(Bloomberg) — 6 am wake-up calls. Tennis date is cancelled. Anxiously checking bond prices while walking the dog.
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These are just some of the scenes from traders and money managers over the weekend as the financial world braced for the next and perhaps final act of Credit’s spectacular and spectacular demise. Suisse Group AG.
For the second week in a row, traders around the world, from London to New York and São Paulo, glued to their mobile phones and laptops, watching the news, convening Zoom calls improvisation and waiting for marching orders — on high alert after another banking crisis. Last time, it was Silicon Valley Bank, a US regional bank for startups. This time it was Credit Suisse, once an important Swiss banking giant.
With the exception of over-the-counter bond trades, most traders have done little when the markets are closed, as Swiss officials and UBS AG race to come up with an all-or-nothing deal. part of Credit Suisse on Saturday. However, a quiet sense of dread about “what will happen next” for the broader banking industry — and the global economy — once markets reopen on Monday could still be. feel.
“Credit Suisse and the U.S. regional banking situation raise concerns about what we don’t know,” said Trevor Bateman, head of investment-grade credit research at CIBC Asset Management. “We spent time over the weekend looking at the scenarios, possible outcomes, and secondary and tertiary impacts from these outcomes. And the unknown.”
Many people work from home, a familiar habit in the Covid era. Some still go into the office and hold conference calls. Goldman Sachs Group Inc. and Morgan Stanley were among the bond trading desks open over the weekend, according to people familiar with the matter. Representatives for Goldman declined to comment, while Morgan Stanley did not immediately respond to a request for comment from Bloomberg.
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Because bonds are traded over the counter, they can technically change hands at any time. But it’s very rare for trading to take place on weekends.
However, there are still unusual levels of activity for both SVB and Credit Suisse’s bonds. At least two sets of Credit Suisse bond quotes were sent out on Saturday, copies of which were viewed by Bloomberg. Premium bonds are quoted higher by traders, in some cases up 12 points. Given that it is the weekend, it is not clear whether trades will be made at these levels.
According to one investor who trades default swaps for a Swiss bank bondholder, the key question in any Credit Suisse deal is figuring out how the assets will be distributed. and how it affects the company’s debt structure.
He, like many others, plans to stay home for the weekend and watch the news from his phone.
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“People are actively checking the news,” said Michael Sandberg, derivatives trader at United First Partners. “Many of us are getting calls from clients looking for select opportunities as things evolve in light of the Credit Suisse situation.”
Calm Before the Storm
A money manager in Brussels, who requested anonymity because he was not authorized to speak publicly, said the last time he remembers a similar situation was after Russia invaded Ukraine, when people in the market were not sure whether bond interest can be paid or not. deleted.
In São Paulo, a credit trader at a major bank said the weekend was like the calm before the tsunami, when the water had receded and the wall of water had not yet come down.
The trader, who asked not to be named, did not return home until 2 a.m. on Friday and was called up early on Saturday after a few hours with his eyes closed. He was working from home in gym clothes, having abandoned plans to play tennis in the morning. He said it hasn’t stopped working since Wednesday, but the trader still plans to come to the office late on Saturday.
–With support from Giulia Morpurgo and Reshmi Basu.
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