Credit Suisse’s new Tier 1 debt will be more expensive

Credit Suisse is recalling an instrument and will issue another later today at a likely higher interest rate.

Credit Suisse Group has called its $1.5 billion 7.125% high-trigger Tier 1 capital instrument for redemption on July 29, the instrument’s first optional redemption date, the bank said in a statement. statement Friday. The instruments are called AT1.

As reported by yesterday, the takeover is part of the bank’s capital and funding plan for 2022, which includes a plan to issue up to 2 billion Swiss francs of high-trigger Tier 1 capital instruments this year.

Today’s call was contingent on the success and price of a new AT1 issuance announced yesterday for a minimum of $1.5 billion and subject to approval by the Federal Financial Markets Supervisory Authority Finma. Today’s announcement indicates that the criteria have been met.

Investors demand a high return

A new instrument to be offered later today will have an interest rate of 9.75% as investors see a high yield from the bank in the throes of a myriad of crises, according to an article in the “Financial Times” (behind a paywall) quoting familiar people.

The instrument Credit Suisse called today was the last of its AT1s that could be converted into shares. The bank said it was buying it back to simplify its portfolio.