PNC’s $750 Million Bond Sale Amid Banking Race to Boost Capital Reserves

Amid a rush among banks to accumulate funds, PNC Financial Group (NYSE:) has turned to the US blue-chip bond market, marking its second venture since a regional banking upheaval jolted investors earlier in the year. The Pittsburgh-based financial institution recently priced bonds valued at $750 million, which feature a fixed-to-floating rate and mature in 2034. These securities were priced at a yield of 1.73 percentage points over Treasuries, narrowing down from an initial discussion pegged at 1.95 percentage points. This move by PNC is concurrent with other major banks diving into bond sales; notably, Bank of America (NYSE:). and Goldman Sachs (NYSE:). executed sales of $5 billion and $1.5 billion respectively. Additionally, Huntington Bancshares (NASDAQ:) (HBAN/a>), a regional lender, entered the market with a bond worth $1.25 billion.

The surge in offerings is mainly attributed to banks’ endeavors to bolster their capital reserves before the customary summer slump that manifests towards the end of August. PNC’s last issuance occurred in early June, culminating in the acquisition of bonds amounting to $3.5 billion. Presently, with funding costs being relatively subdued, regional banks find it enticing to approach the investment-grade debt markets. The additional yield that investors currently seek to clinch financial bonds over conventional blue-chip debt has been on a diminishing trend since April.

Concurrently, the spotlight on Wall Street is now being directed towards potential proposals from US regulators. These propositions, if implemented, would necessitate lenders to amplify their capital reserves as a safeguard against potential market perturbations. This anticipation of more stringent regulatory frameworks could instigate an even more heightened issuance wave, especially among regional banking entities.

In related developments, other market entrants such as Jacobs Engineering Group (NYSE:) and Alexander Funding Trust II unveiled their respective deals on Tuesday. However, representatives for the aforementioned institutions, including PNC, remained reticent when approached for comments.

This article was originally published on Quiver Quantitative