By Matt Tracy
(Reuters) – Banks raised $23.5 billion on Tuesday by issuing investment-grade bonds, the biggest debt issuance by financial institutions in a single day since early 2016, as they expect potentially higher interest rates next year.
The $23.5 billion in debt issued by financial institutions accounted for 78% of the total $30.15 billion in high-grade bond sales Tuesday, which was the fifth-largest day of total issuance in 2024, according to a report Wednesday by BMO Capital Markets.
“From yesterday’s flood of issuance, it appears that banks are now issuing bonds to anticipate what could happen to interest rates next year” under President-elect Donald Trump’s administration, said Jack McIntyre, global fixed income portfolio manager values at Brandywine Global.
“(We) will have to see what happens the rest of the year into the new year with risk, assets, uncertainty and volatility.”
Tuesday’s largest offering came from HSBC, which sold $6.5 billion of bonds to finance a bid for the notes due in 2025 and 2026, according to International Financing Review.
Other banks that issued debt on Tuesday include BNP Paribas SA, Citigroup, Goldman Sachs, Huntington Bancshares, Societe Generale and Westpac.
Yankee banks, or non-U.S. banks that tap the domestic market, accounted for $14.5 billion of Tuesday’s offering, BMO said. This is the fourth-largest day of Yankee bank supply in at least eight years, BMO added.
According to BMO, demand for Tuesday’s sales was strong, with more than three times the volume offered.
A total of 13 borrowers sold bonds on Tuesday, including non-bank deals from automaker Mercedes-Benz and construction equipment maker Caterpillar.
(Reporting by Matt Tracy; Editing by Cynthia Osterman)
