SVB Financial bonds sink to 31 cents on the dollar after failure of Silicon Valley Bank

Heavy trading in SVB Financial Group’s SIVB debt pulled its BBB rated 10-year bonds as low as 31 cents on the dollar in trading on Friday after its subsidiary Silicon Valley Bank was closed by regulators, marking the biggest bank failure since the Global Financial Crisis.

The Santa Clara.-based financial services company has been reeling in recent days, with both its stock and bond prices hit hard, after it on Thursday disclosed a $1.8 billion loss from a sale of about $21 billion worth of securities. SVB Financial’s 4.57% bonds due April 2023 traded low as 31 cents on the dollar on Friday in heavy trading action, according to BondCliq. Since the low, the debt traded up at 38.50 cents, but a week ago was fetching 90 cents. Prices on U.S. corporate bonds below 70 cents on the dollar are broadly considered distressed.

Shares of the Invesco KBW Bank ETF KBWB were down 16% on the week through Friday, at last check, with some investors expressing concern about potential cracks in the financial system following a year of aggressive interest rate hikes from the Federal Reserve.

Yikes

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