Bank liability managers are busier drawing up debt offerings today than at any time since the financial crisis.

Their sales agents are gearing up for two weeks packed with bond issuances that will round out investors' purchase mandates before the new year. Already this week investors have either committed to, or have reviewed documents for, deals from BB&T, Citizens Bank in Providence, R.I., Morgan Stanley, National Australia Bank and Citigroup's OneMain Financial unit, each of which seeks cheaper guarantees of longer funding.

Santander Holdings USA may be next in line to take advantage of still low rates. Barclays Capital, which Santander has chosen to run its next transaction, held roadshows with U.S. investors one week before Thanksgiving, according to people familiar with the agreement and meetings. An official at one of the firms privately confirmed the roadshow when reached by phone on Wednesday. Spokespeople for the firms did not offer official comment.

Santander, the American unit of Spain's largest bank, Banco Santander, plans to sell a transaction of at least $500 million, one of the people said, citing deal prospectuses that are not yet public.

Big and small banks have recaptured the attention of bond investors, who shied away from the market after the financial crisis but are now returning as banks halt multiyear deleveraging campaigns that created gaps in long-term funding.

Since 2010, banks were largely retiring and redeeming more than they were issuing. The tables began to turn this year, and banks are at the moment supported by supply and demand, as well as what appears to be growing confidence in their profitability.

PRICING PRESSURES

Investors are feasting on strong supply for now, but it may be hard for the bonds to stay as attractive once rates climb and heavier supply makes them more expensive to issue. Still, most say this is a seller's market that is here to stay.

"Banks are the richest we've seen since Lehman Brothers," said Jay Contis, an analyst at John Hancock Asset Management, a division of Manulife Asset Management, with $159 billion in assets.

They are now outperforming most corporate bond issuers. Rocky macroeconomic events worldwide and the recent dip in energy prices have widened the spreads on investment grade corporate bonds by 10 basis points since mid-October. Wider spreads can be a sign of weakening demand, for which the issuer must pay investors more.

Banks have been shielded from that widening on a relative basis so far. That reflects strength for the notes and an aftermarket for them, Contis said.

Through two deals on Tuesday, Morgan Stanley sold $2.25 billion of three-year debt at a cheaper price than industrials and most of the investment-grade bonds tracked by the Barclays corporate indices.

MONEY TELLS WHAT REGULATORS WON'T

Larger banks' debt issuances like these fall into what has become a healthy mix of debt issued to boost asset lending, build operations, as well as prepare for a potentially disruptive U.S. interpretation of the Financial Stability Board's bank resolution roadmap.

U.S. regulators have not yet commented on the Nov. 10 outline for total loss-absorption capacity, but capital markets activity suggests banks fear the regulation hawks of the Federal Reserve Board may have the final word. Citigroup, for example, recently surpassed its $20 billion in annual transactional guidance by some $3 billion, according to Wells Fargo Securities data. Two weeks before Thanksgiving the bank issued $2 billion in senior unsecured debt, all at once. That is several times a benchmark-sized issuance. The week prior, Citigroup printed a $1 billion subordinated offering. The funding is designed to also improve net interest margins and overall funding costs.

Only a handful of banks may fall significantly short of senior debt requirements, said Will Schwartz, a senior bank analyst at DBRS, but more banks may begin to layer in cushions of subordinated debt, too, in anticipation of an even harsher senior debt requirement.

"Everyone is looking at what everyone else is doing with funding," he said.

NEW CONFIDENCE

The biggest surprise this year came in the form of subordinated debt issued by community banks. Those banks, most under $10 billion in assets, were first led to market by Kroll Bond Rating Agency, which aggressively courted them to buy creditratings said to be necessary for broader investor appeal. The big three rating agencies have typically viewed these banks as too small to bother for the business.

But there may be signs that some of those banks are also biting the hand that is trying to feed them as they see strong demand in the primary market from buyers picking up deals so small that they are discarding concerns about aftermarket liquidity. Since those sales rose in September, half of the small and mid-cap banks that issued subordinated debt have done so via private placements, arranged by their bookrunners and without paying Kroll to rate their transactions.

The private placements are all small, including a $13 million issuance from Pacific Enterprise Bancorp in Irvine, Calif., and a $10 million issuance from Presidio Bank in San Francisco. The nature of the sales indicates that each had a buyer that bought the deal whole, instead of selling multiple slices to different investors. The buyers are expected to hold the deals for the duration on their books; in both cases, the duration is ten years.

Matt Anderson, a data analyst at market data provider Trepp, is warning that community banks may be overcapitalized and that the pendulum may have swung too far. "For a lot of banks, they could push the envelope on the asset side instead," he said by phone last month.

Kroll has prepared six new community bank ratings to roll out in coming weeks, officials of the firm said Tuesday. They declined to say what has held them back from publishing the work they have already completed.

"This is a seller's market," said Kroll's head of research, Chris Whalen. "Some banks may next year sell retail offerings of preferreds, without ratings, because demand is so strong. They never could have done this before."

Regional banks are also flexing their muscle, as evidenced by talk of new bond programs. Eight larger regional banks appear to have strengthened enough that Kroll no longer feels it has any competitive edge to service them, over the big three rating agencies it seeks to challenge. Over the past two months, Kroll has dropped unsolicited ratings from BB&T, Comerica, Fifth Third Bancorp, Huntington Bancshares, M&T Bank, People's United Bank, Regions Financial and SunTrust Banks.

The decision was made for business reasons, Whalen explained, citing the unsolicited work as time and resource-consuming, for which those eight banks may never pay.

One of the most active trading desks for smaller bank issuances, Sandler O'Neill, will distribute before yearend two more deals for two sub-$10 billion community banks. Officials there declined to elaborate on the transactional details. The bank issuances will continue at a steady pace in 2015, according to Sandler principal Jacques de Saint Phalle, who cited even other community banks as entering the market as buyers, rather than sellers.

"There should be robust dealmaking in the next two quarters, and then we just have to see what happens on rates."

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