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Bond Market News

Credit Suisse Pays $495mn Settlement; Seeks Middle East Capital; Places US Asset Management for Sale

October 18, 2022

Credit Suisse has agreed to pay a $495mn settlement for a legacy case involving mortgage-linked investments in the US leading up to the 2008 financial crisis. This is the latest settlement in a long list of litigation issues surrounding its sale of residential mortgage-backed securities (RMBS) pre-2008, which have cost the bank dearly – most notably its $5.3bn payout to the US DOJ in 2017. The latest case alleged that the bank had “misled investors and engaged in fraud or deceit in connection with the offer and sale of RMBS.” The closure of this case marks the last of its claims involving a regulator and leaves them with five remaining cases at various stages of litigation. These remaining cases are expected to be resolved in the next six months, according to Reuters.

Separately, after news yesterday that Credit Suisse was looking to sell part of its Swiss business, the group is said to be putting its US asset management arm up for sale as well. At the moment, the bank will be accepting early bids for the unit and there is still no guarantee that Credit Suisse will ultimately sell it, as per Reuters. Additionally, Credit Suisse is seeking a capital injection from Middle Eastern sovereign funds, having approached at least one as per a Reuters source. According to Bloomberg, Abu Dhabi and Saudi Arabia are considering the investment, which would see them take advantage of low valuations to gain a long position in the bank. The bank already counts another Middle East sovereign wealth fund, Qatar Investment Authority, among its large investors. Reuters suggests that Credit Suisse could be looking for a capital raise because the sale of assets alone would not sufficiently cover the costs of an impending global business restructuring.

Credit Suisse’s 9.75% Perps callable in 2027 are trading 2.4 points higher at 92 cents on the dollar to yield 11.97%.

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