Recent shifting sands in Silicon Valley have had global impact. Data from Orbisa, securities lending data curated for the buy-side, shows how the story unfolded. 

The SVB Sell Off

The collapse of Silicon Valley Bank (SVB) triggered a series of events in the financial markets that impacted regional banks on a national level. Trading of shares in a number of banks was halted due to volatility that saw the price of many of these banks drop by 60% or more. Naturally, these events have had a direct impact on the securities lending marketplace which we have seen reflected in Orbisa data.

Looking at a composite list of regional bank stocks derived from the SPDR® S&P® Regional Banking ETF (KRE), the group’s utilization jumped from below 4% to almost 5.5% as of March 13. The cost of borrow also increased as it became evident that some of these banks were perhaps on investors’ radar in early January. Using January 2 as a baseline, when these securities were largely trading GC (non-special), Orbisa is able to track the change in borrow rates. By mid-January the average borrowing rate across these regional banks had risen by 175%. In mid-February the average cost to borrow increased by more than 200% relative to the January 1 baseline. Now borrowing demand is at an all-time high for the year.