Regional banks are especially busy in January, which is expected to set records for new U.S. corporate bond sales. Truist Financial Corp., Truist Bank’s financing arm, and Fifth Third Bancorp have announced fresh senior unsecured bond offers, continuing banks’ post-earnings debt issuance.
January’s Bond Issuance Surge Continues
Truist Financial issued two senior unsecured bonds with six- and 11-year fixed-to-floating rates for an unknown value. Fifth Third Bancorp also sought eight-year senior unsecured notes with a fixed-to-floating rate structure for an unknown sum.
After profits, regional and global banks need finance, which explains this bond sale tsunami. Regional banks PNC, Citizens, and U.S. Bancorp issued $7.25 billion in bonds last week. According to BofA Global Research, Bank of America, JPMorgan, Morgan Stanley, and Wells Fargo contributed $49 billion in new investment-grade corporate bonds.
With $151 billion in new investment-grade corporate bond issuance for the month, BMO Capital Markets expects January to be the biggest ever. BMO’s Director of U.S. Investment Grade Strategy, Dan Krieter, expects the month to break January 2017’s $175 billion record.
January Bond Issuance Trends and Expectations
Market watchers expect $25 billion in investment-grade bonds this week. Despite substantial supply, January had the lowest new issue concessions since 2021 because of strong demand. Lower-rated credit tranches follow suit, indicating market risk appetite.
In addition to Truist and Fifth Third, a 31-year green mortgage bond for MidAmerican Energy and a five-year financing agreement-backed note for New York Life Insurance are slated to price on Monday.
Even with increased supply, corporate bond issuance shows the financial market’s flexibility and demand for fixed-income assets. The following weeks will be keenly studied to see whether bond sales enthusiasm continues and if January becomes a record month for corporate bonds.