JPMorgan Sells $3 Billion Bonds in Post-Earnings Bank Boom

(Bloomberg) -- JPMorgan Chase & Co. sold $3 billion of bonds in the U.S. investment-grade market, adding to a streak of debt transactions from big Wall Street banks including Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp.

The biggest U.S. bank priced bonds in a single-tranche transaction, according to a person with knowledge of the matter. The bonds maturing in 11 years yield 0.97 percentage point above Treasuries, after initial discussions in the 1.15 percentage points area, said the person, who asked not to be identified as the details are private. The bank is the sole manager of the sale, the person said.

The surge of deals comes after big domestic banks reported strong third-quarter profits. Citigroup tapped the market last week with a $4 billion, three-part transaction that included a social bond. The overall transaction drew $17 billion of demand at its peak. That kind of investor interest -- and low risk premiums -- are luring more corporations to tap the primary market now ahead of the Federal Reserve’s expected announcement on tapering on Wednesday.

“Of all the large banks, JPMorgan remains the most susceptible to regulatory-driven issuance pressures as balance sheet growth drives higher leverage exposure, in turn driving issuance needs under long-term debt requirements,” Jesse Rosenthal, a senior analyst at CreditSights, wrote in a note on Monday.

The long-term debt-driven pressures should make JPMorgan a regular net issuer for a “foreseeable future,” which could remain a headwind for performance, added Rosenthal. CreditSights ultimately expects some reprieve from regulatory reconfiguration of the leverage ratio, which would have “an outsized benefit on JPMorgan given its slimmer-than-peer cushion,” wrote the analyst.

Goldman Sachs has so far brought the biggest bond deal since posting earnings, having raised $9 billion in the high-grade bond market. Morgan Stanley priced $5 billion of debt since posting results, followed by the Citi deal. Meanwhile, Bank of America has raised $3.25 billion.

JPMorgan’s dealmakers posted their best quarter yet, riding what’s on track to be a record year for mergers and acquisitions. Fees from advising on deals almost tripled in the third quarter, crushing analysts’ estimates and helping to push the firm’s net income to $11.7 billion.

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