Bank of America is at the top of the charts with a $ 15 billion bond transaction, the largest ever by a bank

Bank of America Corp.. On Friday, it borrowed $ 15 billion in the corporate bond market, breaking the record set a day earlier by one of the biggest financial rivals for the largest bank bond ever sold.

The six-part sale, valued at A2, A minus and A plus, attracted orders that exceeded the supply, allowing bankers to reimburse the amount of the spread that the bonds will offer to investors, over BX risk-free Treasurys: TMUBMUSD10Y,
said a person with direct knowledge about relationships.

Price for BAC BofA,
+ 1.06%
The largest $ 4.5 billion bond class, due in April 2032, should be offset by a spread of 110 basis points over risk-free Treasuries, down from initial expectations in the 125-point range. the base.

The banking giant said the proceeds will be used for general corporate purposes in a regulatory record. This may include financing its new $ 25 billion share buyback program, which was announced earlier this week with the bank, reporting a doubling of profit in the first quarter compared to a year earlier. It also released $ 2.7 billion from its reserves, increasing the result.

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Dow Jones Industrial Average
DJIA,
+ 0.48%
and The S&P 500 index
SPX,
+ 0.36%
both closed at new highs on Friday, after a week in which stellar bank gains helped set an optimistic tone for the US economic recovery.

The sale of mega bonds from Bank of America follows JP Morgan & ChaseJPM,
+ 0.74%
On Thursday, a $ 13 billion bond transaction, which Bloomberg said was the largest of its kind ever by a major lender. He only held this record for one day.

Major US banks issued a total of $ 39 billion in guaranteed debt in the first quarter of 2021, down from $ 63.2 billion in the first three months of 2020, according to CreditSights analysts.

CreditSights analysts say at least some banks are expected to issue debt this year to meet regulatory needs, after the Federal Reserve chose not to extend a March 31 exemption that allowed banks in pandemic time to exclude treasuries and deposits with the central bank from a calculation of an essential measure of bank capital, known as the additional leverage ratio (SLR).

However, Bank of America does not intend to use the proceeds of its new debt offer to offset the SLR change, according to the person familiar with the transaction.

CreditSights analysts wrote that Bank of America’s regulatory capital levels already included “surpluses so that regulatory needs are not an issue,” in a note Friday.

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