Saturday , December 4 2021

Goldman Sachs joins bank bond frenzy with $9b sale


Goldman Sachs Group Inc tapped the US investment-grade bond market with a $9 billion sale, joining peers Bank of America Corp and Morgan Stanley in selling new debt after reporting strong third-quarter results.
The bank sold bonds in five parts, according to a person familiar with the matter. The longest portion of the offering, a fixed-to-floating-rate security due in 2032, will yield 105 basis points above Treasuries, said the person, who asked not to be identified because
they’re not authorised to speak about it.
Proceeds from the self-led sale are marked for general corporate purposes, the person said.
Goldman Sachs reported blowout results last week. The investment-banking division reported an 88% surge in revenue from last year, driven by advisory fees, and the trading business beat forecasts with a 23% revenue jump.
The big US banks appear to be capitalising on their strong results to lock in funding at still-favorable rates. The yield on the 10-year Treasury note climbed to 1.60% as a global bond selloff gathered pace, a sign that funding costs could be on their way up.
The bond sales from Goldman and Morgan Stanley may be used to fund the banks’ prime brokerage businesses, according to Bloomberg Intelligence analyst Arnold Kakuda. Both banks are seeing increased prime brokerage activity after the implosion of Archegos Capital Management led to heavy losses and forced internal probes at several prime brokerages.
“Goldman reported solid
results, especially in trading. I think continued prime brokerage funding is behind the sale,” Kakuda said in an interview.
JPMorgan Chase & Co and Citigroup Inc are also candidates to sell debt before year-end as they look to boost their cash holdings to support ballooning balance sheets, he added.

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