By Steve Gelsi
Corporate bond prices in at least four regional banks have been gaining ground at a greater pace than equity prices in a sign of stability after a volatile few months for the sector.
Corporate bonds in Western Alliance Bancorp (WAL) have been particularly strong, with prices currently outperforming its stock price, according to data from BondCliQ. (See chart below)
PacWest Bancorp (PACW) has seen its bonds and stock prices trade mostly in tandem in a mostly flat direction in recent sessions.
The bond price moves suggest that for now, bond investors appear to be slightly more bullish on the regional banks than common stock investors.
This could be a sign of a bottom in regional bank stocks, which have been hit by contagion fears and the threat of increased regulatory oversight after the collapse of Silicon Valley Bank in March.
Along with Silicon Valley Bank, Signature Bank also went out of business, followed by First Republic Bank after a rush of deposit withdrawals from the banks.
The Federal Deposit Insurance Corp. has since sold the bulk of the former Silicon Valley Bank to First Citizens Bancshares (FCNCA), while New York Community Bancorp (NYCB) is buying Signature Bank and JPMorgan Chase & Co. (JPM) is acquiring First Republic.
PacWest stock lifted regional bank stocks on May 22 when it announced the sale of a loan portfolio, but the stock remains the most beaten-down among regional banks.
Also Read: Kennedy Wilson lines up Fairfax Financial as buyer of PacWest loan portfolio
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June 05, 2023 14:46 ET (18:46 GMT)
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