“Put on your big boy pants.”

That was Jeff Gundlach’s advice to disgruntled “gunslingers” who bought Credit Suisse’s CoCos. Even if you agree with the sentiment, someone wearing “big boy pants” doesn’t generally use the term “big boy pants.”

As part of the shotgun wedding with UBS, Finma wrote Credit Suisse’s additional Tier 1 capital down to zero. As I put it Sunday, “some bondholders will be wiped out here, and that may trigger its own mini-crisis, depending on how loudly it reverberates.”

Whether it triggers wider tumult, it certainly triggered a lot of irritable, incredulous protestations from holders of the bank’s (now worthless) AT1s. “Shareholders should get zero,” one PM stuck with the notes insisted. Others waxed hysterical: An important source of bank funding is now dead, and you can blame the Swiss, was the lament.

Goldman, never one to miss an opportunity, was poised to facilitate trading in claims on the bonds.

To be sure, the optics around wiping out creditors (any creditors) before shareholders are challenging, and litigation was all but assured. And yet, as virtually everyone who doesn’t hold these securities was keen to point out on Sunday and Monday, this is what they’re for. Their entire purpose for existing is to absorb losses so that taxpayers don’t have to in the event of a potential bank failure. And Credit Suisse was, arguably, on the brink of failing.

I wouldn’t want to speak directly to the these specific notes, but if you hold bail-in bonds, part of it is accepting the prospect, however unlikely, that they’ll get written down (or converted). From what I’ve read, terms for AT1s issued by Credit Suisse and UBS specifically make room for a once-and-for-all writedown.

The market for these bonds is fairly large — $275 billion — and the angst was palpable enough Monday that the Single Resolution Board, the European Banking Authority and the ECB’s banking supervisor felt the need to issue a joint statement, which read as follows:

The resolution framework implementing in the European Union the reforms recommended by the Financial Stability Board after the Great Financial Crisis has established, among others, the order according to which shareholders and creditors of a troubled bank should bear losses.

In particular, common equity instruments are the first ones to absorb losses, and only after their full use would Additional Tier One be required to be written down. This approach has been consistently applied in past cases and will continue to guide the actions of the SRB and ECB banking supervision in crisis interventions.

Additional Tier 1 is and will remain an important component of the capital structure of European banks.

So, if you were curious as to whether Switzerland’s decision to summarily wipe out CHF16 billion in bonds was an event with spillover potential vis-à-vis sentiment and psychology around an important bank funding source, the answer is “Yes.”

Although it’s nice that regulatory authorities in Europe reaffirmed the proverbial pecking order, the fact that this happened is, by definition, proof that it can happen. Additionally, I’d note that what regulators, central banks and authorities say is subject to change depending on the circumstances.

The SRB, EBA and ECB statement was supposed to be definitive, but the market will be forgiven for harboring doubts, particularly given that the same statement said European authorities “welcome the comprehensive set of actions taken yesterday by the Swiss in order to ensure financial stability.” That “comprehensive set of actions” included writing down the AT1s.

“Sentiment vis-à-vis the AT1 bond asset class will likely remain weak following [the UBS] deal,” Goldman’s Lotfi Karoui said. The complete write-down of Credit Suisse’s AT1 bonds “can be interpreted as an effective subordination of AT1 bondholders to shareholders [and] represents the largest loss ever inflicted to AT1 investors since the birth of the asset class post-global financial crisis.”

This is another warning sign for banks’ funding costs. That’s the real takeaway. Whether or not the Swiss inadvertently opened some kind of Pandora’s box with the CoCos, you’d be crazy not to demand more in the way of compensation for taking on risk associated with these securities, and it’s not unreasonable to believe the market will be moribund now, at least until the storm clouds blow over.

Monday saw an across-the-board repricing in perpetual notes issued by European banks. Record lows and anomalous one-day declines were pervasive. This was insult to injury for banks at a time of extreme uncertainty.

This does seem likely to be a landmark event. AT1s could become an anachronism. The terms on any new issuance will now be scrutinized relentlessly by potential investors, the cost has surely reset higher and these securities may be viewed going forward as quaint instruments that’ll be a tough sell for any bank that needs to issue them.

Get more insight with HR+: Big Picture Takeaways From The Credit Suisse Bond Wipeout