High-grade bank, financial issuers in focus as earnings releases near; financial paper mixed

By Cristal Cody

Tupelo, Miss., April 8 – The high-grade bond market is gearing up for more potential financial issuance after the major U.S. banks release first-quarter earnings results in the upcoming holiday-shortened week.

Several issuers in the financial space, including two Canadian banks, priced bonds ahead of earnings reports due next week. JPMorgan Chase & Co. reports on Wednesday and Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. on Thursday, followed by Bank of America Corp. on April 18.

Other issuers in the financial space also will post quarterly results next week, including First Republic Bank, US Bancorp and PNC Financial Services Group Inc.

The bond markets will close early on Thursday and stay shut for the Good Friday holiday on April 15.

Overall investment-grade issuance is expected to thin to about $15 billion to $20 billion in the week ahead, syndicate sources said.

Credit Suisse firms

Bank supply was strong this week with $10.7 billion of the more than $29 billion of investment-grade deals printed coming from issuers in the financial space.

Credit Suisse AG, New York Branch brought a $2.5 billion two-part offering of three-year notes (A1/A+/A) on Monday that tightened about 10 basis points in aftermarket trading and remained strong on Friday, sources said.

Credit Suisse’s $2.1 billion tranche of 3.7% notes due 2025, priced at a Treasuries plus 115 bps spread, firmed to 99 bps bid, 96 bps offered.

Bank of Nova Scotia came by Tuesday with a $3.35 billion three-part deal that included fixed- and floating-rate three-year notes (A2/A-/AA-) and a tranche of 15-year subordinated notes (Baa1/BBB+).

Scotiabank’s notes were mixed with the $1.25 billion tranche of 4.588% notes due 2037 trading 5 bps wider than issuance in the aftermarket and remaining weaker Friday at 211 bps bid, sources said.

The notes were priced at a Treasuries plus 205 bps spread.

Sammons Financial Group Inc. also came on Tuesday with $500 million of 4.75% notes due 2032 (BBB+/BBB+) that priced at a spread of 220 bps over Treasuries. The issue eased 2 bps in aftermarket trading and softened further by the end of the week, sources said.

Sammons’ notes were quoted at 229 bps bid, 224 bps offered headed into the weekend.

Cantor Fitzgerald LP’s new issue from Thursday weakened over 10 bps in secondary trading.

Cantor Fitzgerald brought $350 million of 4.5% notes due 2027 (BBB-/BBB-) at a spread of Treasuries plus 187.5 bps in Thursday’s session with the paper quoted Friday at 199 bps bid.

Royal Bank of Canada also came to the primary market on Thursday with $4 billion of notes (A1/A/AA-) in four tranches spread across three-, five- and 10-year maturities.

The paper was mixed Friday with the largest tranche, a $1.4 billion offering of 3.375% notes due 2025, trading 1 bp tighter than issuance at 74 bps bid, sources said.

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