Credit Suisse credit default insurance is shooting up
The price of default protection for Credit Suisse bonds climbed to a record high on Monday. Five-year credit default swaps (CDS) on the big bank’s debt securities rose to 451 basis points, data from S&P Market Intelligence showed. This means that an investor has to pay 451,000 euros to insure bonds worth 10 million euros. That is a multiple of comparable corporate bonds, for example from UBS.
In turn, Credit Suisse shares fell to a record low of CHF 2.115 in morning trading. In the further course of trading, the shares recovered marginally and reached CHF 2.15. Compared to the previous evening, this still corresponds to a minus of 13.9 percent.
The uncertainty was triggered by concerns that the collapse of the US start-up financing bank Silicon Valley Bank (SVB) could also cause difficulties for other banks. After a chain of failures, Credit Suisse made a loss of CHF 7.3 billion in 2022 and suffered from high outflows of customer funds. The group expects a significant pre-tax loss in the current year as well.