Credit Suisse Going Down Under
Seen a lot of speculative reports on the internet, Twitter etc re an investment bank about to go bust. Word is it's Credit Suisse as CDS levels are worrying. Internal memo from the CEO today is Lehman esque. Thoughts?
Edit: Link to an article explaining ish here
I def get all my reliable news from Litsavagefrfr69 and EBITDA420
Take a peek at their CDS spread right now lol…
This article does a good job covering what I’m talking about
https://www.ft.com/content/6104a699-fa7f-4a81-9c35-a9a2f8ff92d2
5yr CDS is implying 1% probability of default, so no.
Trading at double their peer set and European banks aren’t the most promising peer set to begin with
How do you get from the spread to the implied probability.
I saw a 5 year spread of ~200bps on Friday, assume that's roughly what you were looking at too.
My rough intuition is:
1. That's 2% per year on average
2. Since right now is the turmoil period, a 2% average would imply something materially higher than 2% for a 1-year Let's say 5% just to illustrate.
3. Isn't the payout net of recovery, which would raise the implied probability of default even more? So if recovery is 50% then you do 5/50 for a 10% implied probability.
Clearly I'm no expert, not even sure of the basic inputs. Just wondering how you did it. Thanks.
BBG terminal CDS cashflow window. Default Probability = 1-Survival Probability assuming 60% loss given default.
Of course they’re going to re-assure staff and say what they need to say to keep people in place…that’s in their best interest in the event of a sale/spin
No way they'll actually go under. People will probably be on the chopping block and maybe the sale of some divisions, but actually defaulting - no
Second this, especially if SNB steps in which seems highly likely in the event CS needs it. And SNB has no issues with their BS nor ability to borrow either
What does this look like for incoming FTs tho?
I wouldn’t know. I don’t think the outlook for the Ibank looks good - especially if they scale back / cease their financing appetite (which seems highly probable if not certain). There will be cuts and I’d wager they’ll impact most if not all layers and functions - unclear to which degrees across levels. If I was a betting man I’d say that junior analysts will do be part of the collateral to some level. All-in-all, if I were in your shoes I’d silently try to recruit elsewhere before the labor market for junior IB professionals deteriorates further. If that doesn’t work out, get your floaties out and peddle as hard as you can when you start
Thought this was gonna be a post about some new Australia office.
Yet another post from a current/incoming CS analyst I suppose. Even if the bank survives, A LOT of people will get axed in almost all imaginable scenario.
My 2 cents: Stop spamming WSO and just wait it out and see what happens to the bank and your job bruh. However it plays out, it will be a great life lesson for sure!
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