Credit Suisse Group AG investors were taken on a wild ride Wednesday after the bank’s biggest shareholder indicated it wouldn’t increase its stake. That sent shares, bonds and credit-default swaps into contortions despite efforts this week by Credit Suisse’s chairman and chief executive officer to reassure investors.
(Bloomberg) — Credit Suisse Group AG investors were taken on a wild ride Wednesday after the bank’s biggest shareholder indicated it wouldn’t increase its stake. That sent shares, bonds and credit-default swaps into contortions despite efforts this week by Credit Suisse’s chairman and chief executive officer to reassure investors.
Here are three charts showing the magnitude of the moves:
First, the bank’s bonds are in trouble. Short-term debt for the lender abruptly sold off on Wednesday, shedding as much as 40 cents on the dollar to levels that signal financial distress. Credit Suisse has €41.8 billion ($44 billion) of bonds maturing by the end of 2024, according to data complied by Bloomberg.
The stock price is telling a similar story. Credit Suisse shares were already under pressure this year after the bank warned that it could see substantial losses in 2023. On Wednesday, shares listed in both the US and Zurich took another leg down to all-time lows after the chairman of Saudi National Bank said the firm wouldn’t boost its stake in the bank past the current level of just under 10%. However, the bank’s American depositary receipts did pare losses late in the US session after Switzerland’s central bank and financial regulator said Credit Suisse will receive a liquidity backstop if needed.
The price of Credit Suisse’s one-year credit default swaps jumped as of afternoon in London, with other lenders looking to protect themselves from the fallout. The credit default swaps curve shows the cost of insuring a company against default. A downward sloping curve typically signals that a company is in trouble because the cost of protecting against a collapse in the near-term is rising.
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