Goldman Sachs is returning to the US high-grade market with its second offering of the year, seeking US$8.5bn from a senior bond transaction as it looks to expand its balance sheet in anticipation of a busy year for capital markets.
The US investment bank is selling a four-part senior unsecured note on Tuesday, on the back of banner fourth-quarter results in which Goldman executives highlighted the growth opportunities ahead.
"There is potential upside to supply from Goldman Sachs this year in what figures to be another active and volatile year for the equities and [fixed income, commodities and currency] trading businesses, conditions that GS could lean into with balance sheet growth funding," said CreditSights analysts on Tuesday.
Goldman's new offering will add to the recent wave of issuance from the biggest six US banks. The cohort collectively sold US$27bn of fresh paper last week as part of their post-earnings funding spree, including a US$1.9bn perpetual preferred issuance from Goldman.
This week's fixed-to-floating notes comprise US$2.1bn six-year non-call five, US$3bn 11-year non-call 10 and US$3bn 31-year non-call 30 tranches. The securities launched at US Treasuries plus 82bp, 97bp and 92bp, respectively, tightening 23bp to 28bp from the mid-points of IPTs.
Notably, the strong levels achieved by the 31-year portion – coming in 5bp tighter than the 11-year tranche – underlined broad investor demand for long-dated paper from banks, even when such securities did not offer additional spread over some short-dated tranches.
"Bank credit curves remain extremely flat with limited spread value for extension, but the long-dated issuance should attract significant interest from yield buyers looking at a high-5% coupon for an A-rated bank," said CreditSights.
The A2/BBB+/A offering also includes a US$400m six-year non-call five floater set at SOFR plus 108bp.