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JPMorgan sells $ 13 billion in bonds in largest bank deal ever

(Bloomberg) – JPMorgan Chase & Co. on Thursday sold $ 13 billion worth of bonds, the largest deal ever by a bank, taking advantage of some of the cheapest borrowing costs in years to increase its capital after the Federal Reserve allowed pandemic measures to lapse. The deal, which followed the bank’s best-ever quarter, hit the market as corporate borrowers continue to see high demand for debt that pays a decent premium over government bonds. The order book grew to about $ 26 billion, allowing JPMorgan to lower interest rates on the debt from the relatively high spreads it initially offered, said a knowledgeable person. According to Bloomberg Intelligence analyst Arnold Kakuda, government bond liquidity disappeared in March 2020. In response, the Fed told banks not to factor in treasury bills or deposits when calculating their additional leverage ratios, which tells them how much capital they need. Set up. aside to support their property. That exemption disappeared two weeks ago. Banks remained in the position of having to sell government bonds or add capital, and JPMorgan’s sale of unsecured debt will help it meet the requirements for total loss-absorbing equity, or TLAC, and bring back the balance ratio, said Kakuda. The bank announced on Wednesday that it would do something. “We have levers to manage SLR and we will,” Chief Financial Officer Jennifer Piepszak told analysts during a quarterly earnings call. The company declined to comment on Thursday. Including today’s sale, JPMorgan raised $ 22 billion in the US dollar investment-grade bond market this year, more than any other major US bank, according to data compiled by Bloomberg. to be big issuers, which gives a certain opportunism to entering the markets, especially when financing is still so cheap, ” said Jesse Rosenthal, senior analyst at CreditSights. According to the person, who asked not to be identified when discussing a private transaction, yield 107 basis points more than government bonds. The sale follows strong gains in the first quarter, including a 15% increase in fixed income, currency and commodities trading revenues and a release of $ 5.2 billion from credit reserves. Rival Goldman Sachs Group Inc. also sold bonds Thursday. The previous largest bond sale by a bank also came from JPMorgan, a $ 10 billion bid in April 2020, Bloomberg compiled data. JPMorgan is the sole bookrunner of the sale and proceeds are marked for general corporate purposes. Visit us for more articles like this one at bloomberg.com Subscribe now to stay ahead with the most trusted business news source. © 2021 Bloomberg LP

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