Credit Suisse to Raise $800 Million Geared Loan
A unit of Credit Suisse Group AG (ADR) (NYSE:CS) plans to invest in junk debts; the bank will be raising collateralized loan obligation for this purpose, a few people familiar with the transaction revealed. A CLO sale is expected by the end of the week. The bank will be underwriting the deal also.
Some $80 billion will be raised by the issue of the CLOs this year against a mere $55 billion worth issuance last year.
As per Wells Fargo & Co.’s report the bank’s original projection of funds yielded only up to $12 billion amid a rebound phase post financial crisis. CLOs issuance peaked sourcing some $105 billion, in 2007.
Banks accepted more than $637 billion in leveraged loans during 2012 against a meager comparative of $892 billion in 2007. Credit Suisse was the fourth largest underwriter of American leveraged loans in the year 2012. The Bank of America Corp. (NYSE:BAC) was at the top of that list.
CLO’s consolidate high-yield debts and subdivide them into securities of varying nature. Leveraged loans are debts that earn a Baa3 at Moody’s Investors Service or not more than an S&P’s BBB.
Credit Suisse Group AG (ADR) (NYSE:CS) was up by 1.07% to $28.46. Bank of America Corp., (NYSE:BAC) shares were down by 1.24% to $11.14.
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