As Credit Suisse seeks to finance the revamp of its business, it is considering turning to convertible bonds or preferred shares as an option to raise capital. Bloomberg notes that issuing a convertible bond would potentially allow the bank to curb further sale of its shares, which have lost half its value this year. In the wake of the collapse of Archegos Capital in 2021, Credit Suisse used convertible bonds to raise approximately $2bn at that time. Analysts estimate that Credit Suisse has a capital hole of CHF 9bn ($8.95bn) that needs to be filled for restructuring, regulatory purposes and to support growth where asset sales alone are unlikely to be sufficient to fill this gap. Recently, the Swiss bank has been in talks with banks and various Middle Eastern sovereign funds on a potential capital raise. Additionally, it has also been putting up various parts of their global business for sale including its US Asset Management Arm and more recently, an 8.6% stake in Allfunds Group valued at €354mn ($347mn). According to Reuters, Credit Suisse has been urgently finalizing the details of these deals because it could reduce the amount of funding it would need from investors. All eyes will be on the bank’s Q3 earnings release where its full overhaul plan will be revealed.
Relatedly, after a series of lawsuits marred by losses, Credit Suisse has won a class-action trial over allegedly price-fixing in the forex market in a case relating to 2013. If it had lost the trial, it might have set the bank back $19bn in potential damages. Elliott Stein, a senior litigation analyst with Bloomberg Intelligence said, “This is obviously a great outcome for Credit Suisse during a difficult time.”
Credit Suisse’s USD 7.5% Perps callable in July 2023, are trading at 80.9 cents on the dollar, down 0.67 points to yield 40.13%