Bank of America Joins Post-Earnings Bond Frenzy With Six-Part Debt Offering

(Bloomberg) -- Bank of America Corp. is selling as many as six new securities in the bond market Friday, joining major U.S. rivals who this week also took advantage of historically low rates to replenish capital.

Investors have been receptive to the deals emerging after banks reported quarterly results. On Thursday, JPMorgan Chase & Co. sold $13 billion in the largest bank bond deal ever, while Goldman Sachs Group Inc. got $6 billion.

Read More: JPMorgan Sells $13 Billion of Bonds in Largest Bank Deal Ever

Capital reserves are top of mind for the industry, after the Federal Reserve let a key pandemic-relief measure -- an exemption that allowed banks to hoard Treasuries and deposits without knocking their leverage ratios out of compliance -- lapse at the end of March. Large U.S. banks that clear the next round of stress tests with sufficient capital will be allowed to resume dividend increases at the end of June, the Fed said last month, presenting another potential motivator to raise cash now.

Banks, known to be opportunistic issuers, have pounced on strong demand and low rates. Treasuries rallied Thursday as JPMorgan and Goldman Sachs were selling debt, driving 30-year rates to the lowest since early March. Corporate bond yields are usually set in terms of their spread to U.S. rates.

Bank of America joined other banking giants in reporting strong results from Wall Street operations on Thursday, with revenue from sales and trading rising 17% and equity underwriting fees more than tripling. The bank also released $2.7 billion in credit reserves.

Initial price talk for the longest portion of Bank of America’s six-part offering -- a 21-year security -- is around 130 basis points above Treasuries, according to a person familiar with the mater, who asked not to be identified as the details are private.

Bank of America is the sole bookrunner on the sale, and the proceeds will be used for general corporate purposes, the person said.

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