Credit Suisse (CS) is preparing a lawsuit against SoftBank regarding Greensill Capital’s failure in February that could see CS’s clients lose upto $3bn. Greensill’s largest investor was SoftBank’s Vision Fund. CS disputes that $440mn in funds were owed to their clients by Katerra, a struggling US construction company that was not just a client of Greensill but also backed by the Vision Fund. Greensill’s loans to its clients like Katerra were collateralized by invoices from suppliers. The loans were packaged and sold as low-risk investments to funds especially run by CS. FT said that when SoftBank agreed to provide emergency cash to Greensill in November 2020 to help cover Katerra’s debts, the money did not reach CS. CS had about $10bn of supply-chain finance funds that bought into Greensill’s notes/bonds. They have returned $4.8bn so far and noted that $2.3bn of funds will be hard to recover, including $440mn from Katerra, $1.2bn from Sanjeev Gupta’s Liberty Steel and $690mn from Bluestone Resources. Sources say that there was an informal ban between CS bankers and SoftBank over the last six weeks and that the dispute may resolve before both companies take to litigation.

CS’s bonds were stable – its 4.5% Perps were at 97.8, yielding 4.8%. SoftBank’s bonds were almost unchanged – its 6% Perps were at 102, yielding 5%.

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