SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Credit Suisse Group AG has warned of a third straight quarterly loss for Q2 2022. The group cites volatile markets as the primary reason, where widening credit spreads and a drop in bond issuance have been straining their key business lines. In addition, clients especially in the APAC region, have been pulling back on investing due to uncertainty across their economies. The recent warning comes off the back of a tumultuous year where numerous setbacks such as Archegos Capital downfall, Greensill Capital’s collapse and significant litigation issues that have plagued the Swiss bank and eroded investors’ confidence. Consequently, they have also been downgraded by Fitch and S&P to BBB+ and A respectively. Looking forward, Credit Suisse said it will look to cut costs structurally by streamlining their business units globally. Nevertheless, analysts note that it may continue to experience steeper revenue drops relative to industry peers because of greater exposure to corporate bonds than treasury securities, and a sizable stake in Allfunds Group which has posted a 53% decline in their share price this year.

In related Credit Suisse news, there is speculation that American company State Street has shown intent to takeover Credit Suisse amidst the latter’s troubled times which caused a slight spike in the swiss bank’s share price. That said, there is no strong credence to such a rumor with most investors believing that it will not happen. Michael Brown, an analyst at Keefe, Bruyette & Woods said “I’d struggle to see why State Street would be the buyer of a global full service investment bank franchise.It extends beyond their core competency as an asset servicing and asset management firm.”

Credit Suisse’s dollar bonds were slightly lower – its 5.1% Perp was down 0.2 points to 83.7 cents on the dollar, yielding 8%.

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