Moody’s downgraded Credit Suisse’s senior unsecured debt rating from Baa1 to Baa2, maintaining the negative outlook on the Swiss bank’s ratings. The rating agency cites Credit Suisse’s weakening credit profile in light of its H1 2022 losses, and uncertainty over the successful execution of its restructuring strategy as reasons for the downgrade. Further, Moody’s rating cut also reflects lengthy litigation and compliance issues, governance deficiencies and top management instability within the bank. The negative outlook captures Moody’s expectation that there could be future deterioration of Credit Suisse’s capital position amid its operational challenges, especially in its Investment Banking division and potential risk of more litigation charges.
S&P also revised Credit Suisse’s outlook to negative, prompted by the bank’s change in leadership after its poor earnings result in Q2 2022. S&P believes that this reflects an instability in the bank’s franchise and a lack of clear strategy, and expects significant challenges for the new management in transforming the bank amid strong operating headwinds. The rating agency expects weak profitability for the Swiss bank in the near to medium term.
Credit Suisse’s 4.5% perps callable in 2030, are trading at 72.6, up by 0.47 points to yield 7.69%.