Credit Suisse raised $1.65bn via a PerpNC5.5 AT1 bond at a yield of 9.75%. The bonds were launched at an initial guidance of 9.75% area. The junior subordinated notes are rated B+/BB (S&P/Fitch), lower than the issuer’s ratings of Baa1/BBB/BBB+ (Moody’s/S&P/Fitch). The bonds received orders of over $2.5bn, 1.5x issue size. The perps are callable from June 23, 2027 to December 23, 2027 and every reset date thereafter. The bonds reset every five years. If not called, the notes will reset at the prevailing 5Y US Treasury yield plus the initial spread of 638.3bp. Proceeds will be used for general corporate purposes. The perps have a mechanical trigger event when the CET1 ratio of the issuer Credit Suisse Group AG, falls below 7%. Prior to the bond sale, market participants were wary of the deal with Simon Adamson, London CEO of CreditSights saying, “It is quite a tough sell, even at that level. The main question is who wants to buy Credit Suisse paper at all in this sort of market”. Besides, even more recently, Credit Suisse delivered its third straight quarterly loss warning, further adding to the negative sentiment. The bonds were priced at a new issue premium of 81.3bp over its comparable 5.25% Perp callable from February to August 2027 that trade at a yield to worst of 8.937%.
