The New York-based owner of the largest brokerage sold 1.25 billion euros ($1.6 billion) of notes due March 2018, its first benchmark issue in euros since September, according to data compiled by Bloomberg. Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA) priced its second senior, unsecured deal of the year, while Credit Agricole SA (ACA) in Paris raised its first funds in the currency since October, people with knowledge of the transactions said.
Bank bond issuance tumbled 80 percent to 12.8 billion euros in February from the previous month as the euro-region economy shrank the most since 2009 and Italy’s deadlocked election made investors wary of all but the safest government securities. Standard Chartered Plc was the last of the 10 biggest European banks to report earnings today, removing one hurdle to lenders wanting to raise cash.
“Issuance is taking off as the earnings season is ending,” said Serafi Rodriguez, an Andorra-based fixed-income trader at Morabanc, which manages 6.4 billion euros of assets. He said he may buy the BBVA bonds. “The Italian political issues are far from being solved, so it makes sense for financials to take advantage of the market opportunities to get funding at historical low levels.”
Morgan Stanley’s deal is its first in the currency since issuing 1 billion euros of 3.75 percent senior, unsecured notes due 2017 on Sept. 17, data compiled by Bloomberg show. The new securities were priced to yield 145 basis points more than the mid-swap rate, compared with the 134 basis-point spread of the existing bonds. Larissa Haida, a London-based press officer at Morgan Stanley, declined to comment.
It’s the busiest day for benchmark issuance since Jan. 23, when Commonwealth Bank of Australia, UniCredit SpA (UCG)’s Austrian unit and Deutsche Pfandbriefbank AG sold a total of 1.6 billion euros of bonds, according to data compiled by Bloomberg.
The extra yield that investors demand to hold European financial company bonds instead of benchmark government debt widened six basis points since the results of the Italian election on Feb. 25 to 160 basis points, according to Bank of America Merrill Lynch’s Euro Banking Index. The spread compares with a five-year low of 150 basis points on Jan. 14.
BBVA’s 1.5 billion-euro sale of March 2016 bonds is its first senior, unsecured benchmark note issue since it sold 1.5 billion euros of 3.75 percent securities due 2018 on Jan. 3, Bloomberg data show.
“BBVA, as always, is taking advantage of opportunities to tap the markets as they arise,” said Paul Tobin, a Madrid-based spokesman at the lender.
Spain’s second-biggest bank priced the notes at a yield of 273 basis points more than the benchmark swap rate, a person familiar with the matter said. That compares with the 270 basis- point spread on the lender’s existing 605 million euros of 4.875 percent April 2016 senior notes.
Credit Agricole sold its first senior, unsecured fixed-rate bonds in the common currency since it issued 1.25 billion euros of 1.875 percent notes due 2017 in October. The yield on those bonds is 70 basis points over the swap rate, compared with the 85 basis-point spread on its new March 2018 securities, a person with knowledge of the transaction said.
France’s third-biggest bank also increased the size of its 1.25 billion euros of floating-rate notes maturing January 2015, first sold in December, by 750 million euros.
Anne-Sophie Gentil, a Paris-based official at Credit Agricole, didn’t respond to a phone call seeking comment.
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