(Adds final information on sale price.)
By Romy Varghese OF DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Wells Fargo & Co. (WFC) sold $6 billion of bonds backed by the U.S. government Wednesday.
This brings the tally of U.S. dollar-denominated bonds issued under the Federal Deposit Insurance Corp.'s program to $38.6 billion in less than two weeks.
"It highlights the success the program has already achieved," said Tom Lewis, Morgan Stanley's head of U.S. investment grade syndicate.
Wells Fargo priced $3 billion in three-year notes at 195 basis points over comparable Treasury yields, and $3 billion in three-year notes at 85 basis points over the three-month London interbank offered rate, according to a person familiar with the deal. Underwriters were Banc of America Securities (BAC), Goldman Sachs (GS), Morgan Stanley (MS) and UBS (UBS).
The floating-rate portion was the largest to sell under the program. Issuance of floating-rate notes has been down 75% year-over-year, according to Lewis. The opening of that market provides another source of liquidity to banks and financial institutions who like the flexibility that floating-rate notes offer.
Lewis said there was $9 billion in demand for the Wells Fargo bonds from global accounts that were "predominantly interest-rate buyers," such as those who buy Treasurys and debt from US housing agencies.
More FDIC-backed deals are on tap. General Electric Capital Corp., the financing arm of General Electric (GE), is expected to price bonds under this program Thursday, according to two people familiar with the deal.
In addition, Regions Financial Corp. (RF) plans to sell FDIC-backed bonds and has named Barclays Capital, Credit Suisse (CS), Goldman Sachs, and Morgan Keegan as underwriters, a spokesman said Wednesday. No further details on size and date were available.
Banks have until June 30 to issue debt under the FDIC program, which guarantees the debt up to June 2012.
The deals have been pricing close to each other. But risk premiums, or spreads, may move wider considering the amount of supply possible before the Temporary Liquidity Guarantee Program ends, said Barclays Capital analysts in a note.
"While the early TLGP deals have been extremely well received, the supply pipeline is daunting, and questions remain about whether $350-400 billion [in bonds] can be absorbed in such a short period without a further spread concession," they wrote.
-By Romy Varghese, Dow Jones Newswires; 201-938-4287; romy.varghese@dowjones.com
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(END) Dow Jones Newswires
December 03, 2008 17:11 ET (22:11 GMT)

Publié le 03 Décembre 2008 Copyright © 2008 Dowjones