Bloomberg News

Credit Suisse Curbs Private Reports to Loan Sales, Trading

October 25, 2011

(Updates with leveraged-loan volume in fifth paragraph.)

Oct. 25 (Bloomberg) -- Credit Suisse Group AG’s U.S. loan sales and trading groups will no longer receive private information regarding borrowers that have issued both bank debt and public securities in an effort to reduce any conflicts of interest.

The securities unit for Switzerland’s second-largest bank will still be able to access and share private information for borrowers that aren’t in public markets, according to Steven Vames, a New York-based spokesman for Credit Suisse. Holders of syndicated bank debt are allowed access to private information that public debt holders aren’t privy to, such as corporate financial projections.

Restricting private information would remove potential conflicts for bankers that work with borrowers that have both private and public debt, according to Vames. The change comes three months after Credit Suisse named Bob Franz as the Americas head of Credit Trading, overseeing operations for leveraged loans, high-yield bonds and investment-grade debt.

Credit Suisse is the fourth-largest underwriter of leveraged loans in the U.S., with a 7.5 percent market share, according to data compiled by Bloomberg. The bank held the same rank at the end of last year. Bank of America Corp. is the largest issuer this year with a 17.1 percent market share, the data show.

Sales, Trading

New institutional term loans, debt that’s sold mostly to collateralized loan obligations, fell to $27.4 billion last quarter from $52.9 billion in the period ended June 30, according to S&P Leveraged Commentary & Data. So far this year, $212.9 billion of institutional loans have been arranged.

The changes at Credit Suisse are similar to when Bank of America and RBC Capital Markets merged their loan sales and trading units earlier this year. Credit Suisse will keep the groups separate.

Leveraged loans and high-yield, high-risk debt are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s. CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.

--Editors: Chapin Wright, Faris Khan

To contact the reporter on this story: Richard Bravo in New York at rbravo5@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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