2023-11-10 22:37:00
Defaults on U.S. debt pledged as collateral spiked Thursday as fallout from a cyberattack on Industrial & Commercial Bank of China Ltd. spread through the market.
U.S. Treasury repurchase defaults — the amount of U.S. debt that was not delivered to satisfy trading contracts — rose to $62.2 billion, the highest since March and above US$25,500 million from the previous day, according to data from the Depository Trust & Clearing Corporation (DTCC). These breaches occur when sellers they do not deliver or the buyers do not receive the securities in time to settle a transaction.
The repo market, which normally closes at 3 pm in New York, remained open until 7 pm to facilitate trading, according to Subadra Rajappa, head of US interest rate strategy at Société Générale. The Federal Reserve, for its part, kept its Fedwire settlement system open to minimize damagesaid Curvature Securities Executive Vice President Scott Skyrm.
Junk debt with yield over 10% increases to US$ 325,000 million
DTCC and the Fed could not immediately be reached for comment.
“We saw our defaults increase by maybe 50% or double”Skyrm said. “We would have had many more defaults if they had not remained open. That eliminated some of the defaults and contributed to congestion,” he said.
Rumors about the ICBC attack circulated in the markets on Thursday, as entities responsible for clearing transactions quickly took their systems offline to contain the damage, forcing ICBC to send settlement details via a USB drive. The problem complicated the auction of 30-year US debt, which was one of the worst in a decade, and some market participants attributed the lackluster result in part to ICBC’s problems.
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