January 20, 2012 by staff
Goldman Sachs, Goldman Sachs Group Inc. (GS), Citigroup Inc. (C) and Bank of America Corp. tapped the corporate bond market, locking in reduced borrowing costs amid a rally in their debt.
Goldman Sachs issued $4.5 billion of notes in its largest offering since March 2009, according to data compiled by Bloomberg. New York-based Citigroup sold $1 billion of 30-year bonds in its first sale of the debt in more than two years, Bloomberg data show. Bank of America, the second-largest U.S. lender, raised $1.5 billion in an offering of 10-year debentures.
Financial companies’ bonds are enjoying their best performance in back-to-back months in more than a year as investors gain confidence that Europe’s sovereign-debt crisis will be contained. Even as the fourth-quarter net income at JPMorgan Chase & Co. and Citigroup dropped, the average cost to protect debt of the largest U.S. banks using credit-default swaps has fallen to the lowest since October.
“They all want to prove they have access to the market and fewer people are buying into a ‘woe is me’ catastrophe coming out of Europe,” Michael Johnson, chief market strategist at the Scottsdale, Arizona-based broker-dealer M.S. Howells & Co., said in a telephone interview. “Investment-grade financial paper is still cheap compared to other parts of the market, and that’s pushing some buyers toward them.”
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