January is expected to be the most active month on record for new sales of U.S. corporate bonds, with two regional banks adding Monday to what has been a post-release rush of debt issuance by banks. of their results.
Truist Financial Corp., the financial arm of Truist Bank, announced a two-part senior unsecured note offering Monday. The bank is seeking an undisclosed amount of six- and eleven-year fixed or floating rate bonds.
Also Monday, Fifth Third Bancorp announced it was seeking eight-year senior unsecured bonds, also fixed-floating rate and in an as-yet-undisclosed amount.
The bond sales announced by these banks continue this month’s theme of regional and global systemically important banks (GSIBs) seeking to raise debt following their earnings release.
Regional banks PNC, Citizens and US Bancorp sold $7.25 billion worth of bonds last week, during which several GSIBs, including Bank of America, JPMorgan, Morgan Stanley and Wells Fargo, also sold bond. debt.
Bank bond sales contributed to a total of $49 billion in new investment-grade (IG) corporate bonds last week, according to BofA Global research.
The first month of the year has already seen $151 billion in new IG corporate bond offerings, according to a BMO Capital Markets note dated Monday.
If current trends continue, this month “will most likely be considered the heaviest January on record,” surpassing January 2017’s $175 billion, wrote Dan Krieter, director of U.S. bond strategy at quality from BMO.
Analysts are forecasting a total of $25 billion in new IG bonds this week. But every week of the new year has so far exceeded supply expectations, with at least a 30% surplus over forecasts in the last two weeks alone, Mr. Krieter noted.
“Despite the breakneck pace of supply this year, demand remains exceptionally strong, with January seeing the lowest concessions in new issuance since 2021,” he said.
Demand was also strong for lower-rated credit tranches “further proving the insatiable appetite for risk”, he added.
In addition to Truist and Fifth Third, other high-quality bond deals expected to list Monday include a 31-year green mortgage bond for utility company MidAmerican Energy and a five-year note backed by a financing agreement on behalf of New York Life Insurance.