Businesses like PIMCO who obtained the risky lender bonds should not have been shocked by the transfer, according to a single lender adviser and bond trader who informed Reuters that the Swiss authorities’ action is absolutely legal supplied the good print on Credit history Suisse’s AT1 bonds. This stipulated that the bonds could be subject matter to a comprehensive compose down.

Unsurprisingly, the revelation has prompted AT1 bondholders in other financial institutions to spook, with the selling price of bonds dropping as traders test to examine the level of chance. A person bond trader instructed that the regulators’ go at Credit history Suisse had set a precedent that implies the bonds are now much more exposed to broader financial factors, introducing: “And economic challenges are definitely really hard to comprehend and price.”

PIMCO’s complete exposure in the Credit history Suisse collapse now stands at all-around $4 billion, the supply additional.

The investment manager—which manages about $1.74 trillion in assets—isn’t by yourself. According to Morningstar facts seen by Reuters, Paris-based mostly Lazard Freres Gestion experienced 7.4% of a €1.45 billion fund in AT1 bonds, worthy of about $107.3 million.

Also Reuters said asset supervisor GAM experienced 4.81% of its €1.15 billion fund in AT1 bonds.

A amount of bondholders—who have not been named—are now reportedly considering lawful motion, in accordance to legislation agency Quinn Emanuel Urquhart & Sullivan.

PIMCO cannot be far too down-hearted about their losses having said that, as the source included that the asset generate-off had been far more than coated by gains in PIMCO’s other Credit history Suisse bond holdings adhering to the UBS takeover.

PIMCO declined to remark when approached by Fortune.