—— Blackstone Defaults on $562M CMBS; Crypto Bank Shares Halve; Tesla Investor Day Disappoints; U.S. Yield Curve Inverts Again; Singapore Raises PR Investment Threshold; 30-Year U.S. Mortgage Rate May Top 7%; Citi Invests Billions, Cuts Jobs
1. Blackstone Defaults on $562M CMBS
Private equity giant Blackstone has defaulted on a $562 million commercial mortgage-backed security (CMBS) loan backed by a portfolio of office and retail properties owned by Finnish landlord Sponda Oy.
Sources said Blackstone had previously requested an extension and was selling assets to repay the debt. However, the war in Ukraine and rising interest rates caused market volatility, which slowed sales. CMBS bondholders ultimately voted against an extension, leading to the default.
According to a statement released today by loan servicer Mount Street, the CMBS matured and Blackstone failed to repay the principal.
A Blackstone spokesperson said the loan represented only a small portion of Sponda’s portfolio and that the proposed extension would have been the best outcome for the firm and its investors. Despite the default, Blackstone remains confident in the quality of Sponda’s assets and management.
The loan was backed by Sponda’s office and retail portfolio, and Blackstone had been trying to sell assets to repay it.
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2. Crypto Bank Shares Halve
California-based crypto bank Silvergate Capital Corp. said it would not be able to file its 10-K annual report on time, casting doubt on its ability to continue as a going concern.
This morning, shares of the La Jolla-based company plunged as much as 45% to $7.50—its lowest level since its 2019 IPO.
Silvergate disclosed in its filing that the company issued several debt instruments in January and February, and operational losses this year may further deteriorate its capital structure.
Silvergate warned that its current year losses could force it to issue more debt and worsen its capital position.
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3. Tesla Investor Day Disappoints
Tesla held its highly anticipated annual Investor Day on Wednesday.
Investors and consumers had expected details about the company’s upcoming affordable EV model, but the event lacked substantial updates in that area.
Instead, the event focused heavily on energy transition, vehicle design philosophy, and production concepts, with minimal specifics on development timelines.
As a result of the vague presentation and absence of meaningful updates, Tesla shares fell 8.3% to $186.01, wiping out $50 billion in market value.
Tesla’s Investor Day was vague and failed to deliver the forward-looking information investors had hoped for.
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4. U.S. Yield Curve Inverts Again
Amid expectations that the Federal Reserve will maintain rate hikes longer than previously thought, U.S. Treasuries were heavily sold off this week. On Wednesday, the 10-year Treasury yield rose above 4% for the first time since November.
Meanwhile, the 2-year yield climbed to 4.88%, its highest level in 16 years.
This dynamic has led to an inverted yield curve, where short-term yields exceed long-term ones—a phenomenon often viewed as a precursor to recession.
In the U.S., every recession since 1970 has been preceded by a yield curve inversion.
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5. Singapore Raises PR Investment Threshold
Singapore’s Economic Development Board announced today that international investors must now invest at least $7.4 million in local businesses or $18.5 million in approved funds to qualify for permanent residency.
Investors seeking to establish a family office must deploy a minimum of $37 million across four designated channels.
Singapore’s infrastructure and political stability have attracted many ultra-high-net-worth individuals, fueling price increases in luxury cars, golf clubs, and high-end apartments.
In response, the government aims to curb inequality. In February, it also raised taxes on luxury homes and vehicles.
Roughly 250,000 residents in Singapore have a net worth exceeding $1 million, ranking it the world’s fifth wealthiest.
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6. 30-Year U.S. Mortgage Rate May Top 7%
According to a statement from Freddie Mac, the average 30-year fixed mortgage rate rose to 6.65% this week, up from 6.5% the previous week.
At that rate, the average monthly payment for a $600,000 mortgage is now $3,852—far higher than $2,782 a year ago.
Realtor.com chief economist George Ratiu noted that although mortgage rates dipped in January, they are likely to exceed 7% again in the coming months.
As mortgage rates rise again, more buyers are opting to pay in full with cash.
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7. Citi Invests Billions, Cuts Jobs
Sources report that Citigroup is cutting hundreds of jobs across its investment banking, technology, and U.S. mortgage divisions. The cuts represent less than 1% of the bank’s 240,000 global employees.
Managers were not given centralized directives for the layoffs, and reasons vary by department.
Weeks earlier, JPMorgan laid off hundreds in its mortgage unit, and Goldman Sachs launched its largest layoff round in history.
In recent years, Citi has spent billions upgrading its tech infrastructure. CEO Jane Fraser believes these long-term investments will reduce labor dependency over time.
Citigroup has invested billions in technology to reduce headcount and long-term operational costs.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.