January set to break record as busiest for new US corporate bonds
22/01/2024 16:41
By Matt Tracy
Jan 22 (Reuters) - The month is poised to be the busiest
January on record for new U.S. corporate bond sales, with two
regional banks on Monday adding to what has been a rush of
post-earnings debt issuance by banks.
Truist Financial Corp TFC.N , the financing arm of Truist
Bank, on Monday announced a two-part senior unsecured bond
offering. The bank is seeking an undisclosed amount of six- and
11-year fixed-to-floating rate notes.
Also on Monday, Fifth Third Bancorp FITB.O announced that
it was seeking eight-year senior unsecured notes, also
fixed-to-floating rate and of an as-yet undisclosed amount.
Their announced bond sales carry on this month's theme of
regional and global systematically important banks (GSIBs)
seeking debt after their earnings release.
Regional banks PNC PNC.N , Citizens CZBC.PK and U.S.
Bancorp USB.N sold a combined $7.25 billion in bonds last
week, which also saw debt sales from several GSIBs including
Bank of America BAC.N , JPMorgan JPM.N , Morgan Stanley MS.N
and Wells Fargo WFC.N .
The banks' bond sales contributed to a total $49 billion in
new investment grade (IG) corporate bond supply last week,
according to BofA Global research.
The first month of the year has already seen $151 billion in
new IG corporate bond supply, according to a Monday note by BMO
Capital Markets.
On its current course, this month "will very likely go down
as the heaviest January on record," surpassing $175 billion in
January 2017, wrote Dan Krieter, BMO director of U.S. investment
grade strategy.
Analysts anticipate a total $25 billion in new IG bonds this
week. But every week in the New Year so far has exceeded supply
expectation, with at least a 30% surplus above forecasts in the
last two weeks alone, Krieter noted.
"Despite the torrid pace of supply this year, demand remains
exceptionally strong with January seeing the lowest new issue
concessions for any month since 2021," he said.
Demand has also been strong for lower-rated credit tranches
"in further evidence of the insatiable appetite for risk," he
added.
Other than Truist and Fifth Third, other high-grade bond
deals expected to price on Monday include a 31-year green
mortgage bond for utility MidAmerican Energy MECI.UL and a
five-year funding agreement-backed note on behalf of New York
Life Insurance NYLIN.UL .
(Reporting by Matt Tracy; Editing by Mark Porter)
((Matt.Tracy@thomsonreuters.com; +1 571 643 3562))