Goldman sells $ 5.5 billion in bonds in April bank sales echo
(Bloomberg) – Goldman Sachs Group Inc. raised $ 5.5 billion in new bonds after reporting its results on Tuesday, recalling the attack on America’s largest banks after releasing their results three months ago.
The lender sold the debt in two parts, according to a person with knowledge of the matter. The longest part of the offer, a 21-year security, is earning 1 percentage point above T-bills, after initial talks of around 1.25 percentage points, said the person, who said. asked not to be identified as the details are private.
Bloomberg Intelligence analyst Arnold Kakuda said Goldman sets itself apart from other large banks in that the company finds opportunities in blue chip brokerage, a potential driver of increased borrowing. The lender said Tuesday that it plans to continue growing its blue chip brokerage even as other banks retreat from selling bundled financial services to clients with more complex needs, such as hedge funds.
“For Goldman, they see an opening in blue chip brokerage to gain stakes with their funding,” Kakuda said in a telephone interview Wednesday, referring to the bank’s active issuance of debt.
The bank raised about $ 38 billion in bond sales in the first half of the year, the analyst wrote in a note Wednesday.
Big domestic banks borrowed heavily after reporting first-quarter profits to make sure they have enough cash to back up their assets, which have grown rapidly during the pandemic. Goldman borrowed $ 6 billion in April while Bank of America Corp. had the biggest sale of bank bonds ever, with a price tag of $ 15 billion. JPMorgan Chase & Co., meanwhile, borrowed $ 13 billion.
While JPMorgan, BofA and Citi will likely follow Goldman in selling new debt, banks could borrow smaller amounts than in April as their balance sheet growth is likely weaker than in the first quarter.
“The pressure to issue is not as strong as it used to be, so I don’t see the need for banks to issue massively like they did in April,” Kakuda said.
JPMorgan bank analyst Kabir Caprihan, meanwhile, raised his overall estimate of supply for US banks to $ 181 billion from $ 151 billion, this increase “reflecting the expected increase in debt issuance. senior unsecured from GSIB “. Caprihan also revised its estimate of non-US dollar denominated GSIB issuance from $ 34 billion to $ 48 billion.
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