Credit Suisse Group AG said it expects defaults in supply chain funds
Credit Suisse Group AG announced that it is expecting defaults in a $10 billion group of supply chain funds that were run with Greensill Capital. The bank previously warned of a possible financial hit after being forced to freeze $10 billion of supply-chain funds that it ran with Greensill. According to Credit Suisse, only $50 million of the $140 million loan has been repaid.
“There remains considerable uncertainty regarding the valuation of a significant part of the remaining assets. The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due,” the bank said in its annual report. Credit Suisse indicated that investors have threatened litigation.
Credit Suisse allegedly marketed the funds as among the safest they offered. The funds contained some assets tied to future sales of the borrowers, though these sales were pure speculation. This is beyond the typical supply-chain finance business of lending actual invoices. Now, investors in the funds are facing significant losses.
Bloomberg reported that Deminor, a company known for funding investment-recovery litigation, said it had been approached by investors facing losses of approximately 60%, and that options for recovery were being reviewed.
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