Latest news with #SOFR
Yahoo
5 hours ago
- Business
- Yahoo
Bond Traders See Treasuries Selloff Going Even Further
(Bloomberg) -- Traders rattled by the rout in long-dated Treasuries are turning more bearish as yields continue to oscillate around a key 5% psychological threshold. NYC Congestion Toll Brings In $216 Million in First Four Months NY Wins Order Against US Funding Freeze in Congestion Fight A JPMorgan Chase & Co. survey of traders released Wednesday spotlighted that investors expect the selloff to worsen, keeping yields elevated in the $29 trillion Treasury market. The survey's all-client category for outright short positions — which includes central banks, sovereign wealth funds, real money and speculative traders — has climbed to the most since around mid-February. The bearish sentiment comes on the tail of a decline in global long-dated bonds as investors grow concerned about widening government fiscal deficits. The US 30-year yield is lingering around 4.97% after soaring last week to 5.15%, the highest since October 2023, amid the US losing its top credit score, a steep selloff in Japan's super-long bonds and the passing of President Donald Trump's tax-bill in the House. Long-bonds got some relief Tuesday as a global debt rally sent benchmark yields tumbling. However, the 30-year yield still hovering around 5% signals investors remain fickle. That's being expressed in the options market too, where traders are paying higher premiums to hedge an extended selloff in long-bond futures versus a rally. 'This is a global steepening of the yield curve,' said Leah Traub, a portfolio manager at Lord Abbett & Co. 'There are a lot of different nuances to the same story, which is that demand for longer-term securities is diminishing at the same time as supply is growing. That's going to put pressure on the long end of all these curves.' Meanwhile, a five-year note auction that drew record indirect demand Wednesday and a two-year auction Tuesday that was also well-received further underscore the disparity between investor interest for shorter-dated debt compared to long-bonds. Traders will next turn their focus to a $44 billion seven-year note sale on Thursday. Here's a rundown of the latest positioning indicators across the rates market: JPMorgan Treasury Client Survey In the week up to May 27, investor outright short positions increased by 2 percentage points to the most since Feb. 10. The net long position now sits at the least since Feb. 3. Most Active SOFR Options Across SOFR options out to the Dec25 tenor, the 94.875 strike has been active over the past week. That's largely down to the flows, including a large buyer of SFRZ5 95.375/94.875 1x2 put spreads, which also accounts for the gains in open interest seen over the past week in the 95.375 strike. The 96.50 strike was also well traded due to flows, including an outright buyer of Jun25 calls over the past week at half-tick. Over the past week, a decent amount of liquidation was seen in the 95.75 strike with both Jun25 puts and Sep25 puts seeing a large drop in open interest. SOFR Options Heatmap The 95.75 strike remains the second most-populated strike despite a decent amount of liquidation seen over the past week. The 95.625 strike is now most populated in tenors across Jun25, Sep25 and Dec25 options, mostly due to large positioning around the Jun25 puts via the SFRM5 95.75/95.625 put spread, which has recently traded. The top three most-populated strikes still contain a large amount of June 2025 put exposure. Treasury Options Skew Traders are continuing to pay increasing premiums to hedge a selloff in the long-bond contracts on both an outright basis and versus the front and belly of the curve. That comes as 30-year yields oscillate at a 5% handle over the past week, touching as high as 5.15% on May 22, helped by a soft 20-year bond sale last week. The skew toward puts in the long-bond contract is now the most in about a month. CFTC Futures Positioning For the second week in a row, asset managers aggressively de-leveraged net long positioning in Treasury futures, CFTC data up to May 20 shows. Over the week, asset managers unwound about 168,000 10-year note futures equivalents to the net duration long, following around 214,000 10-year note futures equivalents the week before. The largest amount of de-risking was seen in the ultra 10-year note futures, where about $5.1 million per basis point of long liquidation was seen on the week. --With assistance from Carter Johnson. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Millions of Americans Are Obsessed With This Japanese Barbecue Sauce YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol ©2025 Bloomberg L.P. Sign in to access your portfolio
Zawya
2 days ago
- Business
- Zawya
Abu Dhabi Commercial Bank issues price guidance for USD REGS 5-year SOFR Formosa
Abu Dhabi Commercial Bank (ADCB) is marketing a US-dollar five-year Formosa bond, with a final price guidance of 100 basis points above the secured overnight financing rate (SOFR), with a coupon paid quarterly in arrear. The Regulation S senior unsecured notes are rated A+ Stable (S&P) / A+ Stable (Fitch), in line with the lender's rating. The issuance will come under the UAE's bank's $15 billion Global Medium Term Note Programme. ADCB said an amount equal to the net proceeds from each issue will be used for the general financing purposes, or in respect of any Green Notes, to finance or refinance eligible green loans. HSBC Bank (Taiwan) and Standard Chartered Bank (Taiwan) have been appointed joint managers. The Formosa bond, which implies a debt instrument issued in Taiwan, will be listed on the Taipei Exchange and Euronext Dublin. In February, ADCB raised $600 million through a five-year floating-rate Formosa bond, priced at a spread of 105bps above the SOFR. (Writing by Bindu Rai, editing by Brinda Darasha)
