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Wells Fargo Returns to Canadian Bond Market with Record C$1.25 Billion Sale

Wells Fargo re-enters Canadian bond market with record C$1.25 billion sale after a two-year hiatus.

By Max Weldon

4/16, 22:26 EDT
Citigroup, Inc.
JP Morgan Chase & Co.
Wells Fargo & Company
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Key Takeaway

  • Wells Fargo re-enters the Canadian bond market with a record C$1.25 billion sale, its largest loonie-denominated bond issuance.
  • The bonds, maturing in four years with an early buyback option after three, were set at a yield of 1.13 percentage points over Canadian government bonds.
  • This strategic move follows Wells Fargo's $4.25 billion deal in the US investment-grade bond market and aligns with its post-first-quarter financial strategy.

Wells Fargo Returns to Canadian Bond Market

Wells Fargo & Co. has re-entered the Canadian bond market with a significant sale, marking its presence after a two-year break. The bank successfully sold C$1.25 billion ($900 million) of debt, showcasing a strong return to the market. This transaction, involving notes maturing in four years with an option for the bank to buy back after three, was set at a yield of 1.13 percentage points over Canadian government bonds. The initial discussions for the yield ranged between 1.13 to 1.15 percentage points. This sale attracted considerable interest, drawing in 57 buyers and receiving orders double the size of the deal.

Record Loonie-Denominated Bond Sale

This recent issuance by Wells Fargo represents its largest ever sale of loonie-denominated bonds, as per data compiled by Bloomberg. The bank's decision to issue such a significant amount of debt in the Canadian market underscores its strategic financial maneuvers following the release of its first-quarter results. Prior to this, Wells Fargo last accessed the Canadian bond market in April 2022 with a C$750 million transaction, which was also a four-year security callable in three years.

Context of the Bond Sale

The bond sale comes on the heels of Wells Fargo's participation in the US investment-grade bond market, where it secured a $4.25 billion deal on Monday. This dual-tranche transaction in the US featured a fixed-to-floating rate portion yielding 0.95 percentage points above Treasuries. The timing of these sales follows the bank's announcement of its first-quarter results, aligning with similar moves by other major banks such as JPMorgan Chase & Co. and Citigroup Inc. These strategic sales occur as the yield on the Canadian corporate bond index has reached 5.10%, its highest in approximately two months, indicating a potentially favorable environment for issuers.