Morgan Stanley has initiated an $8 billion investment-grade bond offering from its New York headquarters on Friday. This marks the third such transaction by major financial institutions on Wall Street following the release of third-quarter earnings reports.
A source, who requested anonymity due to a lack of authorization to speak publicly, revealed that the bond offering consists of four parts, with the longest maturity being an 11-year bond. The expected yield is anticipated to be 0.9 percentage points higher than U.S. Treasury yields and 0.25 percentage points below the initial pricing guidance. The source added that the proceeds from this issuance will be used for general corporate purposes.
The source also noted that a 6-year floating-rate bond initially included in the offering was canceled during the syndication phase. Earlier this April, Morgan Stanley had also canceled a floating-rate bond tranche that was originally announced as a five-part issuance, ultimately raising $8 billion, matching the amount raised in January.
Prior to Morgan Stanley's upcoming bond issuance, Goldman Sachs Group Inc. issued a $10 billion bond on Tuesday, while JPMorgan Chase & Co. completed a $5 billion bond issuance on Wednesday. These transactions occurred after the six largest banks in the U.S. reported overall strong third-quarter results. However, concerns about regional banks resurfaced on Thursday, as two regional banks disclosed they had become victims of a fraud scheme involving loans supporting a fund investing in poor commercial mortgages.
On Thursday, the average yield on U.S. investment-grade bonds fell to 4.69%, the lowest level in a year, while spreads remained near historic lows below 0.8 percentage points, keeping financing costs for high-rated borrowers attractive.
According to data compiled by Bloomberg, high-rated bond offerings are typically rare on Fridays, with only 1% of high-rated bond supply completed on this day this year. Morgan Stanley’s offering is the only high-rated bond transaction taking place in the market this Friday.