Credit Suisse Said to Extend Order-Taking on New Risk-Bond Sale

  • Order books for five-year bond said to close on May 12
  • One large investor said to need more time for due diligence

Credit Suisse Group AG will give investors more time to place orders for a new type of bond designed to offload costs tied to risks such as rogue trading or cyber crime, two people with knowledge of the matter said.

The order books for the insurance-linked, five-year bond are due to close on May 12, one person said, adding that the issuance may fail to reach the upper limit of 630 million Swiss francs ($649 million). The completion of the sale was originally planned for May 6. The delay comes as one large investor asked for more time to complete due diligence, said the person, asking not to be identified because the matter is private.

Credit Suisse has approached bond investors, hedge funds and asset managers with the design for an instrument similar to catastrophe bonds that would cover operational losses between 3.5 billion francs and 4.2 billion francs. The insurance industry uses so-called cat bonds to limit exposure to natural disasters such as severe hurricanes and earthquakes. Investors get above-market yields for taking a chance on their money being wiped out.

A small number of investors have committed to the entire junior tranche of about 300 million francs, two people have said. A spokesman at Credit Suisse declined to comment.

Credit Suisse is scaling back riskier investment-bank activities to free up capital as it seeks to expand its wealth management business in emerging markets, targeting growth in the Asia-Pacific region. Chief Executive Officer Tidjane Thiam, who joined last year from British insurer Prudential Plc, is set to present first-quarter results on Tuesday.

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