PriyaPatelTLDR:
– Yankee banks have been front-loading issuance ahead of US earnings
– Four foreign banks priced $9.25bn of deals across the capital stack in three days
– US money-center banks expected to issue more after earnings
According to an article in GlobalCapital, Yankee banks have been front-loading issuance ahead of US earnings. This is in response to strong demand from investors in the US dollar market. Four foreign banks priced $9.25bn of deals across the capital stack in just three days. The article highlights that this trend is expected to continue, with US money-center banks expected to unleash more issuance after their earnings reports.
The article states that the strong demand for Yankee bank debt is driven by a combination of factors, including the low-rate environment, the search for yield, and investors’ eagerness to buy a slice of the strong credit profiles of US banks. Foreign banks are taking advantage of this demand by bringing deals across a range of maturities and structures.
One example is Banco Bilbao Vizcaya Argentaria (BBVA), which priced $1.25bn of senior preferred debt with a coupon of 0.75% and a three-year maturity. The deal was the bank’s first primary dollar bond deal in almost three years, and attracted significant investor interest.
The article also notes that SocGen joined the post-CPI flow with a $1.25bn Additional Tier 1 (AT1) deal, pricing at a spread of 376 basis points over US Treasuries. The bank had already announced the deal before the publication of the CPI data, indicating confidence in the demand for its bonds.
The article suggests that more Yankee bank issuance is likely to come from US money-center banks after their earnings reports. These banks have been given more freedom to issue debt since the relaxation of regulatory restrictions. The article highlights that this is an opportunity for investors to gain exposure to high quality bank credit at attractive spreads.
In conclusion, Yankee banks have been front-loading issuance ahead of US earnings in response to strong demand from investors in the US dollar market. Foreign banks have been taking advantage of this demand to bring deals across a range of maturities and structures. US money-center banks are expected to join the trend and issue more debt after their earnings reports, providing investors with an opportunity to gain exposure to high-quality bank credit.
