You have two investment choices: Blackstone and Lockbit. Who is a better steward of your capital?
November 20, 2023
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–Curve continued its flattening trend in November. 2/10 started the month around -18 and ended Friday at -47. On the SOFR curve red/green pack spread settled at -17.625 on Nov 1, and was -29.875 on Friday (9592.375/9622.25). Red pack is one year forward starting with Dec’24. The green pack starts with Dec’25 and is the highest point on the curve at a yield of around 3.75%. Although deeper inversion signals a stingy central bank, there are still lots of call spreads being bought on SFRH4 and SFRM4.
–From WSJ regarding the value of Signature Bank assets:
“A venture of two nonprofits and Related Fund Management is poised to win an auction for billions of dollars of Signature Bank loans backed by New York apartments, according to people familiar with the matter.
The venture’s leading bid of less than 70 cents of the loan’s face value shows how much the value of New York’s rent-regulated apartment sector has deteriorated in recent years.”
–I suppose it’s fitting that non-profits “won” this particular auction, though another pool of commercial property will likely fall into the hands of Blackstone. Is it cagey negotiating to buy these assets at 50% on the dollar, or is it an uncomfortable admission that the assets currently on your books need to be marked down to market?
–20 year treasury auction today. The 5 bp tail in the 30y earlier this month was explained away by the ICBC hack. (Subsequently the Lockbit hacking group said “They paid a ransom. Deal closed.”). I wonder if there will be an excuse today. Then again, maybe Lockbit will emerge as a strong bidder for the safety of treasuries as the organization seems to be generating admirable free cash flow.
https://www.reuters.com/technology/cybersecurity/icbc-paid-ransom-after-hack-that-disrupted-markets-cybercriminals-say-2023-11-13
