—— Blackstone Eyes Regional Bank Assets; $200 Billion in Real Estate Debt Falls Below Par; Tech Grads Pivot to Finance; Meta Layoffs Near Completion; 30-Year Mortgage Rate Hits 6.69%; Fundrise Launches $500M Credit Fund; China Stock Gains for 2023 Wiped Out
1. Blackstone Eyes Regional Bank Assets
Blackstone CEO Steve Schwarzman said in a video interview at the Qatar Economic Forum that the firm is in discussions with several U.S. regional banks and is interested in acquiring assets and issued loans.
Schwarzman noted that regional banks are currently reluctant to lend into the economy, and Blackstone is well-positioned to fill that funding gap.
In recent years, Blackstone—the world’s largest alternative asset manager—has increasingly become a popular financing channel outside the traditional banking system.
Schwarzman also praised Middle Eastern sovereign wealth funds for being highly efficient in allocating investment capital.
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2. $200 Billion in Real Estate Debt Falls Below Par
According to Bloomberg data, a total of $190 billion in global real estate bonds and loans are now trading below par—marking a new high for the year.
Most of these distressed loans stem from China’s troubled property sector. A $400 million bond from Dalian Wanda maturing this July fell to about 70 cents on the dollar this week, nearing distressed levels.
In the U.S., demand for low-quality office buildings has plummeted, with certain sectors of commercial real estate facing a brutal reset.
Many speculative fund managers are considering buying REIT bonds but remain unsure about timing and strategy.
More real estate loans are slipping into distressed territory, while loans in other sectors are showing signs of health.
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3. Tech Grads Pivot to Finance
The tech industry in 2023 looks nothing like the boom years—mass layoffs and lower pay are driving more new graduates to consider finance instead, reversing the trend of mass migration into coding.
A partner at job placement firm Lee Hecht Harrison said Wall Street is grueling but offers higher compensation. However, bonus pools are shrinking, hiring freezes are in place, and many banks face financial challenges.
Reportedly, the average salary offered by tech firms to new hires has dropped 25% year-over-year, and stock-based compensation has become far less attractive in the current market.
Many students who once aspired to work in tech are now being forced to consider roles in finance.
Anna, 23, turned down an offer from Microsoft and accepted a higher-paying role at JPMorgan.
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4. Meta Layoffs Near Completion
Today, Meta released the final list of layoffs, marking the near end of its plan to cut over 10,000 employees—allowing remaining staff to breathe a sigh of relief and return to normal work.
In March, CEO Mark Zuckerberg announced the cuts, initially targeting HR and recruiting teams. By late April, large numbers of tech staff were affected.
During the process, employees were left in limbo, unsure who was assigned to what, as the layoff lists weren’t clearly communicated.
After the layoff announcements, employees were anxious and demoralized, creating a difficult work environment.
Now that they’re confident in their positions, staff can finally get back to focusing on work.
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5. 30-Year Mortgage Rate Hits 6.69%
According to data released today by the Mortgage Bankers Association (MBA), the average 30-year fixed mortgage rate rose 12 basis points to 6.69%—its highest level since March. In the week ending May 19, the mortgage application index fell 4.3%, hitting a new low since early March.
In recent weeks, stalled U.S. debt ceiling negotiations have driven up the 10-year Treasury yield, which in turn pushed mortgage rates higher.
Mortgage applications rose early in the year, but demand has fallen again as rates climb.
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6. Fundrise Launches $500M Credit Fund
Real estate investment firm Fundrise plans to launch a $500 million credit fund to capitalize on distress in the U.S. commercial property market.
It will be Fundrise’s first credit-focused vehicle. The firm aims to offer high-yield loans to residential property owners and developers facing financing challenges.
CEO Ben Miller, 46, said that as banks restrict lending, Fundrise sees an opportunity to fill the funding gap.
The firm currently manages over $3 billion in assets.
Over the next two years, $900 billion in commercial property loans are set to mature, and many owners will need financing or refinancing options.
Crowdfunz and Fundrise have similar models—focused on helping real estate developers access capital.
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7. China Stock Gains for 2023 Wiped Out
Today, China’s CSI 300 Index fell 1.4%, erasing all of its year-to-date gains—dragged down by a weakening yuan, a sluggish real estate sector, and worsening U.S.-China geopolitical tensions.
In January, China’s economic reopening spurred a stock market rally, leading Wall Street to upgrade its growth forecasts. But as economic data disappointed, banks like JPMorgan have since lowered their projections.
Shanghai-based Shinyu Private Fund Management said pessimism is spreading across the market. The USD/CNY exchange rate broke 7, and foreign investors are pulling out.
China’s real estate developer debt crisis shows little sign of easing, and overseas investors are exiting en masse.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.