By Matt Tracy
(Reuters) – The month is poised to be the busiest January on record for new U.S. corporate bond sales, with two regional banks on Monday adding to what has been a rush of post-earnings debt issuance by banks.
Truist Financial Corp, the financing arm of Truist Bank, on Monday announced a two-part senior unsecured bond offering. The bank is seeking an undisclosed amount of six- and 11-year fixed-to-floating rate notes.
Also on Monday, Fifth Third Bancorp announced that it was seeking eight-year senior unsecured notes, also fixed-to-floating rate and of an as-yet undisclosed amount.
Their announced bond sales carry on this month’s theme of regional and global systematically important banks (GSIBs) seeking debt after their earnings release.
Regional banks PNC, Citizens and U.S. Bancorp sold a combined $7.25 billion in bonds last week, which also saw debt sales from several GSIBs including Bank of America, JPMorgan, Morgan Stanley and Wells Fargo.
The banks’ bond sales contributed to a total $49 billion in new investment grade (IG) corporate bond supply last week, according to BofA Global research.
The first month of the year has already seen $151 billion in new IG corporate bond supply, according to a Monday note by BMO Capital Markets.
On its current course, this month “will very likely go down as the heaviest January on record,” surpassing $175 billion in January 2017, wrote Dan Krieter, BMO director of U.S. investment grade strategy.
Analysts anticipate a total $25 billion in new IG bonds this week. But every week in the New Year so far has exceeded supply expectation, with at least a 30% surplus above forecasts in the last two weeks alone, Krieter noted.
“Despite the torrid pace of supply this year, demand remains exceptionally strong with January seeing the lowest new issue concessions for any month since 2021,” he said.
Demand has also been strong for lower-rated credit tranches “in further evidence of the insatiable appetite for risk,” he added.
Other than Truist and Fifth Third, other high-grade bond deals expected to price on Monday include a 31-year green mortgage bond for utility MidAmerican Energy and a five-year funding agreement-backed note on behalf of New York Life Insurance.
(Reporting by Matt Tracy; Editing by Mark Porter)
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