Credit Suisse Floats Plan For $3B Debt Buyback To Reassure Investors

Credit Suisse Group AG CS has offered to buy back its debt securities worth about $3 billion in the backdrop of concerns about the Swiss bank's financial health, which had dragged its share price and led to an increase in bets against its debt.

What Happened: Credit Suisse’s shares had briefly hit an all-time low on Monday, while its credit default swaps hit a record high in the backdrop of the market’s concerns over the bank's future. However, as the panic subsided, the cost of insuring the bonds fell sharply on Tuesday from the previous day's close, in sync with a recovery in the company's shares, reported Reuters.

Shares of the lender were trading 2.94% higher on Friday in Switzerland.

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The Offer: The lender said in a statement it was making a cash tender offer in relation to eight euro or pound sterling-denominated senior debt securities for an aggregate consideration of up to €1 billion.

Concurrently, Credit Suisse is also announcing a separate cash tender offer in relation to 12 US dollar denominated-senior debt securities for an aggregate consideration of up to $2 billion.

Credit Suisse said the offers will expire on November 3 and 10, respectively, subject to the terms and conditions set out in the offer documents.

“The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of market conditions to repurchase debt at attractive prices,” the Swiss bank said.

Strategy Review: Credit Suisse recently said it was in the process of a strategy review that included potential divestitures and asset sales.

The strategic review aims to ultimately strengthen Credit Suisse's wealth management franchise and transform the investment bank into a capital-light, advisory-led banking business with an increased focus on markets.

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