Key Takeaways
- • Marathon Asset Management accumulated approximately $150 million in Credit Suisse senior operating company (OpCo) bonds days before the bank's debt buyback announcement, generating roughly $30 million in profit within days.
- • Marathon purchased the bonds at depressed prices in the low 80 cents on the dollar and realized gains as valuations recovered to the high 90s following Credit Suisse's rescue announcement and debt tender offer.
- • The trade capitalized on the UBS-Credit Suisse rescue deal ($3.25 billion) announced in March 2023, which included a Swiss central bank liquidity facility of 50 billion Swiss francs ($54.5 billion) and a Credit Suisse debt buyback at inflated prices.
- • Marathon Asset Management chair and CEO Bruce Richards confirmed the firm's strategy of targeting short-dated Credit Suisse OpCo debt while deliberately avoiding longer-term securities, demonstrating selective exposure management during the crisis.
Summary
New York–based hedge fund Marathon Asset Management capitalized on Credit Suisse's financial distress to generate approximately $30 million in profits within days through a strategically timed bond position. According to Bloomberg, Marathon accumulated around $150 million worth of bonds issued by Credit Suisse's senior operating company mere days before the Swiss lender announced a debt buyback program at above-market prices.
The trade's timing proved critical. Marathon purchased the OpCo bonds at significantly discounted valuations—in the low 80 cents on the dollar—and realized rapid gains as bond prices recovered to the high 90s following the announcement of Credit Suisse's rescue by UBS. The recovery accelerated after Switzerland's central bank made available a 50 billion Swiss franc ($54.5 billion) liquidity facility to support the UBS acquisition, which closed at a valuation of $3.25 billion and was backed by Swiss government authorities.
Marathon chair and CEO Bruce Richards confirmed the firm's tactical approach in a Bloomberg television interview, stating: "We went out and bought a very large position in short-dated Credit Suisse bonds…and those bonds were then tendered for. We avoided all the longer-term debt and just bought the OpCo debt in the low 80 [cents] that are worth high 90s now, just a few days later." This selective strategy—concentrating on near-term maturities while avoiding longer-dated securities—reflected a calculated assessment of which instruments would be included in the rescue package's debt restructuring.
The quick profit underscores the market dislocations that emerged during Credit Suisse's final weeks, as the bank hemorrhaged over $100 billion in deposits during the final quarter of 2022 amid years of leadership instability, regulatory scrutiny, and litigation exposure. Marathon's execution demonstrates how disciplined investors positioned during acute financial stress can capture significant alpha when crisis-driven pricing anomalies are correctly identified and acted upon swiftly.
The trade's timing proved critical. Marathon purchased the OpCo bonds at significantly discounted valuations—in the low 80 cents on the dollar—and realized rapid gains as bond prices recovered to the high 90s following the announcement of Credit Suisse's rescue by UBS. The recovery accelerated after Switzerland's central bank made available a 50 billion Swiss franc ($54.5 billion) liquidity facility to support the UBS acquisition, which closed at a valuation of $3.25 billion and was backed by Swiss government authorities.
Marathon chair and CEO Bruce Richards confirmed the firm's tactical approach in a Bloomberg television interview, stating: "We went out and bought a very large position in short-dated Credit Suisse bonds…and those bonds were then tendered for. We avoided all the longer-term debt and just bought the OpCo debt in the low 80 [cents] that are worth high 90s now, just a few days later." This selective strategy—concentrating on near-term maturities while avoiding longer-dated securities—reflected a calculated assessment of which instruments would be included in the rescue package's debt restructuring.
The quick profit underscores the market dislocations that emerged during Credit Suisse's final weeks, as the bank hemorrhaged over $100 billion in deposits during the final quarter of 2022 amid years of leadership instability, regulatory scrutiny, and litigation exposure. Marathon's execution demonstrates how disciplined investors positioned during acute financial stress can capture significant alpha when crisis-driven pricing anomalies are correctly identified and acted upon swiftly.
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