Credit Suisse to buy back $3 billion in debt and sell hotels as credit fears linger

Signage hangs above the entrance of a branch of Credit Suisse Group AG in Zurich, Switzerland, on Sunday, September 25, 2022. Inflation in Switzerland has more than doubled since the start of the year and the State Secretariat for Economic Affairs expects it to hit a three-decade high of 3% in 2022. Photographer: Pascal Mora/Bloomberg via Getty Images

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Troubled bank Credit Suisse on Friday offered to buy back up to 3 billion Swiss francs ($3.03 billion) worth of debt as it copes with a falling share price and a surge in bets against its debt.

The Swiss lender also confirmed it was selling its famous Savoy Hotel in Zurich’s financial district, prompting some speculation that it was struggling for liquidity.

In a statement on Friday regarding the debt repurchase offer, Credit Suisse said: “The transactions are consistent with our proactive approach to managing our overall debt composition and optimizing interest costs, and allow us to take advantage of market conditions to buy debt at attractive prices.” to buy back.”

It comes after Credit Suisse shares briefly hit an all-time low and credit default swaps hit a record high earlier this week amid the market’s jitters about its future.

The embattled lender begins a major strategic review under a new CEO after a series of scandals and risk management failures and will release a progress update alongside its quarterly earnings on October 27.

The costliest scandal was the bank’s $5 billion exposure to hedge fund Archegos, which collapsed in March 2021. Credit Suisse has since overhauled its management team, suspended share buybacks and cut its dividend to secure its future.

The share closed at 4.22 Swiss francs on Thursday. They’re down over 50% year-to-date.

On Friday, the bank announced a cash offer for eight euro- or sterling-denominated senior notes valued at up to €1 billion (US$980 million) and 12 US-dollar-denominated securities valued at up to US$2 billion on. The offerings for the notes expire on November 3rd and 10th, respectively.

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