Turbulent days in global markets…
After several turbulent days during which some $42 billion of deposits was yanked from Silicon Valley Bank, the bank’s holding company, SVB Financial Group, was placed into Federal Deposit Insurance Corp. receivership on Friday, March 10. The news sent shock waves across global markets, and the extent of repercussions from the financier’s collapse on startups and financial services in general remains unknown.
To help our subscribers stay on top of a rapidly evolving situation, Reorg’s editorial team published a series of articles, including a snapshot of the bank’s financial liabilities, counterparties that might suffer from its failure, an insight piece into the impact on credit markets and startups that highlighted the immense opportunity for private credit funds, and a municipals story on the ripple effects on the prepaid gas market. We also interviewed Chris Maloney from Bank of Oklahoma Capital Financial Markets about mortgage-backed securities and their significance in SVB’s collapse and banking.
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SVB Financial Group Collapse
After a turbulent few days during which investors and depositors initiated withdrawals of $42 billion from Silicon Valley Bank, the bank’s holding company, SVB Financial Group, was placed into FDIC receivership last Friday by California’s financial regulator, the Department of Financial Protection and Innovation. One immediate consequence of SVB’s collapse will be felt in the high-yield and leveraged loan primary markets. New issuance and refinancings, already muted after the record volumes of 2020 and 2021, are likely to largely vanish over the near term, especially among financial services and technology names. » Continue Reading
SVB Bond Trustee US Bank Taps Counsel
Unsecured creditors to SVB Financial Group are mobilizing and speaking with restructuring advisors in preparation for an expected chapter 11 filing, according to sources. Davis Polk advised the joint bookrunning managers on the SEC-registered offering by SVB Financial of $500 million aggregate principal amount of 3.125% senior notes due 2030, $350 million aggregate principal amount of 4.345% fixed-rate/floating-rate senior notes due 2028 and $450 million aggregate principal amount of 4.57% fixed-rate/floating-rate senior notes due 2033 by SVB. » Continue Reading
Americas Municipals Industry Update
Prepaid gas deals are feeling the pain from distress in the U.S. regional banking system following last week’s news that Silicon Valley Bank had been placed under FDIC receivership, according to market sources. Following the collapses of Silicon Valley Bank and Signature Bank, Black Belt Energy Gas District and Energy Southeast have dropped from the primary calendar, according to market sources. » Continue Reading
The newly formed House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion held its first hearing examining recent federal regulatory actions related to the cryptocurrency industry on Thursday, March 9. During the hearing, lawmakers discussed Silvergate Bank’s voluntary liquidation this week and disagreed on whether crypto assets should be separated from the mainstream banking system. » Continue Reading
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At the center of Silicon Valley Bank’s stunning collapse was an investment portfolio stuffed with mortgage-backed securities, or MBS. In this special podcast with Reorg’s James Holloway, CJ Maloney, MBS strategist at Bank of Oklahoma Capital Financial Markets, explains the asset class, their outsized losses since the Fed commenced its rate-tightening program, and the Fed’s options as it seeks to simultaneously battle inflation and support the banking sector. Listen here.