It's raining FIGs as US$12.5bn pours in

(Updates with pricing details of deals)

By Hillary Flynn

NEW YORK, March 1 (IFR) - The US high-grade market saw US$12.5bn of FIG deals Tuesday, including a US$7bn offering from HSBC Holdings (HKSE: 0005.HK - news) , one of six financial issuers in the market.

Tuesday's FIG offerings come as US stocks moved sharply higher on stronger oil prices and better than expected economic data from the US.

The lone non-financial trade was a US$500m 10-year bond at T+175 from O'Reilly Automotive Inc (Baa1/BBB+), bringing Tuesday's total to US$13bn.

On Monday six deals totaling US$16.65bn came to market - including two FIG offerings - bringing the week's supply tally so far to US$29.65bn.

HSBC (A1/A/AA-) sold a three-part deal, with the longest piece being a US$3bn 10-year tranche at T+250bp. It (Other OTC: ITGL - news) also offered $3bn five-year fixed at T+215bp and a $1bn five-year floating rate note at Libor plus 224bp.

Earlier estimates had the order books on the transaction reaching a healthy US$19bn.

An upswing in financial issuance was seen as inevitable as the bank pipeline swelled following a sell-off in bank credits in early February.

"There was a lull there where banks were smacked around the first couple weeks of February, a lot of this (issuance) was pent up," a syndicate banker said.

Citigroup (Swiss: C.SW - news) (Baa3/BBB/A-) also approached investors with a US$1.5bn subordinated 10-year note, which priced at T+280bp, after books swelled to US$5bn.

Other financials that made their way to the dollar market on Tuesday were John Deere Capital Corporation (A2/A), Manulife Financial Corporation (A/A-), Turkey's Yapi ve Kredi Bankasi (Istanbul: YKBNK.IS - news) and regional bank PNC Bank.

Sumitomo Mitsui Financial Group Inc has filed to issue senior notes and is expected in the market Wednesday.

Strong market conditions have essentially reopened access for a sector hit by dramatic spread widening last month following poor earnings from foreign banks, such as Deutsche Bank.

"Tensions have swung back a bit and people are getting more comfortable," a buy side trader said.

Strong secondary performance for recently issued trades have helped to inspire confidence among banks seeking to raise capital.

"Banks are outperforming, Yankee banks are 5bp-10bp better," the trader said Tuesday morning. "BAML (new sub) is 5bp better. Other generic on the run names are 3-5bp tighter."

Concerns about the sector's exposure to oil credits and fear that the US would go into a recession only exacerbated spread widening and gave banks pause about moving forward last month.

This led to a drought in bank paper, with FIG issuance falling by 23% to US$86.95bn year to February 29, compared to the same period in 2015.

With (Other OTC: WWTH - news) a turnaround in market sentiment over the last week, however, more financials have tried their luck.

Bank of New York Mellon was the first one to dip its toes back into the corporate bond market on February 16, garnering a US$3.1bn book for a US$1bn deal.

Goldman also sold a US$3.6bn three-part deal on Feb. 22, JP Morgan (Other OTC: MGHL - news) issued a two-part US$3.25bn sale last Thursday, and just on Monday Bank of America Corporation got a US$6.5bn book for a US$2bn deal.

"After a roughly two week rally in credit spreads, which accelerated for industrial bond spreads this week, we look for the strength to broaden out from the most liquid tickers," wrote analysts at Bank of America Merrill Lynch on Tuesday.

The sole junk bond deal Tuesday was an offering from hospital operator HCA Holdings (NYSE: HCA - news) , which sold a 10-year bond that was priced to yield 5.25% and upsized to US$1.5bn from US$1bn. (Reporting by Hillary Flynn and Davide Scigliuzzo; Editing by Paul Kilby and Jack Doran)