Investors gobbled up US $11bn of new bonds this week from US banks that came to the market after reporting weak earnings, showing a renewed bid for the sector's issuers. Buyers feasted on new senior debt, subordinated bonds, tolerating slim new issue premiums amid stellar secondary market performance. Despite plummeting revenues, there was no sign of the malaise that spurred February's savage sell-off, as results came in line with analysts' severely downgraded expectations.
"The bar was pretty low," said Jacob Habibi, a senior research analyst at Invesco. "But the fact they were able to be consistent, beat estimates and rebound in stock helped our market." Goldman Sachs provided one of the most popular deals of the week on Wednesday, attracting US $13.5bn of orders for a US $3.5bn four-part three and five-year senior holding company deal that priced flat to its curve at 113bp and 133bp over Treasuries.
That deal was 11bp tighter than reoffer on Friday, while a US $3.5bn five-year senior deal sold by Morgan Stanley on Monday at T+135bp was bid 17bp tighter. "You would think the market would be sick of all this FIG supply but the secondary market still looks very good," said a DCM banker. FIG supply this month to date - including Yankee deals - is US $47.85bn, according to IFR data. Wells Fargo also saw fit to reopen its US $3bn 10-year senior holdco deal from the previous week with a US $500m tap on Wednesday, priced at T+125bp, 5bp inside where the original US $3bn bond came.
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