Credit Suisse crisis sparks another weekend of fear as fear of ‘unknown unknown’ rises among traders, money managers

6 am wake-up calls. Tennis dates are cancelled. Anxious checking-in on bond prices while walking the dog.

These are just some of the scenes from traders and money managers over the weekend as the financial world prepares for the next, and perhaps, final act of Credit Suisse Group AG is amazing and amazing fall from grace.

For the second weekend in a row, traders around the world, from London to New York and São Paulo, are glued to their mobile phones and laptops, watching the news, gathering without can be. Zooming calls and waiting for marching orders – on high alert in the wake of yet another banking crisis. Last time, it was Silicon Valley Bank, a regional US bank of startups. This time, it was Credit Suisse, once a titan of the most important banking industry in Switzerland.

Aside from over-the-counter trades in bonds, there was little for most traders to actually do in the closed markets, as Swiss officials and UBS AG raced to strike a deal for of all or part of Credit Suisse on Saturday. Yet a quiet sense of dread of “what comes next” for the wider banking industry – and the global economy – once markets reopen on Monday, is still evident.

“Credit Suisse and the US regional banking situation raise concerns about what we don’t know,” said Trevor Bateman, head of investment grade credit research at CIBC Asset Management. “We spent time over the weekend to consider possible scenarios, outcomes and second and third order implications from these outcomes. And the unknown is the unknown.”

Many are working from home, a familiar routine in the Covid era. Others still head to the office and organize conference calls. Goldman Sachs Group Inc. and Morgan Stanley Among the bond desks open over the weekend, according to people familiar with the matter. A representative for Goldman declined to comment, while Morgan Stanley did not immediately respond to a request for comment from Bloomberg.

Because bonds are traded over the counter, they can technically change hands at any time. But it is unusual for trading to happen on weekends.

However, there was an unusual level of activity in SVB and Credit Suisse bonds. At least two sets of Credit Suisse price quotes bonds sent on Saturday, copies of which were seen by Bloomberg. Senior bonds are quoted higher by traders, in some cases 12 points. Since this is the weekend, it is not clear if trades are being made at this level.

The main question in any deal with Credit Suisse is to find out how the assets will be distributed and how it will affect the company’s debt structure, according to one investor, who trades credit default swaps for a Swiss bank bondholder.

He, like many others, plans to stay home for the weekend, and monitor the news from his phone.

“Everyone is actively checking the news,” said Michael Sandberg, equity derivatives sales trader at United First Partners. “Many of us have received calls from clients looking for cherry-picking opportunities as things progress in the Credit Suisse situation.”

Calm Before the Storm

A money manager in Brussels, who asked not to be identified because he is not authorized to speak publicly, said the last time he remembered a similar situation was after Russia invaded Ukraine, when the People in the market are not sure if the interest payments on the bonds can be cleared.

In São Paulo, a loan trader at a major bank said the weekend was like the calm before the tsunami, when the sea receded and the future wall of water had not yet broken.

The businessman, who asked not to be identified, didn’t get home until 2 a.m. on Friday and got an early wake-up call on Saturday after several hours of sleep. He works from home in his gym clothes, with no plans to play tennis in the morning. There has been no stop since Wednesday, he said, but the businessman still plans to enter the office on Saturday.

–With help from Giulia Morpurgo and Reshmi Basu.

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