To strengthen its balance sheet, Silicon Valley Bank, a division of SVB Financial Group, started a $1.75 billion share sale on Wednesday. Silicon Valley Bank struggles to reassure customers with a 60% stock wipe-out. It claimed in an investor prospectus that it required the funds to close a $1.8 billion hole left by the sale of a $21 billion portfolio of loss-making bonds. The majority of which were US Treasury bonds. The portfolio was returning an average of 1.79%, which was considerably less than the prevailing yield on the 10-year Treasury note of about 3.9%. Given the declining fortunes of numerous technological startups that the bank supports, investors in SVB’s stock were unsure whether the capital raising would be adequate. When the market closed, Silicon Valley Bank struggles and shares of the company fell another 26% in extended trade, dropping to its lowest point since 2016.
Following a capital offering that caused SVB Financial Group’s stock to collapse 60% and contributed to the loss of over $80 billion in value from bank shares, the company hurried on Thursday to convince its venture capital clients that their money was safe. SVB Financial is currently looking to raise fresh capital through a share sale after selling fixed-income investments worth $21 billion at a loss of about $1.8 billion after taxes to manage the liquidity issue. SVB Financial has nonetheless assured its clients that their money is secure.
In conclusion, losses from selling a bond portfolio made up primarily of US Treasuries caused SVB Financial Group’s stock to decline by 60% after it started a share sale to strengthen its balance sheet. The business’s publicly traded parent is currently looking to raise more funds through a share sale after selling fixed-income investments worth $21 billion at a loss of about $1.8 billion after taxes. SVB Financial has guaranteed its consumers that their money is secure notwithstanding this circumstance.