Credit Suisse Sells $3.75 Billion of Debt Amid Archegos Cleanup

(Bloomberg) -- Credit Suisse Group AG sold $3.75 billion of bonds as the bank recovers from losses stemming from the March collapse of Archegos Capital Management.

The Zurich-based lender, which last tapped the U.S. high-grade market in May, issued the debt in three parts. The longest portion of the offering, a five-year $1.75 billion fixed tranche, priced to yield 0.65 percentage points over Treasuries, coming in from initial price talk in the 0.8 percentage point area, according to a person with knowledge of the matter, who asked not to be identified as the details are private. A five-year floating rate note that was part of the earlier marketing was dropped.

Credit Suisse’s exposure to the March collapse of family office Archegos Capital Management cost it at least $5.5 billion and spurred sweeping changes. The bank replaced several executives, cut its dividend, paused share buybacks and raised capital.

The losses and a subsequent pullback in risk weighed on results, with the firm’s first-half profit dropping 99% from a year earlier. The fallout also prompted Moody’s Investors Service to cut the credit rating of the unit housing its investment bank and wealth manager. Credit Suisse’s new chairman said he’s conducting a strategic review that may chart a new course for the lender.

The offering follows debt sales from Bank of America Corp., Morgan Stanley and Goldman Sachs Group Inc. among other Wall Street firms last month. While investment-grade spreads have widened since then, it remains an attractive time for big banks to borrow. High-grade U.S. financial sector bond spreads are just 5 basis points away from a post-financial crisis low of 71 basis points set on June 30, data compiled by Bloomberg show.

A representative for Credit Suisse declined to comment on the debt sale.

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