Yahoo
5 days ago
- Business
- Yahoo
Bessent Sees Easing Capital Rule on Treasuries This Summer
(Bloomberg) -- Treasury Secretary Scott Bessent said that US regulators this summer may ease a rule that's served as a constraint on banks' trading in the $29 trillion Treasuries market. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? NYC's War on Trash Gets a Glam Squad Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt UAE's AI University Aims to Become Stanford of the Gulf 'We are very close to moving' on the so-called supplementary leverage ratio, Bessent said on Bloomberg Television's Wall Street Week with David Westin. He noted the three main bank regulators — the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. — are addressing the issue. 'I think we could see something on that over the summer,' he said. In markets, a popular hedge-fund bet that Treasuries will perform better than interest-rate swaps took a slight leg up on Bessent's remarks. The wager, which had been shaken this week by a surge in long-dated yields, has hinged on a potential move by the Trump administration toward adjusting the SLR. Thirty-year US yields were trading at about 5.02%, with the spread against comparable-maturity SOFR swaps climbing by about two basis points on Bessent's timing guidance. Tweaking the SLR, which requires banks to hold capital when they trade against their investments in Treasuries, could reduce US Treasury yields by tens of basis points, Bessent said. The SLR doesn't have risk weightings for assets — meaning it applies evenly to US government debt, which is widely regarded as the benchmark asset for the global financial system. Banks have argued the capital rule crimps their ability to add Treasuries in stressful times, as they are treated in line with much riskier assets. The SLR's applicability to Treasuries was suspended during the Covid crisis, but it's since been reinstated. Bessent and Federal Reserve Chair Jerome Powell have previously expressed support for tweaking the rule. While the change may give banks greater appetite for Treasury bonds, it's unlikely to have a large impact on their overall capital requirements, because they also face risk-weighted rules and annual stress tests that help set minimum capital levels. --With assistance from Sydney Maki and Michael J. Moore. (Updates with details throughout.) Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Inside the First Stargate AI Data Center Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His ©2025 Bloomberg L.P.
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Business Standard
7 days ago
- Business
- Business Standard
Adani Ports taps DBS for $150 mn capex loan, first global bank deal since probe
Adani Ports and Special Economic Zone Ltd. (APSEZ) has reportedly secured approximately $150 million through a bilateral loan arrangement with Singapore-based DBS Group Holdings Ltd., according to a Bloomberg report. The four-year loan is aimed at funding the company's capital expenditure plans, it said. This marks the conglomerate's first bilateral loan from a global financial institution since the US Department of Justice filed bribery-related charges against it in November. The loan is seen as a signal of gradually improving lender sentiment toward the group, whose portfolio spans ports, logistics, energy and infrastructure. Loan pricing and terms reflect easing risk perception The facility is reportedly priced around 200 basis points above the Secured Overnight Financing Rate (SOFR). Including hedging costs, the total cost of the loan is estimated at about 5.5 per cent, said one of the individuals. While DBS declined to comment on the development, a representative for the Adani Group also did not provide an immediate response. Adani re-engages global investors with new bond and loan plans Just last month, the Adani Group raised roughly $750 million via an offshore private placement bond issuance to finance the acquisition of a construction company. Asset management giant BlackRock Inc. reportedly took up about one-third of the issue. In parallel, Adani is currently in discussions with several international banks, including Barclays Plc, First Abu Dhabi Bank PJSC, and Standard Chartered Bank Plc, for a potential $750 million loan to support its airport business. Meanwhile, Adani Group representatives have met with officials from the US administration to explore the possibility of having the bribery-related charges dropped, Bloomberg reported earlier this month. Earlier this month, APSEZ reported a 47.8 per cent year-on-year rise in net profit attributable to equity shareholders for the fourth quarter of FY25, fuelled by a steady increase in cargo throughput. The company recorded a quarterly profit of ₹3,014.22 crore, surpassing Bloomberg's analyst consensus of ₹2,662.1 crore. Total cargo volumes during the period climbed 8 per cent from the previous year to reach 117.9 million metric tonnes, driven primarily by robust growth in container traffic. Operational revenue for the quarter jumped 23.1 per cent year-on-year to ₹8,488.44 crore, outpacing the projected ₹8,094.4 crore. Meanwhile, total expenses for the quarter stood at ₹5,382.13 crore, marking a 20.93 per cent rise compared to the same period last year.
