Clear Debt Now

Written by admin on May 22nd, 2009

JPMorgan Has Sold An Additional $2.5 Billion In Unguaranteed Debt

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It looks like banking institutions are enjoying their taste at new economic reach. It seems that big companies like JPMorgan Chase are selling bonds without the backing of the federal government.

In April 2009, JPMorgan sold $3 billion unguaranteed ten-year notes. This was followed by a subsequent issue of $2.5 billion in the five-year notes. This came at about the same time that American expressed issued its $3 billion in unguaranteed senior debt.

In the wake of JP Morgan’s move, other U.S. banks have been rushing to issue significant numbers of unguaranteed debt themselves. One of the biggest motivations for this new trend is the fact that the Treasury made the selling of this type of debt a required step for returning the TARP funds that were doled out months ago.

What this really comes down to is telling the government that they don’t need them to keep things going. While it is true that the debt sales are meant to raise crucial capital for those companies involved, but it is also intended as a proof for investors that the companies can remain viable without federal aid.

This about-face came in response to the terms laid out by the Treasury Department and the FDIC back in October 2008 that allowed for the release of funds to help thaw the sluggish credit markets. JPMorgan and others are ready to put aside FDIC guarantees and get back on their feet, financially.

It may also have something to do with the stigma that has been attached to banks that accepted the TARP bailout. The reputations of many financial institutions were affected by the mere idea that they were still receiving money from the government. Additionally, the idea of federal oversight, in any form, let alone in the matter of employee compensation, leaves a bad taste in the mouths of company execs.

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3. An Additional $13.8 Billion Requested By Freddie Mac After Serious Losses
4. $5 Billion In Short-Term Debt Sales In California
5. US Stocks Drop As A Result of Devaluing CIT Shares