Credit Suisse has created side pockets to enable the resumption of trading for four funds that include assets invested in its now-terminated supply chain finance funds.
The bank said in a notice to investors Wednesday that the board of directors for the umbrella Credit Suisse Virtuoso SICAV — SIF strategies, run by Credit Suisse Asset Management, suspended subscriptions and redemptions effective March 1.
A certain part of four funds' assets are invested in supply chain finance funds: the Credit Suisse (Lux) Multi Strategy Bond Fund, the Credit Suisse (Lux) Multi Strategy Alternative Fund, the Credit Suisse (Lux) Qatar Enhanced Short Duration Fund and the Credit Suisse (Lux) Institutional Target Volatility Fund EUR.
In order to reopen the strategies for valuation and trading, the illiquid part of the funds' assets will be separated and side pockets will be created, the notice said. These side pockets will subsequently be liquidated and paid out in cash, with trading of the liquid parts of the assets resuming April 7.
"Apart from SCFFs and the funds listed above, there is no further direct exposure in relation to the SCFFs by funds managed by CSAM," the notice said.
The four funds are for professional investors only, a spokeswoman confirmed.
CSAM executives first suspended trading on its four supply chain finance funds — for which assets were originated and structured by Greensill Capital — on March 1, since there was "considerable uncertainty" with respect to the valuation of some assets. "Moreover, the reduced availability of insurance coverage for new investments and the related substantial challenges to source suitable investments make it currently unachievable for the funds to remain invested in accordance with their investment policies. Credit Suisse Asset Management's fiduciary duty is to act in the best interests of investors in its funds," the notice said.
It then decided to liquidate the funds March 4.
The firm so far has returned $3.1 billion from the original funds to investors, representing on average 30% of the aggregated net asset value of about $10 billion in investments. The bank will provide an update when it has more information on further repayments.
Further changes as a result of the supply chain finance situation were announced March 18, including the appointment of Ulrich Korner as CEO of asset management and the separation of the division from the international wealth management business.