Banks flood US debt market in biggest single-day raise since 2016, BMO says

Huntington Bancshares

13/11/2024 21:44

By Matt Tracy
       Nov 13 (Reuters) - Banks raised $23.5 billion by issuing
investment-grade bonds on Tuesday, the biggest debt issuance by
financial institutions in  a single day since the beginning of
2016, as they anticipate potentially higher interest rates next
year.
        The $23.5 billion in debt issued by financial
institutions accounted for 78% of Tuesday's total $30.15 billion
in high-grade bond sales, which was the fifth-largest day of
overall issuance in 2024, according to a Wednesday report by BMO
Capital Markets.
    "From yesterday's flood of issuance, it seems like banks are
issuing bonds now to get ahead of what could happen next year
with rates" under President-elect Donald Trump's administration,
said Jack McIntyre, global fixed income portfolio manager at
Brandywine Global. 
    "(We) will have to see what happens with risk, assets,
uncertainty and volatility the rest of the year into the new
year."
    Tuesday's largest note offering came from HSBC  HSBCUK.UL ,
which sold $6.5 billion in bonds to fund a tender offer for the
bank's notes due in 2025 and 2026, according to International
Financing Review.
    Other banks that issued debt on Tuesday include BNP Paribas
SA  BNPP.PA , Citigroup  C.N , Goldman Sachs  GS.N , Huntington
Bancshares  HBAN.O , Societe Generale  SOGN.PA  and Westpac
 WBC.AX .
    Yankee banks, or non-U.S. banks which tapped the domestic
market, accounted for $14.5 billion of Tuesday's supply, BMO
said. This is the fourth-largest day of Yankee bank supply in at
least eight years, BMO added.
    Demand for Tuesday's sales was strong at over three times
the volume on offer, according to BMO.
    A total 13 borrowers sold bonds on Tuesday, which included
non-bank deals from automaker Mercedes-Benz  DAIGF.UL  and
construction equipment maker Caterpillar  CAT.UL . 

 (Reporting by Matt Tracy; Editing by Cynthia Osterman)
 ((Matt.Tracy@thomsonreuters.com;))