(Bloomberg) – Wake up service at 6am. Canceled tennis dates. Anxious check-ins on bond prices while walking the dog.
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These are just some of the scenes of traders and money managers over the weekend as the financial world braced for the next, and perhaps final, act of Credit Suisse Group AG’s stunning and spectacular fall from grace.
For the second weekend in a row, traders around the world, from London to New York and São Paulo, sat glued to their mobile phones and laptops, watching the news, making impromptu Zoom calls and waiting for marching orders – in the highest state preparedness in the aftermath of yet another banking crisis. Last time it was Silicon Valley Bank, a US regional bank for startups. This time it’s Credit Suisse, once a titan of Switzerland’s all-important banking sector.
Aside from over-the-counter bond trading, most traders had little to do with the closed markets as Swiss officials and UBS AG scrambled to close a deal for (parts of) Credit Suisse on Saturday. Still, there was a quiet sense of fear about “what comes next” for the wider banking sector – and the global economy – once markets reopened on Monday.
“Credit Suisse and the situation of regional banks in the US raise concerns about what we don’t know,” said Trevor Bateman, chief investment grade credit researcher at CIBC Asset Management. “We spent time over the weekend considering possible second- and third-order scenarios, outcomes and implications of these outcomes. And the unknown unknowns.”
Many were working from home, a now familiar Covid-era routine. Some still went to the office and organized conference calls. Goldman Sachs Group Inc. and Morgan Stanley were among the bond offices open this weekend, according to people familiar with the matter. A Goldman representative declined to comment, while Morgan Stanley did not immediately respond to a request for comment from Bloomberg.
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Since bonds are traded over-the-counter, they can technically change hands at any time. But it is highly unusual for trading to take place on weekends.
Still, there were unusual levels of activity in both SVB and Credit Suisse bonds. At least two sets of price quotes on Credit Suisse bonds were sent out on Saturday, copies of which Bloomberg saw. The senior bonds were quoted higher by traders, in some cases by 12 points. Since it is the weekend, it is unclear whether trades have been made at these levels.
The key question in any Credit Suisse deal is figuring out how the assets will be broken down and how this will affect the company’s debt structure, according to an investor who trades credit default swaps for a Swiss bank bondholder.
He, like many others, planned to stay home for the weekend and follow the news from his phone.
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“Everyone is actively watching the news,” said Michael Sandberg, equity derivatives sales trader at United First Partners. “Many of us get calls from clients looking for opportunities to choose from as things develop in the Credit Suisse situation.”
Calm before storm
An asset manager in Brussels, who asked not to be identified because he was not authorized to speak publicly, said the last time he remembered a similar situation was after Russia invaded Ukraine, when people in the market were not sure knew whether interest payments on bonds could be paid. be deleted.
In São Paulo, a credit dealer at a major bank said the weekend was like the lull before a tsunami hits, when the ocean has receded and the incoming wall of water has yet to collapse.
The trader, who requested not to be identified, did not return home until 2 a.m. Friday and was awakened early Saturday after a few hours of silence. He worked from home in his gym clothes, having given up plans to play tennis in the morning. It has been nonstop since Wednesday, he said, but the trader still planned to go to the office later on Saturday.
–With help from Giulia Morpurgo and Reshmi Basu.
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