Bank, financial issuers slam high-grade bond primary market; busy deal week on tap

By Cristal Cody

Tupelo, Miss., April 22 – Investment-grade bond issuance soared to over $55 billion this week with the bulk coming from bank and financial issuers on the heels of first-quarter earnings statements and ahead of expected rate hikes.

Volume roared past the $17 billion of supply brought last week ahead of the holiday weekend.

Bank supply was widely expected over the week following earnings releases from JPMorgan Chase & Co., Morgan Stanley, Wells Fargo & Co. and Bank of America Corp.

About $33 billion of the week’s volume was priced from the major U.S. banks, including Morgan Stanley and Wells Fargo on Monday, JPMorgan Chase on Tuesday and Bank of America on Tuesday with a preferred deal and again on Thursday with senior notes.

A total of $41.7 billion of corporate bank and financial paper printed over the week, including from PNC Financial Services Group Inc. on Thursday, sources said.

Bank issuance also remained active in the sovereign, supranational and agency spaces this week.

Frankfurt-based government-backed bank KfW on Thursday sold $5 billion of 3% notes due 2027 (Aaa/AAA) at SOFR mid-swaps plus 31 basis points, tighter than talk in the SOFR mid-swaps plus 33 bps area and guidance in the 32 bps spread area.

Development Bank of Japan also brought $1 billion of 3.25% notes due 2027 (A1/A+) on Thursday at SOFR mid-swaps plus 57 bps, 1 bp firmer than talk.

High-grade bond supply is expected to continue to pump the gas next week ahead of the Federal Reserve’s May 3-4 monetary policy meeting and expected additional rate hikes, sources said.

About $25 billion to $30 billion of issuance is anticipated.

PNC, BofA trade

Bank and financial tranches were mostly trading flat to over 10 bps better in the secondary market over the week and on Friday, sources said.

PNC’s $1 billion offering of 6% perpetual preferreds (Baa2/BBB-/BBB) that priced on Thursday saw heavy secondary action on Friday, a market source said.

The preferreds were quoted late afternoon at 101.5, up from where they priced at par of $1,000 on Thursday and from where the issue traded in the aftermarket at 100.375.

The issue was quoted later in the day by another source at 99.75 bid, par offered.

PNC sold the securities on the tight side of the 6% to 6.125% area price talk.

Bank of America’s $2 billion offering of 6.125% perpetual preferred shares (Baa3/BBB-/BBB+) that priced on Tuesday also improved in the secondary market.

The issue was seen trading as high as 102.5 during Friday’s session, up from 100.75 on Thursday.

The 6.125% preferreds priced at par of $1,000 and tighter than the 6.25% area talk.

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