Capital Markets

Five Financial Titans Raise $14 Billion

The cash will help JPMorgan, UBS, Goldman Sachs, Wachovia, and Citigroup regain their footing following the subprime mortgage crisis.
Stephen TaubDecember 19, 2007

Five of the largest financial institutions collectively raised more than $14 billion in note, bond, and preferred stock offerings on Monday and Tuesday, apparently aiming to shore up their balance sheets after taking massive write-offs from the subprime mortgage meltdown.

The large amount of funds generated should also be encouraging to companies that were not affected by the problems in the subprime and related markets and are thinking about raising capital.

The banks raising cash this week included the following:

• JP Morgan Chase, which sold $3 billion in 10-year notes, priced to yield 185 basis points over the 4.25 percent, 10-year Treasury note, Reuters reported.

• UBS AG, Stamford Branch, which sold $3 billion in 10-year bank notes with a coupon of 5.875 percent.

• Goldman Sachs Group, which sold $2.75 billion of 30-year bonds in reopening an existing 6.75 percent issue, according to Reuters. The notes were priced to yield 2.60 percentage points more than comparable U.S. Treasuries. The amount of the issue now totals $5.545 billion.

• Wachovia Corp., which sold $2 billion in non-cumulative perpetual preferred securities with a coupon of 8 percent, according to Reuters.

• Citigroup Capital XXI, which sold $3.5 billion in 70-year enhanced trust preferred securities with a fixed coupon of 8.30 percent until December 21, 2037. Then the rate will float, and pay quarterly at the prevailing three-month LIBOR rate plus 417 basis points.