Credit Suisse junk paper dives as distressed interest grows; Transocean bonds decline

By Cristal Cody

Tupelo, Miss., Oct. 3 – Credit Suisse AG’s notes slid about 5¾ points to more than 10 points as restructuring fears grew on Monday.

Credit Suisse’s high-yield paper declined on secondary action totaling more than $44 million, a source said.

The 7½% perpetual notes blew past the pandemic lows of March 2020 and went out down 10¾ points with a handle in the 70s and yielding about 50%.

Some of Credit Suisse’s paper was seen on Monday with handles in the 60s.

Market tone overall was on the sunnier side as October kicked off with stocks up and volatility down.

The iShares iBoxx High Yield Corporate Bond ETF climbed 93 cents, or 1.31%, to $71.97 by the close.

The CBOE Volatility index declined 4.81% to 30.10 over the afternoon.

Oil prices also opened the week stronger as chatter grows that the Organization of the Petroleum Exporting Countries and partners will cut crude oil production at Wednesday’s meeting, a market source said.

West Texas Intermediate crude oil benchmark futures for November deliveries settled up $4.14 at $83.63 a barrel.

Transocean Inc.’s notes moved lower on the day on the back of weaker oil prices, but trading was thin.

The offshore driller’s 8% debentures due 2027 (C/CCC-) gave back more than 4¼ points Monday.

Credit Suisse softens

Credit Suisse’s high-yield paper dropped more than 5 points in heavy trading totaling more than $44 million on Monday, a source said.

The 7½% perpetual junk notes were quoted at 75 bid and yielding over 49%.

The issue, down 10¾ points from Friday on light volume totaling $1.8 million, was trading in the 95 bid range a month ago and has sunk below March 2020 pandemic lows in the 83 bid area.

Credit Suisse’s 6 3/8% perpetual notes dropped more than 7 points to the 66 bid area on $9.35 million of secondary supply on Monday.

Credit Suisse’s credit default swap spreads, a measure of insuring the company’s debt against default, were reported by Prospect News early Monday 2.5 basis points wider.

The Zurich-based financial services company’s stock dropped and caught the attention of junk investors on restructuring concerns that followed a series of weekend calls the bank made to its investors, a London debt capital markets banker told Prospect News.

Credit Suisse AT1 capital was down 5 points to 7 points on the day, while the five-year CDS spreads were 2.5 bps wider, a market source said early Monday.

Transocean notes lower

Transocean’s 8% debentures due 2027 (C/CCC-) gave back more than 4¼ points in thin trading on Monday following the drop in oil prices, a source said.

The bonds were quoted at 58 bid on less than $1 million of secondary activity.

Transocean’s bonds have softened more than 10 points since late September when the issue was quoted Sept. 23 at 71¼ bid.

The Steinhausen, Switzerland-based offshore driller was scheduled to close Friday on privately negotiated bond exchange and purchase agreements that were announced in September.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day returns finished the prior week higher at 0.26% on Friday, versus minus 1.25% on Thursday, minus 0.83% on Wednesday, minus 0.6% on Tuesday and minus 0.56% at the week’s start.

Month-to-date total returns for September ended the month on Friday soft at minus 6.48%.

Monthly returns totaled minus 6.73% on Thursday, minus 5.55% on Wednesday, minus 4.76% on Tuesday and minus 4.18% at the start of the final week of September.

Year-to-date total returns were minus 26.21% on Friday, minus 26.4% on Thursday, minus 25.47% on Wednesday, minus 24.85% on Tuesday and minus 24.4% in the Sept. 26 session.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.