Wells Fargo Sells $2.75 Billion of Bonds, Rouses Self-Led Deals

Wells Fargo & Co. (WFC), the largest U.S. home lender, sold $2.75 billion of three-year notes, including the first self-led issue of fixed-rate benchmark debt in seven weeks.

The bank, which reported a 13 percent rise in first-quarter profit, issued $2 billion of 1.5 percent fixed-rate bonds that yielded 115 basis points more than similar-maturity Treasuries and $750 million of floating-rate notes at a spread of 92 basis points to the three-month London interbank offered rate, according to data compiled by Bloomberg.

The transaction is the first self-led benchmark sale of fixed-rate securities in the U.S. since Wells Fargo and Goldman Sachs Group Inc. issued bonds on April 30, Bloomberg data show. Then, San Francisco-based Wells Fargo sold $1.5 billion of 2.1 percent, five-year debentures at a 130 basis-point spread.

“Of the four largest U.S. banks, we are most impressed with Wells Fargo from a credit perspective,” wrote James Leonard, a credit analyst in Chicago at Morningstar Inc. (MORN), in a research note today. “The firm has a clear funding cost advantage as low-cost deposits fund its entire loan book and approximately 75 percent of its earnings assets.”

Wells Fargo’s new bonds may be rated A2 by Moody’s Investors Service, Bloomberg data show.

Benchmark issues are typically at least $500 million. Libor is the rate at which banks say they can borrow in dollars from each other.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net