Credit Suisse is raising $5 billion via two bond issues. The scandal-plagued bank had to offer lucrative rates to investors.
Credit Suisse sold two bonds yesterday, raising $5 billion, but because of the many crises the bank is working its way through, it was forced to offer exceptionally high rates to attract investors after a general rise in borrowing costs in the market.
The bank raised 3 billion euros through the sale of a bond maturing in March 2029 with a 7.75 percent coupon via its holding company, according to a sourced report from «Reuters». Investor orders for the bond which is callable in March 2028 totaled more than 7.5 billion euros, with a price of 495 basis points above mid-swap levels, it added.
Separately, Credit Suisse is issuing an 11-year bond worth $2 billion priced at a premium of 485 basis points over US government bonds, with a coupon said to be around 9 percent.
Lower Credit Rating
Recently, S&P Global Ratings downgraded Credit Suisse's long-term credit rating to one notch above junk bond status, as also reported by finews.com. The downgrade was justified by significant execution risks of the big bank's group restructuring.
In addition to debt capital, the Swiss bank plans to raise 4 billion francs in fresh equity from investors. The institution is also cutting thousands of jobs as part of the realignment and shifting its focus even more from investment banking to wealthy clients to put its accumulated scandals behind it.
