Large Banks Set To Access Corporate Bond Market On Wall Street

    Article Overview

    The biggest banks on Wall Street are poised to tap the corporate bond market after declaring quarterly results. This is to raise funds at a lower cost before the Federal Reserve hikes the rates and increases borrowing costs.  

    Nikita Dyatlov and Kabir Caprihan, credit research analysts at JP Morgan Chase, expect large Banks to borrow to the tune of $24 billion to $ 32 billion after reporting their earnings. This week JPMorgan, City Group Inc, and Well Fargo will be announcing their results. 

    The analysts see an upward trend bias and will not be surprised if the combined borrowings are between $35 -$38 billion. Monday’s holiday for Martin Luther King Jr. and the earnings period blackout will lower bond issuance if the bank decides to sell them. 

    As per Bloomberg News, streaming service providers Netflix Inc., American Airlines, and United Airlines are expected to report results this week, affecting bond prices. Credit analysts with Bloomberg intelligence, Suborna Panja, and Stephen Flynn see Netflix as the next rising star of 2022. Netflix is becoming eligible for bonds equivalent to $16 billion for high-grade indexes on Bloomberg. 

    Investors are exploring shorter tenor bonds since they are concerned with the rising yields that can hit longer tenor bonds hardest. Last week Thursday saw 41% bond issuance in the investment-grade market greater than ten years compared to 58 % in 2020 and 48% in 2021. 

    Senior Vice President of Intrepid Capital Management, Hunter Hayes, said that they prefer shorter credit tenors to hedge against possible rate hikes, inflation, and potential credit fundamentals deterioration. Hayes, the Portfolio Manager of Intrepid Income Fund, sees opportunities for bonds maturing in the next couple of years in the high-yield and investment-grade market

    According to strategists Jeff Darfur and Bradley Rogoff of BarclaysPlc, debts of lower ratings of CCC are also attractive. Lower-rated bonds fare better than their higher-graded peers. Their lower tenor and credit-specific risks make them less susceptible to interest rates in a rate-rising environment. 

    Leveraged loans in the U.S. have been on fire so far in 2022, with investors getting drawn to them as protection against rising interest rates and companies proactively bringing such deals to interested buyers. 

    This week at least ten borrowers, including Quest software Inc. have commitments for $3.6 billion of loans. The transaction is split into two parts of B and CCC grade tranch, which is expected to be acquired by funding from Clearlake Capital group. 

    According to Mathew Mish, head of Credit Strategy, UBS Group AG, traders should look out for low-rated Tech deals. The leveraged loan market is weak due to oversupply from borrowers of lower grade B tech sector companies


    RELATED ARTICLES

    Tesla’s Cheapest Cybertruck

    Tesla’s Cheapest Cybertruck Will Cost $60,990 in 2025

    Bloomberg News reports that after two years of delay and production glitches, Tesla Inc. has...
    JPMorgan’s S&P 500

    JPMorgan’s S&P 500 2024 Outlook Grimmest on Wall Street

    Bloomberg News reports that as the strategists on Wall Street are calling for an all-time...
    Fed Will Cut Interest Rates

    Fed Will Cut Interest Rates as Soon, Predicts Bill Ackman

    Bloomberg News reports that Bill Ackman, the billionaire investor, bets that the Federal Reserve will...
    AI Startup

    AI Startup of Google Raises $24 Million for Biotech Work

    Bloomberg News reports that the European biotech startup Cradle has raised as much as $24...
    Quantum Computing Lab

    Quantum Computing Lab Shut by Alibaba in Sign of Broader Cutback

    Bloomberg News reports that Alibaba Group Holding Ltd. has shuttered its quantum computing lab for...
    Water Damage Repairs

    Don’t DIY Water Damage Repairs to Your Business

    If your workplace ever suffers from water damage, you might be tempted to start fixing...
    MBA Programme

    Dual Degree MBA Programme: A Unique Educational Opportunity

    In today's world, professional success requires more than traditional management skills. It calls for a...
    women ipl

    Women IPL Sensation Shreyanka Patil: From Fan to Champion

    In a cricketing universe usually ruled by dudes, Shreyanka Patil, the rookie wonder for Royal...
    Monetize Magnet

    Monetize Magnet Review – The Best Crypto and Forex CPA Network

    In today's world, cryptocurrency has reached new heights, expanding continuously and providing online earning opportunities...
    celsius drink

    Celsius Drink – What Is It and How Safe Is It?

    These days, you must come across your social media feeds with an advertisement for a...
    low porosity hair

    Low Porosity Hair Problem? Slay Locks with Moisture Miracle

    Have you ever experienced your hair being stubbornly resistant to moisture? That's low porosity hair...