Speculative play: Credit Suisse

[freedom2022]

We heard about Credit Suisse, CS, recently.
If we buy now, we may lose 100%.
If there is a little good news, it may go up.
Any takes?

 

[MarieIG]

I would like my bonds to be the secure part of my portfolio, so I will pass.

 

[Freedom56]

I would avoid the stock completely. They have just raised 1.5 Billion capital with convertible bonds. The credit default swaps are pricing a 23% chance of default in the next five years on their bonds but that is more to do with current market conditions. In situations like these, the common shareholders will face massive dilution. We have seen this before with Citigroup, Barclays, DB, and many other banks. The bond holders come out whole and the common shareholders lose out and yet people are attracted to equities due to their casino like volatility. Ask GE shareholders how they have done over the last 22 year versus the bond holders. There are stocks that are in far worse shape than CS like Boeing that are not even making headlines.

I don't have a position in CS bonds or stock. The issue I have with CS is the reality that all the mobsters, despots, criminal organizations of the world do business with them. They are the safe haven bank for criminals and dictators. I seriously doubt they will default and cause harm to that segment of their lucrative customer base.

 

[MarieIG]

I would avoid the stock completely. They have just raised 1.5 Billion capital with convertible bonds. The credit default swaps are pricing a 23% chance of default in the next five years on their bonds but that is more to do with current market conditions. In situations like these, the common shareholders will face massive dilution. We have seen this before with Citigroup, Barclays, DB, and many other banks. The bond holders come out whole and the common shareholders lose out and yet people are attracted to equities due to their casino like volatility. Ask GE shareholders how they have done over the last 22 year versus the bond holders. There are stocks that are in far worse shape than CS like Boeing that are not even making headlines.

I don't have a position in CS bonds or stock. The issue I have with CS is the reality that all the mobsters, despots, criminal organizations of the world do business with them. They are the safe haven bank for criminals and dictators. I seriously doubt they will default and cause harm to that segment of their lucrative customer base.

I think you are most likely 100% correct. (I am very new to the world of individual bonds, am still in the process of learning, so other than with treasuries, which I have been gobbling up, am moving slowly.)

 

[COcheesehead]

The bond guy usually knows more then the stock guy and the bonds are dropping.

 

[jazz4cash]

I can’t tell if OP is referring to stocks, bonds, or both. I seem to recall some competitive CD offers from them.

 

[Sunset]

There is a reason CS is offering Bonds paying ~10%

If I want to gamble, I'll buy some more ARK

 

[COcheesehead]

There is a reason CS is offering Bonds paying ~10%

If I want to gamble, I'll buy some more ARK

CS isn’t “offering”, that is what the market says you need to receive for the risk and I have a feeling the yield will go even higher.

 

[lawman]

Fear of default is what kept me in bond funds 45 years. Thought I was safe in funds. Found out differently. Stuff happens.. BTW anyone interested in my Enron?