Hedge fund Marathon made quick US$30 million on Credit Suisse bet

Marathon Asset Management made around US$30 million in a few days because of a well-timed bet on Credit Suisse Group bonds.

The hedge fund accumulated around US$150 million bonds in the Swiss lender’s senior operating company at knock-down prices just days before the Swiss lender offered to buy them back at a high premium in a Mar 16 statement, according to a person with knowledge of the matter. 

The trade was an opportunistic move to capitalise on current bank disruption, and the fund had no prior exposure to Credit Suisse bonds before buying the positions last week, the person said. 

The Swiss lender subsequently agreed to be taken over by UBS Group after Swiss regulators deemed it was no longer viable. But the bonds bought by Marathon were tendered back by Credit Suisse on Thursday in the mid to high 90 cents on the dollar range. 

Marathon did not respond to a request for comment. 

Marathon, which manages around US$23 billion in assets and specialises in buying distressed debt, is also among investors snapping up claims on Credit Suisse Group’s AT1s, ahead of what is expected be a contentious legal battle over the US$17 billion in debt that was written down to zero.

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Marathon chief executive officer Bruce Richards said on Bloomberg Television on Wednesday that while it was focused on buying some of the dislocation within the banking system, they didn’t want to buy into the subordinate parts of the capital structure unless they’re trading at pennies on the dollar. BLOOMBERG