Credit Suisse CDS ease, bonds rise to close in on late September levels

LONDON (Reuters) – The cost of insuring exposure to Credit Suisse’s debt fell and the lender’s bonds rose on Tuesday, bringing them close to levels last seen before a rout in its assets in early October.

Concerns about the lender’s ability to restructure its business had seen some of its bonds tumble to record lows and lifted credit default swaps (CDS) – instruments used to hedge against default – to historic highs in the week starting Oct. 3.

Five-year CDS on Tuesday stood at 267 basis points (bps) – down from a close of 273 bps on Monday and not far off the closing level of 250 bps on Sep. 30, data from S&P Global Market Intelligence showed. CDS had indicated as high as 363 bps earlier this month.

The lender’s bonds also strengthened further.

Dollar-denominated additional tier one (AT1) issues rose as much as 1.6 cent on the day with the 7.25% bond changing hands at 73.69 cent in the dollar, Tradeweb data showed. That bond had closed at 76.4 cent on Sep. 30 and dropped as low as 63.1 cent in the turmoil.

Many senior euro-denominated bonds also traded more than 1 cent higher on Tuesday.

(Reporting by Karin Strohecker, editing by Alun John)