Credit Suisse To Buy Back $3 billion Of Its Own Debt

Credit Suisse stated that it will spend approximately $3 billion to buy senior bonds in order to save on interest payments as it prepares to restructure itself as a smaller and safer bank.

The Swiss lender also revealed that it is selling its iconic Savoy Hotel in Zurich's business sector, fueling rumours that it is in desperate need of funds.

Credit Suisse stated Friday, "The transactions are consistent with our proactive approach to controlling our overall liability mix and optimising interest expense."

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

The troubled lender is facing a huge strategic review under a new CEO after a spate of scandals and risk management failures. It will provide an update with its quarterly earnings on Oct. 27.

The bank's $5 billion exposure to failed hedge fund Archegos was the worst scandal. Credit Suisse has changed its management team, banned share buybacks, and slashed its dividend.

The bank made a cash tender offer for eight euro or sterling-denominated senior debt instruments worth $980 million and 12 U.S. dollar-denominated securities worth $2 billion on Friday.

The deadlines for the offers on the debt securities have been set for the 3rd and 10th of November, respectively.

Credit Suisse and Deutsche Bank credit spreads have hit historically high levels, and others have widened, but MSCI says credit-spread curves normally steepen, not invert.

While elevated, Szalka and Verbraken noted these market-implied probability did not signal short-term default, but market concern over both banks' long-term health was more clear.