PrefBlog

In the wake of the Fed’s stress tests, there has been a flurry of American bank issues:

Wells Fargo & Co. and Morgan Stanley, ordered to increase capital after the U.S. stress tests, raised $15 billion in stock and bond sales today, the first banks to respond to the government’s mandate.

Wells Fargo sold $7.5 billion of common stock, 25 percent more than it originally planned, according to a person close to the situation, and Morgan Stanley raised $7.5 billion by selling stocks and bonds, up from $5 billion it said yesterday that it would raise. Citigroup Inc. is exchanging an additional $5.5 billion of preferred securities into common stock. Bank of America Corp. plans to sell as many as 1.25 billion shares of common stock in a shelf registration and an undetermined amount of debt that wouldn’t be guaranteed by the Federal Deposit Corp.

I’m more impressed by the ease of raising capital than the stress test results. However, USD LIBOR has dropped significantly:

The London interbank offered rate, or Libor, that banks charge for three-month loans fell two basis points to 0.94 percent today, according to the British Bankers’ Association, bringing its decline in the week to seven basis points, the most since the five days through March 20. The Libor-OIS spread, a barometer of the unwillingness of banks to lend, fell today to the lowest level in more than nine months.

Many Readers, even Assiduous ones, will not really appreciate how good it feels to be talking about significant moves while citing single-figure-beep changes!

Another strong day on continued heavy volume.

This entry was posted on Friday, May 8th, 2009 at 7:59 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.