SVB Bonds US says ‘wipe out’ gains in rare session

Photo of author

(Bloomberg) — As US government officials pledged to fully protect all depositors of the failed Silicon Valley bank, they had a specific message for investors in the bonds and shares of the bank’s holding company.

Read the most from Bloomberg

“They will be wiped out,” a senior Treasury official told reporters late Sunday.

The message did not reach Wall Street’s bond trading desks, where in a rare Sunday session, bonds were being quoted at prices higher than where they had changed hands on Friday, according to people with knowledge of market activity.

At least a handful of dealers were making on Sunday in bonds from Financial Group, the bank’s parent, the people, who asked not to be identified because the trading activity is private.

Some investors were watching the bank’s senior unsecured bonds offer more than 50 cents on the dollar Sunday afternoon. That’s higher than the roughly 37 percent to 42 percent of the prices at which the bonds changed hands at the end of Friday, according to prices compiled by the US trade reporting system known as Trace.

It is unclear exactly how much, if any, bonds were traded on Sunday. And many bond investors were struggling to price debt on a day when the news turned sharply. Investors and credit graders expect the holding company to be put into Chapter 11 bankruptcy following a government seizure of its banking operations.

That would leave ultimate recovery at the mercy of US courts and whatever value creditors can squeeze from the remaining assets of that entity.

See also  Verizon Income Steerage For 2023 Misses Estimates

Read the most from Bloomberg Businessweek

©2023 Bloomberg L.P.