Bank of America Corp. on Friday borrowed $15 billion in the company bond market, smashing the report set a day earlier by one of its largest monetary rivals for the biggest bank bond ever bought.
The six-part sale, rated A2, A minus and A plus, attracted orders that outstrip provide, permitting bankers to dial again the quantity of unfold the bonds will supply buyers, above risk-free Treasurys
BX:TMUBMUSD10Y,
mentioned a individual with direct information of the dealings.
Pricing on BofA’s
BAC,
largest $4.5 billion class of bonds due April 2032 was set to clear at a unfold of 110 foundation factors above risk-free Treasurys, down from preliminary expectations in the 125 foundation level space.
The banking large mentioned proceeds can be used for normal company functions, in a regulatory submitting. That can embrace funding its new $25 billion share buyback program, which was introduced earlier this week alongside the bank reporting a doubling of profit in the first quarter in contrast with a 12 months prior. It additionally launched $2.7 billion of its reserves, boosting its backside line.
Related: Get ready for stock buybacks to roar back
The Dow Jones Industrial Average
DJIA,
and S&P 500 index
SPX,
each closed at fresh record highs Friday, after a week wherein stellar bank earnings assist present an upbeat tone round the U.S. financial restoration.
The mega bond sale from Bank of America follows on the heels of JP Morgan & Chase‘s
JPM,
$13 billion bond deal on Thursday, which Bloomberg said was the largest of its kind ever from a main lender. It held that report just for a day.
Big U.S. banks issued a whole of $39 billion price of senior secured debt in the first quarter of 2021, down from $63.2 billion for the first three months of 2020, in keeping with analysts at CreditSights.
Analysts at CreditSights mentioned to anticipate not less than some banks to concern debt this 12 months to fulfill regulatory wants, after the Federal Reserve opted not to extend an exemption ending March 31 that allowed banks throughout the pandemic to exclude Treasurys and deposits with the central bank from a calculation of a key bank capital measure, often known as the supplementary leverage ratio (SLR).
Bank of America, nonetheless, doesn’t plan to make use of proceeds from its new debt providing to offset the SLR change, in keeping with the individual acquainted with the dealing.
CreditSights analysts wrote that Bank of America’s regulatory capital ranges already included “surpluses such that regulatory needs shouldn’t be an issue,” in a Friday be aware.
