Digital Assets in Capital Markets

Advanced course on digital assets - assets created using a blockchain/DLT network - designed for finance professionals.

IBF-STS
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29 September 2022 (Thursday) | 9am-5pm

Credit Suisse’s 5Y CDS spreads are now at its highest levels since the Global Financial Crisis in 2008. The Swiss-based bank has been facing a lot of flak ever since the collapse of its $10bn supply chain finance funds related to Greensill and $4.7bn writedown tied to the Archegos Capital fiasco in 2021. Further, Credit Suisse has also been under the pump due to money laundering issues and its planned workforce downsizing. It has focused on scaling back its investment bank and reducing more than $1bn in costs. The bank has now reported three straight quarterly losses and due to a drop in its capital, the company has sought to rebuild its buffers. However, this has come at a cost – in June 2022, it raised $1.65bn via a PerpNC5 AT1 issuance at a yield of 9.75%. 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 traded at a yield to worst of 8.937% at that time. Most recently, it announced the sale of its Singapore trust business, among others, and a winding down of its legal entities and “residual businesses” in the coming years. The increased credit risk in the lender is now being seen via rating downgrades and the spike in its CDS spreads (as seen in the chart below). Credit Suisse is currently rated Baa2/BBB/BBB by Moody’s/S&P/Fitch vs. Baa1/BBB+/A- prior to 2021.

Its dollar bonds have dropped so far this year. For example, its USD 7.25% Perps are down 27% YTD.

 

Track Credit Suisse’s bonds now on the BondEvalue App by clicking here

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