Credit Suisse up as issuer fast tracks radical restructuring; bank preferreds mixed

By Cristal Cody

Tupelo, Miss., Nov. 15 – Credit Suisse Group AG’s securities were moving higher on Tuesday after the company reported an acceleration of the “radical restructuring of its investment bank” with plans to sell a significant part of its securitized products group to Apollo Global Management.

Credit Suisse’s 7½% perpetual securities (B+) improved more than ½ point after trading over ¼ point better on Monday.

The issue was up 8¼ points from a month ago.

Other bank and financial preferred securities also have been active in the secondary market this week.

Goldman Sachs Group Inc.’s 7.466% perpetual securities (Ba1/BB+) softened 2 points to 96¼ bid on more than $10 million of paper traded on Tuesday, a source said.

The issue had climbed 2½ points on Monday on $3.8 million of volume.

Goldman Sachs Group’s 3.8% perpetual securities (Ba1/BB+) traded mostly flat at the 79 bid area in light trading on Tuesday.

UBS AG’s 5% perpetual securities were last seen Monday trading more than ½ point better at the 94 area but still yielding over 34%, a source said.

Volatility remained a touch higher on Tuesday with the CBOE Volatility index up 3.41% at $24.54 by the close.

Stock indices rose over the session after closing Monday lower.

The iShares iBoxx High Yield Corporate Bond ETF rose 65 cents, or 0.88%, to $74.55.

In other trading, AMC Entertainment Holdings, Inc.’s bonds improved 1 point to 1¼ points on active volume that tipped over $30 million.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were up 1¼ points after adding 3 points on Monday.

Credit Suisse better

Credit Suisse’s 7½% perpetual securities (B+) climbed more than ½ point on Tuesday to 92 3/8 bid in light trading, a source said.

The issue has improved from trading with a handle in the low 80s in October.

Credit Suisse announced in a regulatory filing on Tuesday that it agreed to sell a significant part of its securitized products group to Apollo.

The company said the divesture represents a step in its managed exit from the securitized products business and is “expected to significantly de-risk the investment bank and release capital to invest in Credit Suisse’s core businesses.”

The deal is expected to reduce Credit Suisse’s securitized product group assets to $20 billion from $75 billion through a series of transactions anticipated to close by mid-2023.

Credit Suisse said the $20 billion of remaining assets will be managed by Apollo under an investment management relationship with an expected term of five years.

Last week, Credit Suisse tapped the high-grade primary market with a $2 billion offering of 9.016% notes due 2033 (Baa2/BBB).

The Zurich- and New York-based issuer’s credit default swap spreads widened 70 basis points for the past week ended Wednesday.

Credit Suisse’s planned restructuring to scale back its investment bank and reallocate capital to its global wealth-management business will involve substantial execution risk, according to a Fitch Ratings report in October.

AMC picks up steam

AMC’s bonds traded 1 point to 1¼ points higher in strong trading that topped more than $30 million on Tuesday, a source said.

The 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were quoted at 41¾ bid, up 1¼ points on $16 million of volume.

The notes went out Monday 3 points higher at 40½ bid on more than $42 million of secondary volume.

AMC’s 7½% notes due 2029 (Caa1/B-) also gained 1 point to head out Tuesday at 63 bid after improving 1 point in the prior session.

The Leawood, Kan.-based movie theater owner and gold and silver mine company on Monday reported strong weekend ticket sales following last week’s weak third-quarter report.

Distressed returns positive

S&P U.S. High Yield Corporate Distressed Bond index one-day returns remained positive on Monday at 1.2%, up from 0.26% a week ago.

Month-to-date total returns for November improved on Monday to minus 0.67% from minus 2.09% the same day last week.

Year-to-date total returns also rose to minus 26.17% on Monday from minus 27.22% a week earlier.

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