Or at least we think they do, given the amount of financial paper hitting the equity market at the moment.
So far this week, JPMorgan have announced plans to sell $5bn of equity, American Express is looking to place £500m, while International Petroleum Investment Corp, an investment vehicle of the Abu Dhabi royal family, has placed 1.3bn shares in Barclays on Tuesday in one of the UK market’s biggest ever secondary share sales.
And now Morgan Stanley is joining the rush in a placing backed by the Chinese and a Japanese bank. From the MS statement:
Morgan Stanley (NYSE: MS) today announced that it has priced a public offering of 80.2 million shares of common stock to the public at $27.44 per share for total gross proceeds of approximately $2.2 billion.
China Investment Corporation has agreed to purchase 44.7 million shares of common stock at the public offering price. In addition, Mitsubishi UFJ Financial Group, Inc. (MUFG) has agreed to purchase 16.0 million shares of common stock at the public offering price.
Meanwhile, Bank of America has just announced that it has sold $3bn of 5-year and $2.5bn of 10-year notes and says it could issue 296m common shares in the future.
US banks are, of course, raising cash so that they can repay TARP money. Indeed, the Federal Reserve said last night that it expects the process to begin next week:
The Federal Reserve Board on Monday outlined the criteria it will use to evaluate applications to redeem U.S. Treasury capital from the 19 bank holding companies (BHC) that participated in the Supervisory Capital Assessment Program (SCAP).
Redemption approvals for an initial set of these large bank holding companies are expected to be announced during the week of June 8. Applications will be evaluated periodically thereafter. Any banking organization wishing to redeem U.S. Treasury capital must first obtain approval from its primary federal supervisor, which then forwards approved applications to the Treasury Department.
John Kemp at Reuters reckons the start of repayments will put pressure on other banks to follow suit and demonstrate that they too can survive without government assistance and subject to government control.
Which means more paper is going to hit the market. But do investors have the heart to keep buying?
Related links:
JP Morgan and Amex in bid to repay Tarp – FT
Capital raising brings BofA closer to target – FT
BNY Mellon to repay Tarp fast – FT
Charts du jour: US vs European banking equities – FT Alphaville