Credit Suisse Woes Sink Catastrophe Bonds Tied to Bank’s Risks
- Prices on operational risk bonds drop on writedown uncertainty
- Bonds insure more than 20 scenarios of operational failure
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Credit Suisse Group AG peddled a series of unusual bonds in recent years that gave the Swiss firm insurance against the equivalent of a banking earthquake. The owners of those securities are feeling some tremors.
The $461 million of notes, which are rarely traded, were quoted at distressed levels last month, with a sliver of the issue selling at around 60 cents on the dollar. Traders at JPMorgan Chase & Co. recently offered to buy the junior tranche of the notes for around the same price, according to two people familiar with matter who asked not to be identified as the prices aren’t public.