Wells Fargo & Co. is the first of the six biggest Wall Street banks to tap the US investment-grade market after reporting third-quarter earnings.
(Bloomberg) — Wells Fargo & Co. is the first of the six biggest Wall Street banks to tap the US investment-grade market after reporting third-quarter earnings.
The lender is selling bonds in as many as two parts, according to a person with knowledge of the matter. The longest portion of the self-led offering, a 11-year security, may yield 2.05 percentage points above Treasuries, said the person, who asked not to be identified because the details are private.
The offering comes after Wells Fargo beat analysts’ expectations for net interest income in the third quarter and raised its full-year guidance again as it continues to benefit from higher interest rates. The San Francisco-based bank earned $13.1 billion in NII — revenue collected from loan payments minus what depositors are paid — in the three months through September, up 8.3% from a year earlier, according to a statement Friday.
US companies have raised $22.15 billion this month through October 16, far less than the projected $85 billion. Earnings blackouts are partly contributing to the slowdown but issuance from the big banks should pick up as more lenders report quarterly results, JPMorgan Chase & Co. credit strategists including Eric Beinstein and Nathaniel Rosenbaum wrote in a note on Monday.
The bank’s financial sector analyst Kabir Caprihan is projecting a total of $16 billion to $20 billion from the big banks post earnings and issuance could reach $24 billion by the end of the year, according to the note.
“If this proves correct it is not going to change the supply picture much, and it may help financials narrow their spread gap to non-financials,” the analysts wrote.
–With assistance from Christopher DeReza.
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