Yahoo
14-05-2025
- Business
- Yahoo
Lument Finance Trust Inc (LFT) Q1 2025 Earnings Call Highlights: Navigating Challenges with ...
GAAP Net Loss: $0.03 per share. Distributable Earnings: $0.08 per share. Quarterly Dividend: $0.08 per common share. Net Interest Income: $7.7 million, down from $9.4 million in Q4 2024. Loan Payoffs: $55 million in Q1 2025. Exit Fees: $700,000 in Q1, down from $1.1 million in Q4 2024. Total Operating Expenses: $2.6 million in Q1, compared to $2.8 million in Q4 2024. Allowance for Credit Losses: $5.7 million net increase. Specific Reserves for Credit Losses: Increased to $11.1 million as of March 31. Unrestricted Cash Balance: $64 million at the end of Q1. Total Equity: Approximately $232 million at the end of Q1. Book Value of Common Stock: $3.29 per share, down from $3.40 as of December 31. Portfolio Composition: 61 floating rate loans with an aggregate unpaid principal balance of approximately $1 billion. Portfolio Collateralization: 92% by multi-family properties. Weighted Average Note Floating Rate: SOFR plus 355 basis points. Risk Rated Loans: Seven loans risk rated five, totaling approximately $108 million. Warning! GuruFocus has detected 6 Warning Signs with LFT. Release Date: May 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lument Finance Trust Inc (NYSE:LFT) reported distributable earnings of $0.08 per share, maintaining the quarterly dividend of $0.08 per share. The multi-family sector, which constitutes a significant portion of LFT's portfolio, continues to demonstrate resilience with robust occupancy rates. LFT has successfully executed several loan modifications and extensions, preserving value and enhancing downside protection. The company maintains a strong liquidity position with $64 million in unrestricted cash, providing flexibility for future investments. LFT is exploring new secured financing options, which are expected to provide adequate flexibility and position the company favorably in the CRE CLO market. Lument Finance Trust Inc (NYSE:LFT) reported a GAAP net loss of $0.03 per share for the first quarter of 2025. Net interest income declined to $7.7 million from $9.4 million in the previous quarter, primarily due to declines in the SOFR benchmark rate and deleveraging of secured financings. The company increased its specific reserves for credit losses by $7.3 million, reflecting challenges in the portfolio. Seven loans, representing approximately 11% of the unpaid principal balance, were risk-rated as 5, indicating significant credit risk. The total book value of common stock decreased to $3.29 per share from $3.40, driven by an increase in the allowance for credit losses. Q: Can you characterize the current pipeline and discuss if there's a level of net originations needed to maintain the current dividend capacity? A: James Flynn, CEO: The origination level is not a concern at the moment. We have assets that can be deployed into LFT when there's capacity. While recent volatility could reduce opportunities, I don't foresee it drying up completely. We are seeing attractive assets, particularly in new construction and lease-up levels, although competition is high. There's been a modest slowdown in recapitalization and bridge-to-bridge deals, but opportunities remain, especially with the anticipated turnover in the wall of maturity. Q: Are there other financing options available besides the CLO market? A: James Flynn, CEO: Yes, there are opportunities from both banks and private credit. These options offer more flexibility than traditional warehouses, such as longer asset duration and flexible terms. While the CLO market remains the most attractive for floating rate multifamily assets, we are exploring these alternatives as interim steps or potentially permanent solutions to maintain flexibility. Q: Regarding the problem loans under asset management, do you anticipate any near-term resolutions? A: James Flynn, CEO: There is potential for resolutions in the next three to six months, as we've seen in previous quarters. The key issue is sponsorship, as some sponsors lack the capital to improve assets, leading to deterioration. Our strategy involves gaining control of assets or bringing in new sponsors to improve asset conditions. As we deleverage and maintain liquidity, the number of problem assets should decline, leading to more resolutions. Q: Is the rise in non-accruals due to cash flow issues at the property level? A: James Flynn, CEO: Yes, it's a cash flow issue both at the asset and sponsor level. Lack of reinvestment leads to further cash flow deterioration and operational decline. Without control of the asset, we see continued decline unless reinvestment occurs. It's a combination of cash flow and management issues, with a correlation between asset performance and management quality. Q: Given the rise in non-accruals, do you still believe in strong fundamentals and robust demand? A: James Flynn, CEO: Yes, strong fundamentals and demand remain true in the market and on average in our portfolio. However, some sponsors have not followed through on their goals, leading to quick deterioration. We believe that with better management, these assets could perform better, and we are evaluating scenarios to improve outcomes. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
