What happened

Shares of Swiss bank Credit Suisse Group (CS) traded 9.5% higher as of 1:29 p.m. ET Tuesday, as stocks rallied and as fears over the financial health of the bank seemed to dissipate. 

So what

The market rose today after the Reserve Bank of Australia hiked its benchmark interest rate by 0.25%, which is lower than experts had initially thought, leading investors to wonder if the Federal Reserve will also soon slow the pace of rate hikes.

Credit Suisse, however, has been dealing with its own mess, as losses from scandals in its investment bank, such as exposure to Archegos Capital and Greensill Capital, have forced management to think about an expensive and arduous overhaul of the embattled unit.

Spreads on credit default swaps for the bank have widened recently, rising past 3% on Monday, and leading some investors to wonder if the bank could soon fail similarly to how Lehman Brothers did during the Great Recession.

While Credit Suisse has a ton of work to do to dig itself out of this hole and could see more pressure on the stock, the bank is very well capitalized and analysts do not think it will fail.

"Whilst there is a potential for new write-downs being announced by Credit Suisse at the end of the month when they're coming up with results, there is nothing publicly available at the moment that indicates that those write-downs will be sufficient to actually cause solvency issues for Credit Suisse," DBRS Morningstar analyst Johann Scholtz told CNBC today.

Now what

Like Scholtz, I do not expect Credit Suisse to fail. That said, I would also not buy the stock because Credit Suisse doesn't have a lot of good options right now.

The company will likely need capital to overhaul its investment bank. It could go raise capital but it would be doing so at its current stressed valuation, which would be very dilutive to existing shareholders. Credit Suisse also could sell some of its other existing businesses that perform well, but it may not get a great deal in this market and that also might hurt its future earnings power.

I don't expect the bank to fail, but it could trade at these distressed levels until the market is convinced it has fixed its internal controls and has a clear transformation plan in place, which could take some time.