By Matt Tracy
(Reuters) - U.S. banks are expected to dominate corporate bond issuance following several major players' earnings on Friday and early next week, according to bond investors and analysts.
January has historically served as the largest bond issuing month for banks when compared to the rest of the year. The last seven Januarys saw an average $22.58 billion in issuance from the "Big Six" banks, according to Informa Global Markets data.
"Bank issuance will likely be the main driver for primary volumes in the latter half of this week and all of next week as the sector clears earnings and the issuance window opens up for them," said Blair Shwedo, head of fixed income sales and trading at US Bank.
On Friday, a long list of global systemically important banks (GSIBs) including Bank of America, BNY Mellon (NYSE:BK), Citigroup, JPMorgan and Wells Fargo will report fourth quarter earnings. Goldman Sachs and Morgan Stanley report the following Wednesday.
A large portion of the debt is expected from these large U.S. banks as they look to get ahead of regulatory requirements for more capital reserves.
"While the size certainly varies, for the GSIBs, the size is generally in the ($5 billion per-issue) range," said Guy LeBas, chief fixed income strategist at asset manager Janney Montgomery Scott.
"And January is usually the largest of the year," he added.
The expected strong issuance from banks this and next week follows a lackluster January 2023, which saw only $9 billion raised by the "Big Six" banks, according to Informa Global Markets data. Only two members of this group chose to tap the market then: Bank of America raised $3 billion, while Morgan Stanley sold $6 billion in bonds.
Expectations of sizeable bank debt sales this and next week follow a strong start to the New Year overall for the investment-grade primary market.
Last week saw $57.9 billion in total high-grade primary issuance volume, above the upper range of market forecasts. The largest offering was UBS Group's $4 billion two-part senior note deal.
Twelve offerings are expected to come to market on Monday, according to IFR data, as issuers get ahead of important economic data releases including Thursday's consumer price inflation report for December.