Morgan Stanley to Issue $8 Billion in Debt
So far this year, the firm has completed three four-tranche offerings of the same amount, all for general corporate purposes.
Quick overview
- Morgan Stanley priced an $8 billion investment-grade bond offering, marking its third deal of the week following major banks' earnings releases.
- The bond deal, split into four tranches, included an 11-year bond with a yield 0.9 percentage points above comparable U.S. Treasuries.
- This transaction contributed to a surge in primary market activity, with Goldman Sachs and JPMorgan also issuing significant amounts earlier in the week.
- Analysts noted the unusual timing of the issuance on a Friday, a day when only about 1% of high-grade bond deals are typically launched.
Morgan Stanley, one of Wall Street’s largest investment banks, priced an $8 billion investment-grade bond offering on Friday—its third deal of this kind in the week following the release of third-quarter earnings by major banks.
The deal, split into four tranches, included an 11-year bond—the longest maturity—which offered a yield 0.9 percentage points above comparable U.S. Treasuries. According to a person familiar with the transaction, the spread was tightened by 25 basis points from initial guidance.
Continued Debt Issuance by Morgan Stanley
During syndication, the bank removed a six-year floating-rate tranche that had initially been included. Morgan Stanley took a similar approach in April, when it pulled a floating-rate portion from an originally five-part deal that also raised $8 billion—matching the size of its January issuance. So far this year, the firm has completed three four-tranche offerings of the same amount, all for general corporate purposes.
The transaction added to the week’s surge in primary market activity: Goldman Sachs raised $10 billion last Tuesday, while JPMorgan issued $5 billion on Wednesday.
All three deals came after the six largest U.S. banks reported strong quarterly results. However, optimism was partially dampened on Thursday when two regional banks disclosed losses tied to fraud involving loans backed by funds investing in distressed commercial mortgage assets.
An Unusual Timing
On Thursday, the average yield on U.S. investment-grade corporate bonds fell to a year-to-date low of 4.69%, while spreads remained near historic lows (below 0.8 percentage points), keeping funding costs attractive for high-quality issuers.
Even so, analysts pointed out that choosing Friday as the issuance date was unusual: historically, only about 1% of high-grade bond deals are launched on that day. In fact, Morgan Stanley’s deal was the only top-tier U.S. corporate bond issuance in the primary market that Friday.
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