Credit Suisse made a show of financial strength Friday!
With an offer to buy back around $3 billion in bonds, a way to profit on its troubles and save on interest costs.
The Swiss lender’s stock shot up as much as 8% in morning trading, while its bonds and credit-default swaps on its debt also rallied.
Tweet on bond buybacks from Credit Suisse
Credit Suisse Stock Price Jumps After Bond Buybacks@CreditSuisse made a show of financial strength Friday with an offer to buy back around $3 billion in bonds, a way to profit on its troubles and save on interest costs.
via @WSJ https://t.co/P0GzGPyRff
— The_Journalbiz (@the_journalbiz) October 7, 2022
Credit Sussie stock jumps on the news on bond buyback
The annual cost of insuring 10,000 euros of Credit Suisse debt against default fell to €327, from €350 on Thursday, S&P Global Market Intelligence data showed.
“They’re giving a sign that they’re not financially distressed by proving they can buy back their bonds and provide liquidity to investors,” said Artaud Caloni, a portfolio manager
Credit Suisse shares and debt had sold off in recent weeks as concerns mounted over its financial health. Investors and analysts predict it needs to raise fresh capital to fund a strategic pivot away from investment banking, diluting existing shareholders. An online frenzy also sparked worries about the bank.
Buying back debt extinguishes the interest payments the bank owes bondholders and saves the bank money by buying back the debt at a discount. The size of the offering is in some ways symbolic. Credit Suisse had $160 billion in long-term senior and subordinated debt as of June 30, according to its financial statements.