Last week, we wrote about the “amend and extend” boom that might be expected as banks work through a 525bps rate increase in less than 18 months. This week, Moody’s warned another group of regional banks that are on the edge of downgrade due to CRE exposure.
While much was made over the poor risk management at SVB that led to inexplicably unhedged long-bond positions, most lenders understand that years of debt securities and assets priced well under today’s yields lead to a somewhat illiquid “hold-to-maturity” position for too much of the portfolio.