Reeling from a series of scandals and financial troubles, Credit Suisse Group is paying a massive price to drum up demand for bond sales on both sides of the Atlantic that will give it a much-needed injection of cash.
The embattled Swiss lender is marketing an 11-year fixed-to-floating-rate dollar bond at over 9% — levels more consistent with where high-yield borrowers are currently trading, according to Bloomberg indexes.
Grappling with an existential crisis in its investment bank, Credit Suisse priced a euro obligation earlier with a stunning 7.75% coupon — the second-highest ever for a new senior investment-grade bank deal in euros.
It's a sign of how far the lender's star has fallen as it undertakes sweeping job cuts, the sale of its securitized products group and a capital increase.
Attracting hefty demand thanks to the junk-level yields on offer, both bond sales are heavily oversubscribed. The bank received $8 billion of orders for the $2 billion pending sale in the U.S. market, and €7.5 billion for the €3 billion 2029 bond in Europe, according to people familiar with the matter.
A Credit Suisse spokesperson declined to comment when contacted by Bloomberg.
The sales underscore the bank's declining creditworthiness and the surging cost of new funding as market yields jump. The lender's long-term rating was
The average yield on a Bloomberg index of euro senior bank debt has risen to 4.3%, up more than 13-fold since the start of the year, as central banks hike rates to fight runaway inflation.
Last week many of Credit Suisse's bondholders opted to
Sales Wednesday will complete the bank's debt funding plans for the year and will count toward its total loss-absorbing capacity requirements, said Bloomberg Intelligence senior analyst Jeroen Julius.
