JPMorgan Kicks Off US Bank Borrowing With $4 Billion Sale

JPMorgan Chase & Co. tapped the US investment-grade bond market Wednesday, kicking off what’s expected to be a relatively light season for bank bond sales ahead of expected changes to sector regulations.

The lender sold $4 billion of 11-year subordinated notes that are fixed-to-floating rate and that can’t be called for 10 years, according to a person familiar with the matter. The bonds will yield 1.13 percentage points above similarly dated Treasuries, said the person, who was not authorized to speak publicly.

Initial price discussions were around 1.4 percentage points above the benchmark.

It’s the first dollar-denominated high-grade offering from a money-center bank this month. Each of the six biggest US banks have reported their financial results for the most recent quarter, a move that typically opens a window for them to sell debt.

But this quarter those sales are expected to come in lighter than they have so far this year: About $18 billion is expected, Kabir Caprihan, a credit research analyst at JPMorgan, wrote last week. That’s compared to about $33 billion in April and some $44 billion in January.

Banks often sell less debt in the second half of the year, and this year is expected to be no different after near-historic low spreads helped lead banks to front-load much of their issuance. By the end of June, the group had met at least 70% of their stated funding needs for 2025.

The expected easing of bank capital regulations could also dampen sales. Banks may need about $100 billion less of long-term debt outstanding to help absorb losses if the supplementary leverage ratio is relaxed, JPMorgan strategists wrote last month.

“Over a multi-year period, certainly I think it’ll impact some of the larger banks,” said Kyle Stegemeyer, head of investment-grade debt capital markets and syndicate at U.S. Bank, referring to the supplementary leverage ratio. “The question is where it plays out and over what period of time. I think the answer is still to be determined.”

JPMorgan’s self-led bond deal comes after the firm posted better-than-expected investment banking results on Tuesday, a possible early sign of a dealmaking rebound.

The debt sale was one of two in the US high-grade market Wednesday, with the other coming from Golub Capital Private Credit Fund. Citigroup Inc. also sold perpetual junior subordinated notes that are rated junk, after the bank, along with Wells Fargo & Co., tapped European markets earlier on Wednesday.