Credit Suisse Offers $3B Debt Buyback

Photo: Bloomberg/Getty Images [via CNBC]

The Facts

  • On Friday, Credit Suisse announced a $3B debt repurchase plan to take advantage of low prices and reduce its funding costs amid concerns about the financial position of the Swiss bank. It also revealed that it's selling the famous Savoy Hotel in Zurich.

  • The buyback offer includes euro and pound sterling debt securities worth up to $980M and US dollar securities worth up to $2B. After the announcement, Credit Suisse shares went up, and the cost of insuring against default on five-year senior debt fell.

The Spin

Narrative A

Credit Suisse has made the right decision to calm anxious investors after a week of concerns about the bank's financial health, indicating that it isn't facing a liquidity crunch and allowing it to save money. This move has successfully boosted its shares and reduced the cost of insuring its debt.

Narrative B

Though Credit Suisse shares have jumped following this announcement, the debt buyback represents only temporary relief to the bank's ongoing crisis. Only a deep restructuring plan can restore confidence and attract the billionaire amount of money needed to break the cycle of bad news involving Credit Suisse.

Nerd narrative

There's a 50% chance that the next great financial crisis in the US will occur by November 2029, according to the Metaculus prediction community.

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