Major U.S. Banks Initiate Bond Issuance Amidst Busy Week for Debt Markets

Tuesday witnessed the initiation of new bond issues by three of the six largest U.S. banks, marking the commencement of what is anticipated to be a robust week for new bank debt. Wells Fargo, a prominent player in the financial sector, stepped into the bond market seeking issuance for fixed and floating-rate notes, along with senior unsecured fixed-to-floating rate notes. Concurrently, JPMorgan and Morgan Stanley announced their intentions to issue four tranches featuring different maturities of senior unsecured notes.

While the exact amount of debt sought by these banks has not been disclosed, both Wells Fargo and the collaborative effort of JPMorgan and Morgan Stanley are expected to finalize pricing on Tuesday. These debt issuances follow a series of fourth-quarter earnings releases by several global systemically important banks (GSIBs), including Bank of America, BNY Mellon, Citigroup, and Goldman Sachs.

Historically, January has been a pivotal month for banks to engage in bond issuances. Data from Informa Global Markets reveals that the last seven Januarys have witnessed an average issuance of $22.58 billion from the “Big Six” banks, which include JPMorgan, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley. Notably, the outlier was the preceding January, recording only $9 billion raised by the Big Six, according to the Informa data.

Despite the holiday-shortened week, the debt market is gearing up for a substantial supply. At least 11 investment-grade (IG) bond offerings, including those from Wells Fargo, JPMorgan, and Morgan Stanley, are expected to price on Tuesday. This includes a $500 million three-year bond for cereal maker General Mills and a $400 million 10-year senior note for real estate investment trust Extra Space Storage.

The surge in expected supply is remarkable given the holiday constraints. Daniel Krieter, Director of Fixed Income Strategy at BMO Capital Markets, highlighted that the average investment-grade bond supply for the week of Martin Luther King Jr Day has been $24.6 billion since 2016. Banks are anticipated to be particularly active in debt issuance this month as they proactively address new regulatory requirements, aiming to maintain higher capital reserves.

Krieter noted, “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.” This projection underscores the strategic moves by banks to navigate regulatory changes and bolster their capital positions amidst a dynamic market landscape. As the week unfolds, investors will be closely monitoring these bond issuances and their implications for the broader financial sector. **Major U.S. Banks Initiate Bond Issuance Amidst Busy Week for Debt Markets**

Tuesday witnessed the initiation of new bond issues by three of the six largest U.S. banks, marking the commencement of what is anticipated to be a robust week for new bank debt. Wells Fargo, a prominent player in the financial sector, stepped into the bond market seeking issuance for fixed and floating-rate notes, along with senior unsecured fixed-to-floating rate notes. Concurrently, JPMorgan and Morgan Stanley announced their intentions to issue four tranches featuring different maturities of senior unsecured notes.

While the exact amount of debt sought by these banks has not been disclosed, both Wells Fargo and the collaborative effort of JPMorgan and Morgan Stanley are expected to finalize pricing on Tuesday. These debt issuances follow a series of fourth-quarter earnings releases by several global systemically important banks (GSIBs), including Bank of America, BNY Mellon, Citigroup, and Goldman Sachs.

Historically, January has been a pivotal month for banks to engage in bond issuances. Data from Informa Global Markets reveals that the last seven Januarys have witnessed an average issuance of $22.58 billion from the “Big Six” banks, which include JPMorgan, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley. Notably, the outlier was the preceding January, recording only $9 billion raised by the Big Six, according to the Informa data.

Despite the holiday-shortened week, the debt market is gearing up for a substantial supply. At least 11 investment-grade (IG) bond offerings, including those from Wells Fargo, JPMorgan, and Morgan Stanley, are expected to price on Tuesday. This includes a $500 million three-year bond for cereal maker General Mills and a $400 million 10-year senior note for real estate investment trust Extra Space Storage.

The surge in expected supply is remarkable given the holiday constraints. Daniel Krieter, Director of Fixed Income Strategy at BMO Capital Markets, highlighted that the average investment-grade bond supply for the week of Martin Luther King Jr Day has been $24.6 billion since 2016. Banks are anticipated to be particularly active in debt issuance this month as they proactively address new regulatory requirements, aiming to maintain higher capital reserves.

Krieter noted, “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.” This projection underscores the strategic moves by banks to navigate regulatory changes and bolster their capital positions amidst a dynamic market landscape. As the week unfolds, investors will be closely monitoring these bond issuances and their implications for the broader financial sector.