Citi, JPMorgan Kick Off Post-Earnings Bank Borrowing Binge

© Bloomberg. Citigroup headquarters in New York, U.S., on Friday, Jan. 7, 2022. Citigroup Inc. was the first major Wall Street bank to impose a strict Covid-19 vaccine mandate: Get a shot or face termination. With its deadline fast approaching, the company is preparing for action.

(Bloomberg) -- Citigroup Inc (NYSE:C). and JPMorgan Chase & Co. (NYSE:JPM) are the first of the six biggest Wall Street banks to tap the U.S. investment-grade market after reporting earnings, setting the stage for a potential flood of issuance from the banking giants.

Citigroup is selling bonds in as many as three parts, according to a person with knowledge of the matter. The longest portion of the offering, an 11-year fixed-to-floating-rate security, may yield around 1.35 percentage points above Treasuries, said the person, who asked not to be identified as the details are private.

Two of the tranches are being issued under Citigroup’s affordable housing bond framework, with proceeds set to finance or refinance the bank’s portfolio of affordable housing assets, the person said.

Meanwhile, JPMorgan is selling an 11-year fixed-to-floating rate note with proceeds set to finance general corporate purposes, a separate person said.

Financial companies are leading a rush to lock in still-attractive borrowing costs before the Federal Reserve hikes interest rates, potentially adding to volatility and uncertainty. The sector accounted for 65% of U.S. high-grade bond sales in 2022 as of Thursday, according to data compiled by Bloomberg. JPMorgan Chase & Co. credit research analysts expect big banks to borrow a combined $24 billion to $32 billion following their earnings reports.

“There is a widespread expectation of heavy financials supply in the weeks ahead,” JPMorgan credit strategist Eric Beinstein wrote Tuesday.

Read more: Top Wall Street Banks Seen Flooding Debt Markets After Earnings

Citigroup and JPMorgan both reported fixed-income and equities trading revenue that fell short of analyst estimates on Friday.

Both banks are the sole bookrunner on their own bond sales.

(Updates to include JPMorgan bond sale beginning in first paragraph.)

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