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Bond Market News

Credit Suisse Eyeing External Funds for Investment Bank Spinoff; Moody’s Warns of $3bn Group Loss in 2022

October 7, 2022

Credit Suisse is eyeing roping in an outside investor to inject money into a spinoff of its advisory and investment banking businesses, as per sources. External investment is being sought to take a partial stake by providing capital and helping fund the costs of hiring and retaining talent, they said. This includes talks on reviving the First Boston name for the spun-out businesses – First Boston was acquired by CS in 1990 and CS First Boston was the IB-unit of Credit Suisse Group until 2006. The IB division witnessed pre-tax losses of CHF 1.12bn ($1.1bn) in Q2 and is expected to report another quarter of losses again. However, as Bloomberg notes, it is unclear if substantive talks have happened yet and that the spinoff ‘plans aren’t set in stone’.

Separately, Moody’s expects Credit Suisse’s losses to widen to $3bn by end-2022, from its $1.92bn H1 losses. A lead analyst said that the bank’s CET1 ratio is expected to fall below the 13% level, adding that staying consistently below the mark would be a “credit negative”. Moody’s had last downgraded the bank in August to Baa2.

Credit Suisse’s USD Perps were broadly 1.5-2 points higher with its 7.25% Perp up 1.9 points to 70.25, yielding 11.47%.

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