First Republic Bank notes up on week; Signature Bank gives back some December gains

By Cristal Cody

Tupelo, Miss., Dec. 21 – Distressed bank paper making a run higher in December mostly softened on Thursday.

First Republic Bank’s notes were mixed and trading about ¼ point better to a 1/8 point lower on about $8 million of volume.

“I’ve seen buyers, indications,” a trader said. “There was not a whole lot there.”

Signature Bank New York’s paper was “busier and both bonds are down over 2 points,” the trader said.

The 4% subordinated notes due 2030 fell 2¾ points on Thursday but remained about 20 points higher since November.

Signature Bank’s 4 1/8 notes due 2029 also declined 2¼ points over the day.

First Republic and Signature Bank were among three regional banks that collapsed earlier in the year.

Distressed paper was mixed on Thursday in lighter trading, according to market sources.

Stock indices mostly recovered from Wednesday’s slide.

The S&P 500 index increased 1.03%.

The iShares iBoxx High Yield Corporate Bond ETF added 35 cents, or 0.45%, to $77.56.

First Republic mixed

First Republic Bank’s notes were trading with a 6 bid handle over the session, a source said.

The 4 5/8% subordinated notes due 2047 were quoted moving higher than 6¼ bid, while the 4 3/8% subordinated notes due 2046 were quoted just under 6 1/8 bid.

The issues were mixed and trading about ¼ point better to a 1/8 point lower on about $8 million of volume Thursday.

First Republic Bank’s 4 5/8% subordinated notes due 2047 have climbed from where the issue went out in the prior week at 4¾ bid.

The notes traded with a 50s handle in March and had been stuck below a 3 bid handle since May.

The former San Francisco-based bank was closed and auctioned to JPMorgan Chase & Co. on May 2, though the purchase did not include its $800 million of subordinated notes or $3.6 billion of preferred stock.

Signature Bank softens

Signature Bank’s 4% subordinated notes due 2030 were the busiest tranche in the name on Thursday, a source said.

The issue went out 2¾ points lower at 26¼ bid on volume totaling around $17 million.

On Monday, the notes climbed 5¾ points and had rallied 2½ points over Tuesday’s session to 28½ bid.

Signature Bank’s paper traded over most of November in the 3 bid to 4 bid range and finished the month at 6½ bid.

The paper was seen in October as low as ½ bid.

Signature Bank’s 4 1/8 notes due 2029 also declined 2¼ points to 27 bid on $11 million of secondary action on Thursday.

The New York-based bank was closed in March by state regulators.

Distressed index up

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved on Wednesday to 0.58% from 0.39% on Tuesday and 0.02% on Monday.

Month-to-date total returns rose to 6.69% midweek from 6.07% in the prior session and 5.66% at the week’s start.

Year-to-date distressed total returns were higher on Wednesday at 22.73% after ending Tuesday at 22.02% and Monday at 21.54%.

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