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Pimco, Apollo To Buy Credit Suisse Securitized Products Unit

Amid ebbing and flowing speculation that Credit Suisse is next Lehman – which may be a stretch but the math that the 2nd largest Swiss bank desperately needs billions in fresh capital is all too real – some were wondering who is the buyer that would get the crown jewels of the CS empire: its securitized products group.

Moments ago, the WSJ delivered the answer: Credit Suisse is nearing a deal to sell the securitized-products group to financial giants Apollo Global and PIMCO, as part of the bank’s retreat from Wall Street.

The Swiss bank is set to give details of the sale, and other measures for a planned strategy change, on Thursday the Journal reports.

Two bidding groups emerged as the favorites for the business, The Wall Street Journal earlier reported. One consortium included Pimco, a big bond manager, and Apollo, a large alternative asset manager. It beat out a second group comprised of Centerbridge Partners and Martello Re Ltd., a life and reinsurance company, according to some of the people familiar with the effort.

The securitized-products group, which underwrites financing and packages up mortgage bonds and other securities for resale, has long been rumored to be on the selling block. It generated high returns but Credit Suisse executives said in July it wasn’t a good fit with its envisioned future shape. Since then, as CS entered a solvency and liquidity spiral which pushed its CDS to record wides, the company had no choice but to liquidate the unit to the most generous buyer.

 

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