Credit Suisse Offers $3 Billion Debt Buyback to Shore Up Confidence, Shares Rise 7%

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Credit Suisse tried to allay fears over liquidity on Friday by announcing it would buy back up to $3 billion of its own debt.

The embattled bank's shares rose following the announcement as the proposed buyback will trim its debt burden. Shares of the second largest Swiss bank traded nearly 7 percent higher at 4.50 Swiss francs.

Credit Suisse
Credit Suisse Wikimedia Commons

The Swiss bank, whose liquidity crisis threatened to trigger a Lehman-like crisis in the financial industry, said buyback will allow it to take advantage of market conditions to repurchase debt at attractive prices.

According to Bloomberg, the buyback offer includes euro and pound sterling debt securities worth up to 1 billion euros ($980 million). The other component of the package is an offer for US dollar securities up to $2 billion.

"The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of market conditions to repurchase debt at attractive prices," Credit Suisse said in a statement.

Earlier this week, the financial industry was spooked over an unprecedented liquidity crisis at Credit Suisse. A series of financial scandals took the Swiss banking giant perilously close to the tipping point. Amid a torrid plunge in market value, there was increasing chatter about impending bankruptcy or a humiliating merger with rival UBS.

The debt buyback move came even as the bank is set to unveil a revival plan on October 27. The bank is expected to almost certainly announce the divestment of its investment banking activities, which was at the core of the current crisis.

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This article was first published on October 7, 2022