Canadian bank stocks could fall another 5-15% before they hit bottom: Nigel D’Souza
Toronto-Dominion Bank and National Bank of Canada priced loss-absorbing securities as strong earning results by Wall Street banks improved the tone in the North American primary debt markets for a few hours.
TD sold $800 million (US$617 million) of institutionally marketed preferred shares with a call option after five years at a yield of 420 basis points over the Canada government yield curve, according to people familiar with the matter. National Bank priced $750 million of higher ranking 10-year subordinated notes with a call option after five years at the tight end of a range of 238 to 242 basis points, said the people.
Two of the largest Canadian banks issued securities in their home market after Goldman Sachs Group Inc. reported better-than-expected results in nearly every area and Bank of America Corp. beat analysts’ estimates for net interest income that it said is likely to rise more this quarter. The Markit CDX North American Investment Grade Index, which declines as credit risk drops, tightened as much as 2.37 basis points to 88.16 before pulling back to 91.22, higher than Friday’s closing level.
In the US dollar market, where JPMorgan Chase & Co. led the busiest day in about three months, Bank of Montreal raised US$2.5 billion by issuing covered bonds in one of the largest sales of such debt in the currency this year.
TD’s preferred shares built an order book for 1.4 times the deal size from 55 investors, according to people familiar with the matter. National Bank subordinated bonds drew 59 buyers who put in orders for around 2.45 times the size of the transaction.