Three of 'Big Six' U.S. banks tap bond market post-earnings

Extra Space Storage

16/01/2024 16:08

By Matt Tracy
       Jan 16 (Reuters) - Three of the six largest U.S. banks
announced new bond issues on Tuesday, kicking off an expected
heavy week for new bank debt.
    Wells Fargo  WFC.N  is tapping the bond market on Tuesday
for either or both of fixed and floating-rate notes, in addition
to senior unsecured fixed-to-floating rate notes.
    Meanwhile, JPMorgan  JPM.N  and Morgan Stanley  MS.N 
announced they are seeking to issue four tranches with different
maturities of senior unsecured notes.
    The banks did not disclose the exact amount of debt they are
seeking. Both deals are expected to price on Tuesday.
    The deals follow a long list of Friday earnings releases
from these and other global systemically important banks
(GSIBs). 
    In addition to Wells Fargo, JPMorgan and Morgan Stanley,
other banks that reported fourth quarter earnings on Friday and
Tuesday include Bank of America  BAC.N , BNY Mellon  BK.N  and
Citigroup  C.N  and Goldman Sachs  GS.N .
    January has historically been the biggest month for banks to
issue bonds. According to data from Informa Global Markets, the
last seven Januarys have seen an average $22.58 billion in
issuance from the "Big Six" banks - JPMorgan, Citi, Bank of
America, Wells Fargo, Goldman Sachs and Morgan Stanley.
    The outlier was last January, which saw only $9 billion
raised by the Big Six, according to the Informa data.
    At least 11 investment-grade (IG) bond offerings are
expected to price on Tuesday including Wells Fargo, JPMorgan and
Morgan Stanley.
    These include a $500 million three-year bond for cereal
maker General Mills  GIS.N  and a $400 million 10-year senior
note for real estate investment trust Extra Space Storage
 EXR.N .
    The expected heavy supply comes despite the
holiday-shortened week. For the week of Martin Luther King Jr
Day, the average investment-grade bond supply dating back to
2016 has been $24.6 billion, according to Daniel Krieter,
director of fixed income strategy at BMO Capital Markets.
    Banks are expected to be particularly active in debt
issuance this month, as they look to get ahead of new regulatory
requirements to maintain higher capital reserves.
    "That makes a projection of $35bn from U.S. GSIBs in January
reasonable in our estimation, with the majority of that supply
expected to come this week," Krieter wrote in a Tuesday note.

 (Reporting by Matt Tracy, Editing by Nick Zieminski)
 ((Matt.Tracy@thomsonreuters.com; +1 571 643 3562))