Credit Suisse has been downgraded by Fitch from BBB+ to BBB, with the rating agency prescribing a negative outlook on the Swiss Bank. Fitch also downgraded Credit Suisse’s subsidiaries by one notch. The rating action was prompted by Credit Suisse’s poor Q2 2022 earnings which Fitch believes underpin the challenges the bank will face in attempting to restructure its business to profitability again. On top of its weak operating profitability, Fitch also opines that as the bank undergoes its strategic review, a prolonged period of restructuring could increase the execution risk in a turbulent financial market. Despite this, the rating agency added that the bank has strong loan quality and a diversified funding base, which they will be able to capitalize on to create a renewed business model. Fitch’s downgrade of Credit Suisse comes after Moody’s downgraded the bank’s unsecured debt to Baa2 and S&P gave it a negative outlook on Tuesday.
Credit Suisse’s 5.625% perps callable in 2024, are currently trading at 90.1, down 0.38 points to yield 11.78%.