Charles Schwab raises $2.5 billion in bond offering amid surge in corporate-bond deals
By Steve Gelsi
Schwab plans to use the proceeds for general corporate purposes
Charles Schwab Corp. (SCHW) on Thursday disclosed an investment-grade $2.5 billion bond offering as the corporate-bond market continues to pick up steam.
The brokerage firm on Wednesday offered $1.2 billion of 5.643% fixed-to-floating-rate senior notes due in 2029, as well as $1.3 billion of 5.853% fixed-to-floating-rate senior notes due in 2034.
In trading on Thursday, the bond spread tightened by three to five basis points from their new issue level, to about 205 basis points above five-year U.S. Treasurys, according to data provider BondCliq.
The tightening spread on the bonds is seen as a sign of health in the regional-bank space, sources said.
"They priced it right and they're holding their spreads and they're even three to five points tighter," a source said.
Bank of America Corp. (BAC), Citigroup Inc. (C), Credit Suisse Group AG , Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) are joint book-running managers on the Schwab debt deal.
Schwab plans to use the proceeds for general corporate purposes, including to make investments in subsidiaries and to support business growth.
Schwab's stock fell 1% on Thursday.
The offering comes a day after Pfizer Inc. (PFE) disclosed plans to raise $30 billion in debt, in a sign of liquidity and revived deal making on Wall Street.
Optimism around a debt-ceiling deal and an announcement from Western Alliance Bancorp. (WAL) that its deposits have grown by $2 billion in the second quarter continued to fuel gains in bank stocks early Thursday, after big gains in the previous session.
Investors have been pouring money into corporate bonds as a way to generate more yields than other asset classes, with that pattern expected to continue in the second half of this year, according to market observers.
As of May 17, this week has been the second-busiest of the year for new investment-grade corporate-bond issuance, with $57 billion, including the Pfizer deal, as issuers try to get deals done ahead of the debt-ceiling deadline and potential higher interest rates.
Also read: Fitch downgrades PacWest debt to junk status after deposit flight exceeds peers
-Steve Gelsi
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
05-18-23 1458ET
Copyright (c) 2023 Dow Jones & Company, Inc.-
Going Into Earnings, Is Eli Lilly Stock a Buy, a Sell, or Fairly Valued?
-
What’s the Difference Between the CPI and PCE Indexes?
-
5 Stocks to Buy That We Still Like After They’ve Run Up
-
Markets Brief: Stocks Are Starting to Look Cheap Again
-
Will Earnings From These 10 AI Stocks Live Up to the Hype?
-
What’s Happening In the Markets This Week
-
What the Next Bitcoin Halving Means for ETF Investors
-
Going Into Earnings, Is Microsoft a Buy, a Sell, or Fairly Valued?
-
Meta Earnings: Stock Now Fairly Valued After Latest Selloff
-
March PCE Inflation Index Forecasts Show Mixed Readings On Price Pressures
-
After Earnings, Is Charles Schwab Stock a Buy, a Sell, or Fairly Valued?
-
Going Into Earnings, Is Apple Stock a Buy, a Sell, or Fairly Valued?
-
AT&T Earnings: Network Outage Didn’t Stop Solid Growth or Cash Flow
-
This Dividend Stock With a Nearly 7% Yield Is a Buy After Selloff
-
Visa Earnings: Growth Holds Steady
-
GM Earnings: Strong Start to 2024 Is Good Sign for Rest of the Year