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Most Paused, Some Did Not

26 April 2017 by lberuti

Monday and Tuesday were all about the capitulation of hedge fund managers who held short risk positions into the first round of the French presidential election. Today marked this week’s first session of consolidation. Credit indices bounced off the tights as investors reduced a bit their strategic long risk positions ahead of the ECB meeting tomorrow. Single reference entity CDS also made a pause, but among them Financials continued to perform with CS (Credit Suisse Group AG) showing the way. The CEO announced that the bank is eventually bowing to investors’ pressure by abandoning the partial sale of its biggest profit generator, its Swiss Universal bank, and said that it will instead boost capital through a right offer. The bank will raise 4 billion Swiss Francs from the share sale. CS also posted a first quarter profit of CHF 596mln which beat analysts’ expectations of CHF 336mln. Investors celebrated the results together with the end of what were weeks of speculation regarding the funding plan by sending CS’s 5-year risk premium another 5bps tighter to 89bps.