Big US banks set to temper bond sales after strong 2026 debut

[WASHINGTON] The six largest US banks are expected to issue fewer bonds this quarter after the busiest start of a year on record.

Analysts from JPMorgan Chase and Barclays are predicting the group will issue between US$35 billion and US$45 billion of high-grade securities this quarter. That compares with US$65.8 billion of investment-grade debt priced in the first quarter, even as Citigroup held off issuance, according to data compiled by Bloomberg.

Nearly all of the debt was sold before the Iran war began, led by a sector-record US$16 billion deal from Goldman Sachs, in what amounted to a historic high for first-quarter issuance and the most since the second quarter of 2021, based on estimates by Bloomberg Intelligence analysts.

Sales will occur after the six firms – Bank of America, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo – release first-quarter results. Those reports are due between Monday (Apr 13) and Wednesday, with Goldman due to unveil its performance first.

“We expect Big 6 senior issuance to normalise in 2Q26 after historically high levels in the first quarter,” Peter Troisi and Justin Moreno at Barclays wrote this week. They predict US$45 billion of sales from the group, part of US$60 billion overall anticipated this quarter from all US banks.

Major US banks collectively issued US$47.85 billion in the second quarter of last year, during a period that markets were roiled by US President Donald Trump’s global tariffs.

As issuers headed into 2026, massive spending on artificial intelligence and rekindled merger and acquisitions activity were expected to drive demand for funding. Since then, investors have grown wary over industries exposed to AI disruption and a spate of redemptions at private credit funds. The US conflict in Iran has also fuelled uncertainty after oil prices jumped more than 70 per cent.

JPMorgan analysts forecast that America’s biggest banks will issue about US$35 billion in bonds this quarter. While they expect an increase in investor attention on private credit and AI risk, the analysts see borrowers getting support from solid bank earnings led by loan growth, investment banking and markets revenue growth.

“The banks want to expand their balance sheets to facilitate customer trades in a volatile environment,” said Robert Smalley, a portfolio manager at MacKay Shields. “Also, I think that risk management is prudently looking for more liquidity.”

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Despite an uncertain macroeconomic backdrop, Smalley expects banks will aim for size as a number of M&A and other transactions will still need to be funded.

For all of 2026, Barclays expects about US$188 billion of high-grade bond sales from the Big Six across all currencies, a 7 per cent rise year-over-year.

Tighter spreads

While spreads are tightening, Barclays believes that the wider concerns over private credit are “overstated” since banks have a more limited exposure to losses hitting retail funds like business development companies than other parts of the bond market.

Last month, the US Federal Reserve announced plans to relax Basel III endgame and enhanced supplementary leverage ratios reserve requirements, but analysts from both JPMorgan and Barclays do not expect the changes to have a “material impact” on credit spreads and bank bonds.

“We did see financials underperform but there’s certainly good momentum,” said Nicholas Elfner, co-head of research at Breckenridge Capital Advisors. “It’s setting up to be a typical quarter for the US banking industry.” BLOOMBERG