SVB announced on Thursday it would sell $2.25 billion in common equity and preferred convertible stock to fill its funding hole. This forced SVB to recognize a $1.8 billion loss, which it needed to fill through a capital raise. The portfolio was yielding it an average 1.79%, far below the current 10-year Treasury yield of around 3.9%. To fund the redemptions, Silicon Valley Bank sold on Wednesday a $21 billion bond portfolio consisting mostly of U.S. REUTERS/Nathan Frandino SILICON VALLEY BANK SELLS BOND PORTFOLIO AT A LOSS This culminated in Silicon Valley Bank looking for ways this week to meet its customers' withdrawals.Ī man puts a sign on the door of the Silicon Valley Bank as an onlooker watches at the bank’s headquarters in Santa Clara, California, U.S. SOME SILICON VALLEY BANK CLIENTS FACE CASH CRUNCHĪs higher interest rates caused the market for initial public offerings to shut down for many startups and made private fundraising more costly, some Silicon Valley Bank clients started pulling money out to meet their liquidity needs. This weighed on technology startups - the primary clients of Silicon Valley Bank - because it made their investors more risk-averse. Investors have less appetite for risk when the money available to them becomes expensive due to the higher rates. The Federal Reserve has been raising interest rates from their record-low levels since last year in its bid to fight inflation. Here is the sequence of events that led to Silicon Valley Bank's failure: FEDERAL RESERVE RAISES RATES Federal Reserve raising interest rates and souring the risk appetite of investors. NEW YORK, March 10 (Reuters) - SVB Financial Group Inc's (SIVB.O) shutdown and takeover by banking regulators on Friday can be traced to the U.S.
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