If traditional buyers can't take it all on, the bonds "will have to get so cheap that your average muni investors will say, 'I'll buy inferior coupons because I can't resist."Īppleson added that he would be "in the camp that it would have to be very cheap for me to start giving it a serious look." "Seven billion is a lot to digest," Appleson warned. Retail buyers are the traditional buyer base, with institutional buyers typically sticking with traditional 4% or 5% debt.Īs the SVB paper begins to hit the streets, it remains to be seen if BlackRock finds sufficient interest. Many now carry significant discounts and have crossed over the de minimis threshold. Low coupon bonds became increasingly popular in the recent past's low-rate environment but under the Federal Reserve's rate-hiking cycle have faced price pressure. The portfolio has roughly 2,300 positions, of which only about 10% offered 4% or 5% coupons, with the rest carrying lower interest coupons, according to Jason Appleson, managing director and head of PGIM Fixed Income's municipal bond team. Double-A-plus rated bonds totaled $1.84 billion, and double-A bonds accounted for $1.11 billion. Of the $7.4 billion, the majority, or $4.26 billion, consist of AAA-rated bonds. It is unlikely to be a single auction and the firm is currently circulating the list to the Street to gauge interest, another source added.Īs of December 31, 2022, the fair value of the muni portfolio was marked at $6.15 billion, according to SVB's 10-K.
BlackRock, which declined to comment, is expected to start selling the bonds in the next two to three weeks, according to a source.
0 kommentar(er)
