Credit Suisse Shares Sink To New Record Lows, Bonds Tumble

Credit Suisse shares and bonds took another hit on Wednesday in a sign the embattled Swiss bank is struggling to regain investor confidence ahead of a planned $2.4 billion fundraising to help pay for a major overhaul.

After opening higher, the shares tumbled more than 1.5% to a new record low in their ninth straight session in the red. The stock has lost more than 66% since the start of the year.

Credit Suisse rights for its 2.24 billion Swiss francs ($2.4 billion) share issue were down 3%, having reversed initial gains. This came on top of a 30% tumble on Tuesday.

The bank's bonds were also under pressure, with additional tier 1 dollar bonds down as much as 2.7 cents and many sinking below the levels seen during a sell off in the bank's shares and bonds in early October, Tradeweb data showed.

The share issue, part of a broader capital raising worth 4 billion francs, which got shareholder approval last week, aims to help to fund Credit Suisse's recovery from the biggest crisis in its 166-year history.

Switzerland's second-largest bank last week flagged that it was on course for a pre-tax loss of up to 1.5 billion Swiss francs in the fourth quarter, and revealed that wealthy clients had made hefty withdrawals.

"Investor confidence has not been restored yet," said Joost Beaumont, head of bank research at ABN Amro.

"The bonds had a little rebound when the strategic review was announced, but it is still a difficult story, with question marks on the execution of the strategic review," he added.

The cost of insuring exposure to Credit Suisse debt meanwhile hit a record high of 409 basis points (bps) at the open, up 2 bps on the day, according to S&P Global Market Intelligence. Credit Suisse credit default swaps had started the year at 57 bps.

The euro-denominated bond issued by Credit Suisse's holding company in mid November at a record coupon of 7.75% also declined and is currently quoted below par price at 99 cents. The bond's price was as high as 103 cents on 22 November.

The bank had also revealed in an official filing for a capital increase that the U.S. Federal Reserve had said it intended to pursue an investigation of Credit Suisse over collapsed U.S. investment firm Archegos.

($1 = 0.9501 Swiss francs)