Due to high demand, two significant regional banks in the United States raised a total of $4.75 billion by issuing bonds on Thursday. This indicates that fixed income investors are no longer concerned about regional banks in the wake of the March banking crisis.
Regional Bank Crisis
On Thursday, $1.25 billion worth of six-year senior unsecured callable fixed-to-floating rate notes were sold by Citizens Bank (CFG.N), opening a new page. In the interim, U.S. Bancorp (USB.N) sold $3.5 billion in callable senior unsecured fixed-to-floating rate notes with terms of six and eleven years.
The banks’ agreements come after peer PNC Bank (PNC.N) sold $2.5 billion in bonds on Wednesday. opens new tab. Strong investor demand for the sale was evident, as its book attracted orders for more than six times that amount.
As a sign that investors have moved past the regional banking crisis that occurred in March of last year, when three small-to-midsize U.S. banks failed over the space of five days, market participants anticipate equally robust demand for today’s bank deals.
Robust Investor Demand
Head of investment-grade credit strategy at asset manager Payden & Rygel Natalie Trevithick stated, “There is very strong demand for credit right now for the regional banks.” “It definitely reflects some consensus that we survived the crisis.”
According to Informa Global Markets, both Citizens and U.S. Bancorp’s new bonds priced at a spread that was 27 to 30 basis points inside their early price talk levels, indicating robust investor demand for their notes.
As per Krieter, the market may anticipate such deals to last for the remainder of January. BMO has estimated that by the end of the month, non-U.S. Yankee and regional bank issuance will total between $50 billion and $55 billion.
Similar to their larger global systemically important bank (GSIB) rivals, the regional banks decided to access the bond market over the holiday-shortened week in response to their most recent earnings releases.