USD MTNs: Formosas pop back up; SocGen steepener

Formosas pop back up; SocGen steepener  

After a break last week, a couple of Formosas printed in the past week. To be sure, Credit Agricole sold a $65m 10y NC2 fixed callable Formosa that pays a coupon of 5.5% while Citigroup sold a 5y $89m floating Formosa that pays a coupon of O/N SOFR +130bps via leads E Sun, Shanghai Commercial and Taishin.

On the CMS side, Societe Generale launched a 15y CMS steepener that pays 12% for the first three years, then pays 50*(CMS2y/30y), capped at 12% and floored at zero, with an equity conditional. Elsewhere, Barclays launched a 12y NC2 EMTN note that pays 10.15% to Jan 2025, then pays ICE SOFR30y, floored at zero.

Clear reasons for lower callable supply – JP Morgan  

Analysts at JP Morgan highlight that although January is usually a month of high Formosa and other callable bond issuance, “this year is expected to be a notable exception…thanks to higher rates and greatly diminished redemption activity.” Thus, JP Morgan believes that “new issuance of callables in January is likely to be considerably low in 2023, lower than even 2019.”

More broadly, JP Morgan says “yields are likely to remain in a higher range for much of 2023 where neither structural vega demand nor vega supply will be significant factors.” Instead the bank expects “volatility to be driven by macro factors such as policy uncertainty, relative value considerations and carry-seeking appetite as the Fed grinds its hiking pace slower.”

Recent structured note activity

Zero-coupon callables and Formosas:

• Credit Agricole sold a $65m 10y NC2 fixed callable Formosa. The EMTN matures Feb 2033 and is callable annually starting Feb 2025 and pays a coupon of 5.5%. Announced Jan 18. Self-led.

   

• Citigroup sold a $89m floating Formosa. The EMTN matures Feb 2028 and pays a coupon of O/N SOFR +130bps. Leads E Sun, Shanghai Commercial and Taishin. Announced Jan 17.

CMS steepeners:

• Societe Generale is working on a self-led CMS steepener maturing Jan 2038 NC1 that pays 12% for the first three years, then pays 50*(CMS2y/30y), capped at 12% and floored at zero. Conditional on the S&P 500, Euro Stoxx Bank Index and Nasdaq remaining at or above 55% of an initial index level throughout the life of the note. Domestic MTN.

Other CMS-linked:

• Barclays is working on a self-led fixed to floating note maturing Jan 2035 NC2 that pays 10.15% to Jan 2025, then pays ICE SOFR30y, floored at zero. EMTN. 

Fixed and step-up callables:

• Bank of America is working on a self-led step-up callable maturing Jan 2035 NC2 that pays 5% to Jan 2025, 6% to Jan 2029, 7% to Jan 2033 and 8% thereafter. Domestic MTN.

   

  Bank of America is working on a self-led fixed callable maturing Feb 2028 NC6m that pays 5.1%. Domestic MTN.

   

  Bank of America is working on a self-led step-up callable maturing Feb 2038 NC3 that pays 5% to Feb 2026, 5.25% to Feb 2030, 5.75% to Feb 2034 and 6.5% thereafter. Domestic MTN. 

   

• Bank of Montreal is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5.06%. Domestic MTN.

   

  Bank of Montreal is working on a self-led fixed callable maturing Jan 2025 NC6m that pays 5.1%. Domestic MTN.

   

• Barclays is working on a self-led fixed callable maturing Jan 2026 NC1 that pays 3.76%. EMTN.

   

  Barclays is working on a self-led fixed callable maturing Jan 2024 NC6m that pays 5.1%. GMTN.

   

• CIBC is working on a self-led fixed callable maturing Jan 2029 NC1 that pays 5%. GMTN.

   

  CIBC is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 4.5%. GMTN.

   

  CIBC is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 5%. GMTN.

   

• Citigroup is working on a self-led $10m step-up callable maturing Jan 2030 NC2 that pays 5% to Jan 2025, 5.25% to Jan 2027, 5.625% to Jan 2029 and 6% thereafter. Domestic MTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5%. Domestic MTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5.5%. Domestic MTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 4.65%. EMTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5%. EMTN.

   

  Citigroup is working on a self-led $60m fixed callable maturing Jan 2028 NC2 that pays 5.3%. EMTN.

   

  Citigroup is working on a self-led $50m fixed callable maturing Jan 2025 NC1 that pays 4.82%. EMTN.

   

  Citigroup is working on a self-led $30m fixed callable maturing Jan 2028 NC2 that pays 5.3%. EMTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2028 NC3m that pays 5.15%. EMTN.

   

  Citigroup is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 4.3%. EMTN.

