Bank of America taps high-grade bond market after turbulent week

[NORTH CAROLINA] The Bank of America (BOA) has kicked off the sale of investment-grade bonds, becoming the third major Wall Street company to tap a turbulent market this week after reporting third-quarter results.

The lender is marketing debt in as many as four parts, ranging in maturity from three to 11 years, said a person with direct knowledge of the matter.

The longest tranche is initially being offered at a yield premium of about 1.2 percentage points to US Treasuries, the person added, who asked not to be identified because they are not authorised to speak publicly.

The unusual Friday offering comes after numerous companies held off on high-grade bond sales over the past few days, as Treasury yields swung sharply on stronger-than-expected inflation data and worries about the artificial-intelligence trade.

BOA was the only one of the six big Wall Street banks that did not tap the market in the third quarter, raising just US$17 billion so far this year, the least among the group. In its latest offering, it raised US$10 billion in April.

The six banks, which often time their borrowing to follow quarterly reports, are projected by Barclays to raise about US$41 billion through high-grade bond sales this quarter.

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That is 30 per cent more than the average for the period since 2015. JPMorgan Chase and Morgan Stanley earlier this week raised a combined US$10 billion.

BOA shares slumped earlier this week after reporting third-quarter earnings that missed analyst projections, with both its stock and fixed-income tradings falling short of estimates.

The company’s bond sale is set to be just the fifth high-grade offering to price on a Friday this year, going by data compiled by Bloomberg. The last was a July offering from a Deere unit. BLOOMBERG