2 ms·
Yes, insolvent, but the money doesn't go poof. I never traded cash bonds but would struggle to imagine it would be hard to liquidate. Sure, over a week, but su
by rich_sasha 4y ago
Yes, insolvent, but the money doesn't go poof.
I never traded cash bonds but would struggle to imagine it would be hard to liquidate. Sure, over a week, but surely SVB can't be a major bondholder.
- Ekaros 4y agoThey are easy to liquidate. But not at the face value. For that you need to wait until maturity. Principle is simple. Why would you buy from someone a piece of paper saying someone else(even government) will pay you 1,5% a year. When you could directly buy from then similar paper paying 4%.
- rcme 4y agoThese types of bonds are what caused the pound's dramatic fall a few months ago. There isn't a large market for these. If you need to sell a lot at once, you're in trouble. The treasury recently explored stepping in to provide liquidity for off-the-run bonds: https://www.reuters.com/markets/us/yellen-says-taking-steps-enhance-treasury-market-funds-resilience-2022-10-24/ https://www.reuters.com/markets/us/yellen-says-taking-steps-...
- prottog 4y ago> I never traded cash bonds but would struggle to imagine it would be hard to liquidate Bonds are actually well known for having terrible liquidity. It's common for corps and munis even with good credit ratings to be no-bid, and even Treasuries, once they're off-the-run, aren't easy to move without moving markets.