Regional Banks Face Headache From Rising Treasury Yields
- Rising 10-year yield could exacerbate CRE, securities losses
- About 44% of office loans are underwater in the US: researcher
The risk of default by borrowers who bought office buildings before the pandemic sent values plummeting also increases when the cost of credit rises.
Photographer: David Paul Morris/BloombergThis article is for subscribers only.
US Treasury yields have trended up since late last year, and commercial real estate distress risk is straining regional banks’ balance sheets again.
Stocks are already reacting to the higher borrowing costs. Smaller bank shares have fallen about 8.2% since late November after the 10-year Treasury yield began trending up. The risk of default by borrowers who bought office buildings before the pandemic sent values plummeting also increases when the cost of credit rises.