   

• Credit Agricole is working on a self-led $95m fixed callable maturing Jan 2028 NC3 that pays 5.01%. EMTN.

   

• Credit Suisse is working on a self-led fixed callable maturing Jan 2026 NC1 that pays 6.75%. Domestic MTN.

   

  Credit Suisse is working on a self-led fixed callable maturing Jan 2028 NC2 that pays 6.25%. Domestic MTN.

   

  Credit Suisse is working on a self-led fixed callable maturing Jan 2024 NC6m that pays 7%. Domestic MTN.

   

  Credit Suisse is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 7.1%. Domestic MTN.

   

• Deutsche is working on a self-led fixed callable maturing Feb 2024 NC1m that pays 5.65%. Eurodollar.

   

• Goldman Sachs is working on a self-led floating callable maturing Feb 2024 NC1 that pays O/N SOFR flat. EMTN.

   

  Goldman Sachs is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5.1%. Domestic MTN.

   

  Goldman Sachs is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5.3%. Domestic MTN.

   

• HSBC is working on a self-led step-up callable maturing Feb 2024 NC6m that pays 4.26% to Aug 2023 and 4.36% thereafter. Domestic MTN.

   

• IBRD sold a $15m 10y NC3m fixed callable. The GMTN matures Feb 2033 and is callable May 2024 and pays a coupon of 5.25%. Lead WFS. Announced Jan 20.

   

  IBRD sold a $25m 10y NC3m fixed callable. The GMTN matures Feb 2033 and is callable May 2023 and pays a coupon of 5.95%. Lead WFS. Announced Jan 18.

   

• JP Morgan is working on a self-led fixed callable maturing Jan 2026 NC6m that pays 5%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Jan 2025 NC6m that pays 5.05%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Feb 2024 NC6m that pays 5%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Jan 2028 NC2 that pays 5%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Jan 2028 NC2 that pays 5.1%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Jan 2027 NC1 that pays 5.1%. Domestic MTN.

   

  JP Morgan is working on a self-led fixed callable maturing Jan 2025 NC6m that pays 5.05%. Domestic MTN.

   

• Morgan Stanley is working on a self-led fixed callable maturing Jan 2031 NC7 that pays 4.6%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2031 NC3 that pays 4.35%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2028 NC3 that pays 4.25%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2027 NC2 that pays 4.05%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2026 NC2 that pays 4%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2038 NC2 that pays 4.75%. Domestic MTN.

   

  Morgan Stanley is working on a self-led fixed callable maturing Jan 2033 NC3 that pays 4.7%. Domestic MTN.

   

• Royal Bank of Canada is working on a self-led step-up callable maturing Feb 2024 NC6m that pays 5% to Aug 2023 and then pays 5.1%. EMTN.

   

  Royal Bank of Canada is working on a self-led fixed callable maturing Feb 2024 NC6m that pays 5%. EMTN.

   

• Santander is working on a self-led fixed callable maturing Jan 2025 NC1 that pays 4%. EMTN.

   

• Toronto Dominion is working on a self-led fixed callable maturing Jan 2025 NC6m that pays 5.1%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Feb 2024 NC6m that pays 5.1%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Jan 2028 NC1 that pays 5.5%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Jan 2027 NC3m that pays 5.35%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Jan 2028 NC2 that pays 5.25%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Jan 2026 NC1 that pays 5.1%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Jul 2024 NC3m that pays 5.1%. GMTN.

   

  Toronto Dominion is working on a self-led fixed callable maturing Apr 2024 NC3m that pays 5.1%. GMTN.

   

• UBS is working on a self-led fixed callable maturing Oct 2023 NC3m that pays 4.75%. Domestic MTN.  

   

  UBS is working on a self-led fixed callable maturing Feb 2024 NC6m that pays 4.74%. EMTN.

   

• Wells Fargo is working on a self-led fixed callable maturing Feb 2026 NC1 that pays 5%. Domestic MTN.

   

  Wells Fargo is working on a self-led step-up callable maturing Jan 2028 NC1 that pays 5% to Jan 2026, 5.4% to Jan 2027 and 6.25% thereafter. Domestic MTN.

   

  Wells Fargo is working on a self-led fixed callable maturing Jan 2026 NC1 that pays 5.05%. Domestic MTN.

Extendibles:

• Toronto Dominion is working on a self-led USD extendible with initial maturity Jan 2024 and then extendible to Jan 2025 that pays 5.14%. Domestic MTN.

   

• Royal Bank of Canada is working on a self-led CAD extendible with initial maturity Jan 2025 and then extendible to Jan 2028 that pays 5.2%. Canadian.

   

  Royal Bank of Canada is working on a self-led CAD extendible with initial maturity Jan 2025 and then extendible to Jan 2028 that pays 5.05%. Canadian.