Morgan Stanley and Bank of America Corp. were the first of the big six Wall Street banks to announce bond sales on Tuesday, combining to sell $9 billion of new bonds, as the market gears up for the usual deluge of debt from US lenders following their respective earnings reports.
(Bloomberg) — Morgan Stanley and Bank of America Corp. were the first of the big six Wall Street banks to announce bond sales on Tuesday, combining to sell $9 billion of new bonds, as the market gears up for the usual deluge of debt from US lenders following their respective earnings reports.
Morgan Stanley is selling $6 billion of new debt in three parts, according to a person familiar with the matter. The longest portion of the sale, a 15-year note, will yield 2.43 percentage points over Treasuries, after initial pricing talks expected 2.7 percentage points, said the person, who asked not to be identified as the details are private.
Bank of America is selling a $3 billion security, according to a person familiar with the matter. The four-year fixed-to-floating rate note will yield 1.2 percentage points above Treasuries, after initial pricing talks of 1.45 percentage points said the person, who asked not to be identified as the details are private.
Each bank dropped four-year floating-rate tranches from their deals. Both are expected to use proceeds from the sale for general corporate purposes.
Morgan Stanley’s net income tumbled almost 40% from a year earlier on lower revenue, as non-interest expenses came in higher than expected and trading missed estimates. But overall results at the New York-based bank were better than analysts expected
Bank of America reported earnings on Friday, along with Wells Fargo & Co., Citigroup Inc., and JPMorgan Chase & Co. Goldman Sachs Group Inc. and Morgan Stanley each announced results on Tuesday. The Charlotte-based bank’s traders beat analysts’ estimates as they reaped the benefits of dramatic market swings, and lending income rose along with interest rates while falling short of expectations
One key area of strength reported by Bank of America was its fixed income, commodities and currencies trading segment, where revenue posted a 49% gain. Executives touted investments in that business, which received a boost from higher rates, inflation and volatility spurred by economic pressures and geopolitical uncertainty.
Now that all six banks have reported earnings, their issuance is expected to be the bulk of the week’s new investment-grade deals. Syndicate desks indicate they could sell a combined $20 billion to $25 billion of debt across multiple currencies in January, a potential 15% drop versus the prior year, according to Bloomberg Intelligence analyst Arnold Kakuda. Bank debt issuance is expected to fall to a “more normalized pre-pandemic pace,” the analyst wrote in a note dated Jan. 10.
Read more: Top US Banks Slash Bond Sales, a Bright Spot for Investors
(Updates to add pricing information starting in headline.)
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