Credit Suisse Group AG is offering investors a hefty incentive to buy its new euro bonds just days after announcing a bigger-than-expected quarterly loss.
(Bloomberg) — Credit Suisse Group AG is offering investors a hefty incentive to buy its new euro bonds just days after announcing a bigger-than-expected quarterly loss.
The Swiss lender’s London branch, which is selling a three-and-a-half year note, is offering more than double the average spread that its peers paid for similar deals this year, according to data compiled by Bloomberg. The embattled bank also offered chunky premiums for sales in other currencies last month.
This will be the last time for a while that Credit Suisse comes to the euro market, according to a person familiar with the matter, who asked not to be identified because the information is private. The bank sought a smaller-sized deal than in previous years as it wanted to cut spreads and has already completed about half of its operating company funding needs for the year.
It follows a surge in Credit Suisse Group’s credit risk late last year amid a string of challenges and scandals that resulted in a strategic revamp of its investment banking business. The group also suffered a cut to its long-term credit rating to just one step above junk by S&P Global Ratings, while its share price remains near a record low. A Credit Suisse spokesman decline to comment.
The lender’s London branch is raising €500 million ($536 million) in its latest debt-raising venture, according to a person with knowledge of the sale. It’s offering the notes with a spread of 235 basis points above midswaps, well above the 90 basis point average for banks that tapped the market this year. Bids have exceeded €1 billion, and final orders will be determined before pricing.
Potential buyers of the bonds will likely want a suitable premium — or the extra spread offered over an issuer’s existing debt — given the lender’s troubles, which include a fifth-straight quarterly loss of 1.39 billion Swiss francs ($1.5 billion) in its worst result since the financial crisis.
Wednesday’s deal is the lender’s first in the common currency this year and follows offerings in the US dollar and pound debt markets in January. The London branch was last in the euro-denominated bond market in May last year, when it priced a two-part deal, including €1 billion of two-year bonds at 120 over midswaps.
(Updates with comments from a person familiar with the deal in paragraph three)
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