Bloomberg
JPMorgan Sells $ 13 Billion Securities in Largest Banking Transaction Ever
(Bloomberg) – JPMorgan Chase & Co. sold $ 13 billion worth of bonds on Thursday, the largest transaction ever by a bank, and used the cheapest borrowing costs in years to increase its capital after the Federal Reserve dropped the pandemic relief. The deal, which followed the bank’s best quarter ever, hit the market as corporate lenders still see a huge demand for debt that yields a reasonable premium above the treasury. According to a person with knowledge of the matter, the order books grew to about $ 26 billion, so that JPMorgan could reduce the interest on the debt from the relatively high spreads it initially offered. According to Bloomberg Intelligence analyst Arnold Kakuda, the bank’s liquidity disappeared in March 2020. In response, the Fed has told banks that they do not have to calculate treasury or deposits when calculating their supplementary leverage ratios, which tells them how much capital they need to set aside to back up their businesses. The release disappeared two weeks ago. Banks have been left in a position to sell treasury or add capital, and JPMorgan’s sale of unsecured debt will help reach total loss-absorbing capacity, or TLAC, and reinstate the relationship Kakuda said the bank has Wednesday indicated he would do something. “We have levers to manage SLR, and we will do so,” CFO Jennifer Piepszak told analysts during a quarterly earnings call. The company declined to comment further Thursday. Including today’s sales, JPMorgan has raised more than $ 22 billion in the US dollar investment grade market this year, according to data compiled by Bloomberg. “Banks are always going to be solid issuers, which offers a certain chance of leveraging the markets, especially if funding is still so cheap,” said Jesse Rosenthal, a senior analyst at CreditSights. offer, a security of 31 years, will yield according to the person 107 basis points above the treasury, which asked not to be identified during a private transaction.The sales follow strong earnings in the first quarter, including an increase 15% in fixed income, foreign exchange and commodity trading revenues and a $ 5.2 billion release from its credit reserves.Competitor Goldman Sachs Group Inc. also sold bonds on Thursday.The previous largest bond sale by a bank was also comes from JPMorgan, a $ 10 billion offer in April 2020, according to Bloomberg data, which is the sole book winner of the sale, and the proceeds are marked for general corporate purposes. Visit us at bloomberg.com for more articles like this. © 2021 Bloomberg LP