Junk quiet, liquidity thins as SVB implodes; IAA jumps, Richie gains on merger approval

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 10 – The junk bond primary market remained idle on Friday as volatility gripped the capital markets on news surrounding the failure of Silicon Valley Bank.

In less than 36 hours, SVB Financial Group went from an investment-grade rated company to a delisted stock with its subsidiary Silicon Valley Bank in FDIC receivership.

SVB’s perpetual preferred stock plunged 50 to 60 points to close the day in the single digits.

While the U.S. non-farm payroll report was expected to be the market-moving event of Friday’s session, SVB’s implosion sparked a buying frenzy in Treasuries with investors fleeing to a safer safe haven than the banking sector.

The 10-year Treasury yield fell 22 basis points to close Friday at 3.69% and the two-year yield fell 29 bps to close at 4.58%.

While the secondary space was quiet, the cash bond market was weaker with credit spreads widening.

Meanwhile, IAA SpinCo.’s 5½% notes due 2027 (B2/B) jumped up to their special redemption price and Ritchie Bros. Auctioneers Inc.’s recently priced tranches improved after Ritchie Bros.’ acquisition of IAA was met with shareholder approval.

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