Wells fargo site12/7/2023 ![]() The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content on Forbes Advisor. Second, we also include links to advertisers’ offers in some of our articles these “affiliate links” may generate income for our site when you click on them. This site does not include all companies or products available within the market. The compensation we receive for those placements affects how and where advertisers’ offers appear on the site. First, we provide paid placements to advertisers to present their offers. This compensation comes from two main sources. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. “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.The Forbes Advisor editorial team is independent and objective. The bank’s financial sector analyst, Kabir Caprihan, is projecting a total of US$16bil to US$20bil from the big banks post-earnings, and issuance could reach US$24bil by the end of the year, according to the note. US companies have raised US$22.15bil so far this month, far less than the projected US$85bil.Įarnings blackouts partly contributed to the slowdown, but issuance from the big banks should pick up as more lenders report quarterly results, JPMorgan credit strategists including Eric Beinstein and Nathaniel Rosenbaum wrote in a note on Monday. Lack of supply has been a big driver of returns for financial sector bonds so far this year. Investors also continue to be interested in debt issued by big lenders, as they’re considered a safe haven among financial sector credits, he added. “Neither Goldman nor Citigroup have issued a 10-year senior benchmark in 2023.” “More issuance should be anticipated,” Smalley said. Meanwhile, JPMorgan posted another quarter of record net interest income and boosted its forecast for the year. ![]() 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. Recent earnings from big banks have been supportive for credit spreads, which could lead to more issuance down the road, according to Robert Smalley, a financials credit desk analyst at UBS Group AG. ![]() “Banks have also raised the yield on their loans, but net interest margins may have peaked as lenders raise their deposit costs.”Īverage yields on US high-grade company notes ended last Friday at 6.1% after surging to the highest level since 2009 earlier this month. “Regardless of higher borrowing costs, big banks need to replenish their bail-in eligible debt for regulatory purposes,” said Kakuda. Wells Fargo and JPMorgan are most impacted by the new regulations, which would affect their debt surpluses, Kakuda said. The so-called TLAC rules require banks to hold a certain amount of debt at the level of their holding companies, which can be converted to equity in a distressed scenario to keep the operating company solvent, or close to solvent. Issuance from the two banks on Monday is likely driven by their needs to meet their total loss-absorbing capacity (TLAC) requirements, according to Bloomberg Intelligence analyst Arnold Kakuda. The average spread on a financial institution bond was 145 basis points as of last Friday, 21 basis points wider than the spread for the broader high-grade bond index, according to data compiled by Bloomberg.īanks still choosing to borrow may be a sign that they expect it to become more expensive to do so in the future. Wells Fargo issued US$6bil of bonds in two parts, while JPMorgan priced a US$7.25bil, three-part offering, according to a person with knowledge of the matter.īig banks were expected to stay on the sidelines because they’re well-funded for the short term and borrowing costs remain high. The Wall Street giants borrowed from the debt market after posting strong net interest income and raising their outlook guidance. NEW YORK: Wells Fargo and Co and JPMorgan Chase and Co led the biggest Wall Street banks in tapping the US investment-grade market after reporting third quarter earnings.
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