Distressed debt investor David Tepper is betting that the value of Silicon Vally Bank parent SVB Financial Group’s debt will rise as parts of the group are auctioned off, according to a report by the Financial Times.
Unnamed FT sources have revealed that Tepper, who has a successful track record in investing in troubled financial companies, acquired SVB bonds along with preferred stock via Appaloosa Management, which for the most part manages his family’s multibillion-dollar fortune.
SVB filed for Chapter 11 bankruptcy protection in a move intended to make it easier to auction off its broker dealer, which generated more than $500 million of revenue in 2022, and a fund management arm with $9.5 billion of assets.
SVB’s bonds fell from near par value to around 40 cents on the dollar when the bank failed, but have since recovered to more than 60 cents, while the preferred stock was trading as low as 10 cents on the dollar.
According to the FT’s sources, Tepper acquired the securities in the period between the bank collapsing and the bankruptcy filing.
