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imageNEW YORK: JP Morgan on Thursday announced a new 10-year benchmark US dollar bond, shortly after releasing strong second-quarter earnings that boosted US equity indexes.

Sources told IFR that initial price thoughts on the self-led deal were heard in the range of US Treasuries plus 145bp-150bp, with proceeds to be used for general corporate purposes.

The senior unsecured notes will be issued at the holding company level of JP Morgan (A3/A-), the largest US bank by assets.

At IPTs, the deal offered a premium of around 10bp-15bp over JPM's 3.3% April 2026s, which were trading in the low 130bp area before the deal was announced.

An investor following the deal said while that was not a particularly generous premium, the strength of demand for US credit and the strength of JPM's results should ensure success.

"They're the first bank to issue for a while and they had a solid quarter - it should do well," said the investor.

Rabobank (A3/BBB+/A) was also in the market with a 10-year subordinated bond, at IPTs of 255bp area over Treasuries.

At IPTs, the deal offered around 20bp-30bp of premium over Rabo's 4.375% 2025s, which were trading at G+226bp-229bp, said two investors following the transaction.

Phil Jacoby, chief investment officer at Spectrum Asset Management, said that Rabo's deal looked attractive.

Along with continued monetary easing from the European Central Bank, it should help smooth the way for other European banks to bring deals in the coming weeks, he added.

" will be one of the leaders on the way back as spreads come back in," he said. "More capital is needed and central banks are intending to ensure that runway is clear."

SUPPLY ON THE WAY

Supply of new bonds from financial sector issuers has been light in recent weeks, but is expected to pick up as more banks report earnings.

JP Morgan reported a 1% drop in Q2 profit on Thursday but still beat subdued analyst expectations, helped by loan growth and a tight control on operating expenses.

The bank's shares rose 2.3%, while the S&P financial index's 1.15% bump led gainers among the 10 major S&P sectors in early morning trading.

Wells Fargo, Citigroup, PNC Financial Services Group and US Bancorp report second quarter results on Friday.

Earnings blackouts are keeping other corporate issuers out of the market, despite another positive day for stocks and secondary bond prices, said bankers.

"If we didn't have earnings seasons we would see more," said a syndicate banker. "The tone is very good."

Copyright Reuters, 2016

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