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Bloomberg
Credit Suisse Group AG is paying up to raise billions of dollars in the US and UK as the troubled lender relies on attractive terms to keep funding plans in place.
The embattled Swiss lender’s New York branch sold $3.75 billion of two-year and five-year notes to yield 370 basis points over Treasuries, according to a person with knowledge of the matter. That’s much higher than average risk premiums across investment grade credit.
Its London branch is offering a benchmark-sized pound note, meaning at least £250 million ($300 million), due in just over three years, according to another person familiar. Initial price talk of about 435 basis points over the UK Treasury benchmark suggests it’s similarly paying up for that funding.
Credit Suisse is in the throes of a huge restructuring that will see it cut thousands of jobs and reshape its investment bank to put an end to a string of huge losses and scandals.
The burden of higher interest rates on its debt is another hurdle for a bank that’s set to report its fifth-straight quarterly loss.
The Swiss firm’s net interest income fell by 14% in the first nine months of 2022, a time when many banks were net beneficiaries of a rising rate
environment.
Skepticism about the restructuring is helping drive up borrowing costs. The firm also had to pay over 9% in November when it sold $2 billion of high-grade bonds. Those bonds are now trading at 104.7 cents on the dollar, up from par when the notes were issued, according to Trace bond trading data.
“Its credit standing has taken a severe knock in recent years due to various risk management misses,†said Bloomberg Intelligence strategist Jeroen Julius. The lender’s liquidity suffered from the recent turmoil as a result, Julius wrote in December.
The bank has about $24 billion in bond maturities this year.