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A Painful Day for Sure

My Customers Bank (CUBI) preferred and debt are being annihilated – an understatement. And in spite of plunging interest rates almost all issues are losers. At these levels I will hold – as mentioned they are modest positions (but painful just the same).

I had a nibble order in for one of the First Republic issues 2 cents above the ask and it wouldn’t execute – so I cancelled and have decided I will sit and not pursue the ‘hero’ role for now.

I did notice that CD rates are holding up so there is always that safe haven (I think) for now.

25 thoughts on “A Painful Day for Sure”

  1. I read that Moody’s had an A rating on SVB up until the day it failed. Another feather in their dunce cap.

    FDIC released something about $620B in unrealized bank losses. Would be nice to have a list so we could get an idea of which preferreds are being hammered unnecessarily

    I had one bank preferred in my portfolio (ONBPP) but it’s held up pretty well so far. Sold it this morning for a small loss

  2. Sold some CUBI-E at 18.87 to buy CUBI-F at under 12 average price. Nice profit if they survive, That’s the kind of trades I make in volatile markets.
    Put in a bid to buy 100 CUBI-F at 15.50. Filled a few minutes later at 9,50. Never seen that much price improvement.

    1. I did the same thing, Martin but messed up my last tranche by by buying F before selling E and that 18.87 range bid for E’s had disappeared and disappeared with a vengeance … So my overall spread was about a point less than you achieved… Nice one… hopefully not a deck chair swap..

    2. Sorry, this has probably been asked and answered before, but would selling E then buying F be considered a wash by the IRS?

  3. One or more MAJOR bond dealers are NOT in the market today, so if you are so inclined you might be able to get a few attractive buys filled. Lower liquidity, wider spreads, some issues with NO bids showing.

    1. Any suggestions Tex?
      Looked early this morning on FIDO saw a Marathon that didn’t last long and quite a few of Targa resources but didn’t like there was so many showing. Saw two PCG was tempted but they had been lower last week. Most were low coupon but showing high YTM

      1. Charles, there were no deals in my neck of the bond woods either. I decided to humor myself and see if the TD bond desk were more of a scoundrel than I presumed and was proven right. I sent out 4 requests for bids on the same lot, same 2025 Mexico Public Service bond I own. I sent the same requests all same time under a minute difference and got back 4 separate prices ranging up to around 4% spread between the lowest and highest. If I ever get serious about selling a bond I own, I will send out 15 requests and really amuse myself next time.

    1. Maybe not.
      They are data dependent.
      What data has changed since the last inflation numbers?
      This event does not change anything. All deposits being made whole by Uncle Sam.

      If the Fed looks at these events and not the data they will be hammered on credibility. Using external events brought us the transitory attitude and interest rates not moving soon enough as indicated by the data at the time.
      Once this settles, rates will creep back up IMO.

    1. yup! I already traded SCHW. Sold short this week’s $30 puts when things were “dire” for $199. A couple contracts and covered 45 min later at $95. ez money. Much more of these opps out there in times like this.

  4. yea i bought a few cd’s today. they will adjust downward in the next few days with the big drop in the 1 and 2 year treasurys
    get them over 5 percent while you can.
    got a Schwab 5.4 18 months noncallable

    1. I can normally mssg the credit union to open CDs, today they said, “go to the site and fill out the paperwork yourself you filthy b#stard.”

      Of course, the Online CD account page is down, ha

      Glad I bought some 5% treasuries last week. I was actually going to buy a few more as 5% is my “that’s good enough” metric, but I missed that boat at the moment. Very interested to see the Fed’s decision in a week and soem change. Not sure they ever cared about credibility so they may simply pause now that they’ve broken some backs.

      Oh well, been nibbling the bank buffet today. Hurry and get what you can before it’s all gone and out of business. As Matt Damon said, “Fortune favors the Brave.” /sarcasm

      1. Smitty–went of FIDO to look at the CD’s and all the big banks–i.e. JPM are no longer offering anything–just ones like the Bank of India.

        1. Dummy here…
          Tim, could you provide a link or so to FIDO?
          Google returns dozens of links to some artist but nothing related to CDs.

      2. Smitty–went of FIDO to look at the CD’s and all the big banks–i.e. JPM are no longer offering anything–just ones like the Bank of India.

        1. Tim, I noticed the Morgan Stanley 5.25% 2 year noncallable I bought this morning is long gone now, too.

        2. There is a one year 5.3% CD from Citizens Bank (a bank I know) on Fido. Wasn’t there this morning and is going fast

          I picked up some to replace a T Bill that is maturing on 3/31. Transferred some cash in temporarily to do so

          1. Well, I cancelled my order for those Citizen’s Bank CDs

            They must have sold over 13,000 of them – and are now back with another 13,000+. No issue with a FDIC insured CD but seems they are raising some deposits in this manner

            Anyway American Express was out with a slightly better rate at 5,35% at Fido so I switched to that instead

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