PNC Financial Services Group Inc. and U.S. Bancorp raised a combined $7 billion in separate bond offerings Wednesday ahead of stricter capital requirements expected from U.S. regulators.
Now eyeing a potential 20% boost to capital requirements, banks are coming back to the investment-grade bond market for the first time since the collapse of Silicon Valley Bank roiled the sector in March.
The bank bonds from PNC
PNC,
+0.93%
and U.S. Bancorp
USB,
+1.93%
drew healthy demand from buyers given price talk around the debt, a market source told MarketWatch.
The bonds have been described by traders as “TLAC bonds” because their proceeds will qualify banks to meet their Total Loss Absorbing Capacity guidelines that were put into place in the wake of the Global Financial Crisis.
PNC priced $3.5 billion in debt in two parts, according to Bloomberg. It priced $1 billion of notes due in 2026 with a coupon payment of 5.812%, and a $2.5 billion bond due in 2029 with a coupon of 5.582%. Citigroup, Morgan Stanley and PNC are bookrunners on the deal.
U.S. Bancorp priced $3.5 billion in two separate offerings of $1.75 billion each including a six-year bond with a coupon of 5.775% and and an 11-year bond with a coupon of 5.836%. Goldman Sachs Group Inc., Royal Bank of Canada and U.S. Bancorp are bookrunners for the deal.
Earlier this week, Capital One Financial Corp
COF,
+1.36%
and Truist Financial Corp.
TFC,
+1.30%
raised a combined $6.75 billion in separate corporate bond offerings.
Truist issued $1.75 billion in medium-term 5.867% fixed-to-floating rate senior notes due in 2034, as well as $1.5 billion in medium-term 6.047% fixed-to-floating rate senior notes due in 2027.
Truist Securities Inc., BofA Securities, Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were joint bookrunners of the Truist bonds.
Capitol One issued $1.75 billion in 6.312% fixed-to-floating rates senior notes due in 2029, as well as $1.75 billion in 6.377% fixed-to-floating rate senior notes due in 2034.
Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P., Morgan Securities LLC, Morgan Stanley & Co. LLC and Capital One Securities Inc. were joint book-running managers.
Meanwhile, corporate bond prices at Western Alliance Bancorp
WAL,
+2.56%,
KeyCorp
KEY,
+3.77%,
Comerica
CMA,
+1.43%
and Zions Bancorp
ZION,
+4.55%
have been gaining ground at a greater pace than equity prices in a sign of stability in regional banks after a volatile few months for the sector.
Along with a regulatory review now underway to prevent future bank failures in the vein of Silicon Valley Bank, banks are also facing updated international banking guidelines under the international Basel 4 proposals.
The U.S. Federal Reserve and other federal banking regulators are expected to increase capital requirements under the Total Loss Absorbing Capacity rules that were introduced in the wake of the global financial crisis.
Also Read: Regional bank bond prices outperform stocks of late — a sign that debt investors are growing more comfortable
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