Credit Suisse Gets Slammed in Credit Markets on Archegos Losses

(Bloomberg) -- Credit Suisse Group AG’s bonds tumbled and the cost to protect its debt against default climbed to the highest since mid-2020, fueled by concern it faces billions of dollars in losses from Archegos Capital Management’s blowup.

The spread over Treasuries for the Swiss bank’s 4.875% dollar bonds due in 2045 widened 8.5 basis points, among Tuesday’s worst performances in the investment-grade market, according to Trace.

Among the largest global investment banks, Credit Suisse is now deemed riskiest in the eyes of derivatives traders. Its five-year credit-default swaps got up to 74.7 basis points on Tuesday, the highest since July, according to ICE Data Services.

The company expects losses from Archegos to run into the billions, Bloomberg News reported, citing people with knowledge of the matter. This could wipe out more than a year of profits for the bank and threaten its stock buyback plans.

S&P Global Ratings revised Credit Suisse’s credit outlook to negative from stable on Tuesday.

“We believe Credit Suisse can manage potential financial losses due to its strong capitalization and robust underlying earnings, but the incident raises questions about the quality of risk management,” S&P wrote in a press release.

©2021 Bloomberg L.P.