Accounting rules(US GAAP/IFRS) presently insist on writing down fair value of debt(and crediting equity) if the credit spreads rise(risk of own default increases). Though it reflects what is happening, it does not reflect that the core business is seen as suffering yet you increase equity-a case of silver lining in dark cloud.
Morgan Stanley faced the reverse situation and explained it beautifully in their 2009 letter to shareholders
"Our results were muted in large part by the improvement in Morgan Stanley’s debt-related credit spreads (“DVA”). Although this improvement was a long-term positive for Morgan Stanley and reflected the credit markets’ increased confidence in the Firm, it reduced full-year net revenues and earnings per share by $5.5 billion and $2.84, respectively"
An interesting explanation which explains why accounting is still seen as a mystery to some
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