You are here
Goldman expected to sell $2 billion in FDIC-insured bonds
By Walden Siew
Monday, November 24, 2008
NEW YORK -- Goldman Sachs plans to sell at least $2 billion of new debt that will be guaranteed by the Federal Deposit Insurance Corp., with pricing expected Tuesday, according to a market source familiar with the sale.
The debt will mature no later than June 30, 2012, the source said. Goldman Sachs is the sole bookrunner, while Citigroup and Morgan Stanley are joint leads, the source said.
The debt is guaranteed under the FDIC's Temporary Liquidity Guarantee Program, and investors are watching the deal as a test case for demand under the new program.
The new debt is expected to price at 85 basis points over midswaps, plus or minus 3 basis points, the source said.
Goldman is expected to be the first firm to tap the FDIC's new program. The FDIC on Friday approved a program to guarantee to banks' new senior unsecured debt, potentially allowing the firms to issue debt with top "AAA" ratings.
The market could see roughly $50 billion in issuance per month until the deadline for debt issuance next June, Bank of America estimated in a report.
The TLGP is expected to fill a financing gap for banks shut out of the corporate bond market by skyrocketing yields.
* * *
Help Keep GATA Going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at http://www.gata.org/.