US IG Wrap — Large banks project strength amid pockets of market weakness

William Hoffman

17 October 2025•3 min read

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It turned out to be a three horse race in investment grade bond markets this week as bank issuance expectedly dominated the primary.

Goldman Sachs was first out the gate with a $10bn five-part package on Tuesday, followed by JP Morgan’s $5bn two-part deal on Wednesday, and bringing up the rear is Morgan Stanley today with an $8bn four-part bond package of its own in a nearly identical structure to Goldman’s earlier in the week.

Last week we identified all three as having a high likelihood of coming to the market post Q3 earnings, and they certainly delivered in size. The three banks accounted for more than 90% of this week’s issuance.

Both JP Morgan and Morgan Stanley dropped longer floating rate tranches and each of the three banks priced 11NC10 bonds as their longest tranche. On those 10-year notes JP Morgan priced at the lowest spread at 77bps over Treasuries, tightening by 28bps from IPTs, followed by Morgan Stanley at T+99bps tightening by 25bps while Goldman Sachs priced at T+92bps moving 23bps in from IPTs.

The other corporate issuers on the week combined to price $2.4bn across five sub-$1bn tranches. That included deals from energy provider Eversource, beer maker Constellation Brands, and life insurance company AuguStar via its funding agreement-backed program called Constellation Global.

“Issuance was well absorbed and spreads are a couple basis points tighter today,” one banker said. “Overall the market has held in well considering some of the volatility in headlines.”

Spreads put on some weight

Spreads moved wider late last week and into the start of this week as investor concerns about China trade tariffs, private credit risks and bankruptcies among consumer finance companies took hold (we detailed the IG market’s reaction here).

Throughout the week spreads seemed to stabilize at a slightly higher plane, but more risks were introduced Thursday as regional bank stocks fell after disclosing more losses from bad loans.

Zions Bancorp said it would take a $50m loss in the third quarter while Western Alliance Bancorp disclosed it’s suing a borrower over alleged fraud.

That equity sell-off translated to its debt too where spreads on Zion’s most recent $500m SUNs due 2028 that priced back in August widened to around T+110bps, from lows of around T+96bps earlier in the week, according to ICE Vantage data.

“It's definitely an area where we'll be a little bit higher beta as the market sort of susses through where the risks within private credit lie and what exposures are across the regional bank landscape,” the banker said, adding that the situation is similar to the Silicon Valley Bank fallout, but at much lower magnitude this time around.

“The sector wholesale initially sold off, and then you got to see some more differentiation as investors understood what type of concentration risks and what parts of the issue were idiosyncratic.”