After selling bonds in the US yesterday to raise additional cash, Credit Suisse is today tapping the UK bond markets for more, according to media reports.
Yesterday, Credit Suisse via its New York branch, sold placed $3.75 billion worth of two-year and five-year bonds, once again at eye-watering yields, which came amidst several bond sales as borrowers look to lock in favorable rates should conditions worsen.
The two issues included a two-year bond worth $1.25 billion with a coupon of 7.95 percent and a five-year bond worth $2.5 billion with a coupon of 7.50 percent. The respective yields are 8.06 percent and 7.551 percent, according to a «Bloomberg» (behind paywall) report, citing sources. That sale came as 19 issuers in the US placed 40 separate debt instruments of around $34 billion.
The spread over 10-year U.S. Treasury bonds at 370 basis points is well above the average risk premiums for investment-grade bonds, the Bloomberg story added.
Up Next, London
Today, Credit Suisse is selling new sterling-denominated bonds in the UK, according to «Reuters» which cited a memo made available to the news outlet. It said there was strong investor demand for the issue which will price later today.
Subscriptions for the new senior unsecured sterling bond due March 2026 topped 875 million pounds ($1.05 billion), according to the memo from a lead banker involved in the sale. The issue size was previously reported at 750 million pounds.
Compared with sterling 2026/0.125 percent bonds, the premium on the Credit Suisse bonds was 425 basis points. Previously, the price had been in the range of 435 basis points.
Painful Premiums
The yields reflect the higher premium investors are demanding for holding Credit Suisse debt as the bank undergoes a restructuring. Later this year about $24 billion of the bank's bonds are set to expire.
In November, CS had to pay a coupon of 9 percent on a bond issue. These securities are currently trading at 104.7 percent, clearly higher than when they were placed.
