Credit Suisse Collapse: Hedge Fund Wins Big

　　A Lucrative Gamble

　　In the midst of Credit Suisse's tumultuous downfall, one hedge fund, Marathon Asset Management, has reportedly emerged as a major beneficiary of the bank's collapse and subsequent rescue.

　　A Lifeline from UBS

　　Earlier this month, Credit Suisse was acquired by its rival, UBS, in a $3.25 billion deal backed by the Swiss government. This historic rescue came as a response to a crisis of confidence that had led to the withdrawal of over $100 million in assets from the bank in the final quarter of 2022.

　　Marathon's Strategic Move

　　Just days before the UBS takeover was announced, Credit Suisse announced plans to borrow up to 50 billion Swiss francs ($54.5 billion) from the Swiss central bank and repurchase around $3 billion in debt at an inflated price.

　　Seizing this opportunity, Marathon Asset Management, based in New York, reportedly accumulated approximately $150 million worth of bonds in Credit Suisse's senior operating company (OpCo) days before the bank's debt buyback offer, according to anonymous sources cited by Bloomberg.

　　Reaping the Rewards

　　Marathon's well-timed bet on Credit Suisse bonds proved highly lucrative. The hedge fund purchased the bonds at a discounted price and, within a few days, realized a profit of approximately $30 million.

　　Marathon's CEO Confirms the Bold Move

　　In an interview with Bloomberg television, Marathon Asset Management's chair and CEO, Bruce Richards, confirmed the hedge fund's substantial investment in Credit Suisse bonds.

　　"We went out and bought a very large position in short-dated Credit Suisse bonds...and those bonds were then tendered for," Richards stated. "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."

　　Scooping Up Distressed Assets

　　Marathon, known for its expertise in purchasing distressed debt, is also among the hedge funds acquiring Credit Suisse's AT1 bonds, which are now being traded as claims, as reported by Bloomberg.

　　The Controversy Surrounding AT1 Bonds

　　Holders of the risky AT1 notes, designed to act as buffers in case a bank's liquidity levels fall below a certain threshold, were outraged when regulators controversially decided to write down $17.3 billion in Credit Suisse AT1s to preserve $3.3 billion in value for shareholders as part of the UBS takeover.

　　Typically, bondholders have priority over shareholders in recovering their capital when a bank faces collapse. However, in Switzerland, the financial regulator is not bound by these conventions.