Citigroup Inc.’s Richard Zogheb, global head of the debt capital-markets division, said last month that he expects record volume for the period.
U.S. investment-grade corporate bond issuance more than doubled in the second quarter from a year earlier, to $757.7 billion, according to data compiled by Bloomberg. High-yield sales jumped 61% to $130.1 billion.
Mortgages
Mortgages are set to be another strong spot for banks in the second quarter as historically low interest rates spur homeowners to refinance. U.S. refinancing activity has almost doubled from last year, according to the Mortgage Bankers Association. The average rate for a 30-year mortgage has tumbled to 3.03%.
Lenders sell most of the loans they make, and the spread between what they charge borrowers and what they’re able to sell the loans for was at its widest in April since 2008. Also that month, a measure of lenders’ profitability maintained by the Urban Institute hit a record high.
Looking Ahead
The outlook now depends on whether businesses continue reopening, or if a resurgent virus in the Sun Belt and other regions forces another nationwide shutdown. States that faced the initial brunt of the pandemic in March and April have managed the spread of the virus, but new outbreaks in states such as Texas and Arizona are stoking fears of a second wave.
While banks’ net income will continue to face a substantial hit, the crisis is still expected to be one that brings temporary earnings pain rather than existential capital concerns, Royal Bank of Canada said in a report.
“Our outlook is cautiously optimistic as we expect the economy to continue to gain momentum into the end of the year,” RBC said in the report.
--With assistance from Hannah Levitt.
This article was provided by Bloomberg News.