Magazine article American Banker

Capital: Momentum of IPO Boosts $1.5B Goldman Debt Issue

Magazine article American Banker

Capital: Momentum of IPO Boosts $1.5B Goldman Debt Issue

Article excerpt

On the heels of its successful initial public offering of stock, Goldman Sachs Group Inc. is finding strong demand for its debt as well.

Goldman has increased its first public bond offering to $1.5 billion, from $1 billion, according to a filing with the Securities and Exchange Commission. Goldman's 10-year global senior notes were launched Monday to institutional investors, the company said. It said it expects the debt to be priced Wednesday.

The bond offering came a week after the investment bank's well-received initial public offering, which raised $3.66 billion of capital. Last Tuesday, in the first day of trading, Goldman's investors bid up the new stock to more than $70 a share, from the offering price of $53.

Observers expect that same demand to carry over to the bonds. Appetite for them will surge as a result of the scarcity of the new paper and Goldman's stature, analysts said.

"The bonds should perform pretty well," said Mark Girolamo, bond analyst at Deutsche Bank Securities in New York. "Investors will have room in their portfolio for a high-quality name like this."

Analysts said they expect the bonds to trade in the range of 105 to 110 basis points over Treasuries. But they may price a few points less than that range, based on investor fervor over the new issue.

The securities are probably going to trade better than their fundamentals would suggest "because of pent-up demand," said John E. Otis, bond analyst at Bear, Stearns & Co. …

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