BlackRock brings largest mortgage bond auction since 2010
$3.7 billion sale is "all or nothing”
According to a report from Bloomberg, BlackRock is managing an “all or nothing” sale of $3.7 billion of debt mostly tied to subprime loans. The sale is scheduled to take place on Tuesday and is the largest auction of its type since 2010.
Dealers must bid on the entire block of bonds, either to hold on their own books or to fill client orders.
“So much for a quiet July!” JPMorgan analysts led by John Sim in New York wrote in the July 11 report.
The sale would represent about twice the $1.9 billion of U.S. home-mortgage securities without government backing offered in widely marketed auctions last week, according to Wells Fargo & Co. data. It’s almost equal to the $3.9 billion that traded, based on a Wells Fargo report last week.
Holders of U.S. mortgage securities bought before the 2008 financial crisis have been unloading large blocks during the past few years to benefit as prices rallied. A European bank may be the seller, Wells Fargo analysts said in the report last week.