Morning Commentary: SVB paper thrashes in deep distress as market liquidity thins

By Paul A. Harris

Portland, Ore., March 10 – With the unfolding Silicon Valley Bank situation continuing to play out on screens, and investors training weather eyes on possible contagion scenarios, market liquidity was extremely thin on Friday morning, a trader said.

The SVB Financial Group 4.7% series E non-cumulative perpetual preferred stock traded as low as 18 on Friday morning amid a cascade of headlines regarding the failure of the group's attempted $2.25 billion capital raise and amid reports that it is exploring alternatives, including a possible sale.

Subsequently, distressed players lifted that paper to 25, the trader said, noting that it went out at 69 on Wednesday.

The company's stock (Nasdaq: SIVB) fell 63% in the Friday premarket before trading was halted. That follows Thursday’s 60% drop, according to market sources.

Turning to the broad high-yield market, junk opened 1/8 point lower on Friday, a trader said.

The bonds of fallen angel Nissan Motor Co. Ltd. (Baa3/BB+) continue to be traded on the crossover desk – some trading at prices, some at spreads – the trader said.

High-yield investors are taking a keen interest in the name, the source added.

The trader spotted the Nissan Motor 4.81% senior notes due September 2030 at 87½.

The primary market sat idle on Friday morning, and the active forward calendar was empty.

Fund flows

High-yield ETFs saw $344 million of daily cash inflows on Thursday, according to a market source.

Actively managed high-yield funds sustained $90 million of outflows on the day.

News of Thursday's daily flows follows a Thursday afternoon report that the combined funds saw $10 million of net inflows during the week to the Wednesday, March 8 close, according to fund-tracker Refinitiv Lipper.

These relatively modest weekly inflows follow a three-week stretch of outflows totaling $11.3 billion, according to the market source.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.