(Bloomberg) – Earnings season is gearing up again, and that usually means debt issuance from the largest US banks is coming.
JPMorgan Chase & Co. and Morgan Stanley are set to report second quarter earnings on Thursday, followed by banks including Citigroup Inc. and Wells Fargo & Co. Friday. While some level of issuance is expected, it would be tough to beat the supply from the financial giants seen in the last two quarters.
“It’s hard to bet against big banks issuing after reporting earnings,” said Arnold Kakuda, Bloomberg Intelligence credit analyst. “But the pace should be a lot slower after a very active first half of the year.”
Sales next week are more likely to be driven by Yankee issuers, Bloomberg’s Michael Gambale wrote Friday. That’s especially true for companies in the financial sector which typically sell US dollar debt while domestic companies go into earnings blackouts. Blue-chip companies could sell $ 15 billion to $ 20 billion worth of bonds.
Money managers will also get the opportunity to parse through the latest US inflation data Wednesday. The consumer price index is projected to show an 8.8% annual gain in June following an 8.6% rate in May, according to data compiled by Bloomberg. Atlanta Fed President Raphael Bostic said he supports raising the benchmark rate 75 basis points later this month after a stronger-than-expected jobs report Friday.
Banks led by Citigroup and Bank of America Corp., meanwhile, are beginning to premarket a $ 5.4 billion debt package to help fund Apollo Global Management Inc.’s buyout of Tenneco Inc.
The launch of a leveraged loan and high yield bond offering tied to the deal is now expected in the second half of July, though that timing could change, according to people familiar with the matter, who asked not to be identified because the talks are private .
There are no other bank meetings scheduled or commitments due in the US leveraged loan market next week. Commitments for Terra Millennium Corp.’s buyout financing were due June 28.
US high-yield funds reported inflows of $ 889 million this week, ending a three-week streak of outflows. US leveraged loan funds saw the fourth consecutive week of outgoing cash with investors yanking $ 1.1 billion.
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