Analyst says concerns over liquidity were overblown after Schwab issues $2.35 billion in corporate debt.
Charles Schwab Corp. boosted financial stocks on Wednesday on an upbeat comment from Deutsche Bank, after the money services company successfully raised about $2.35 billion in corporate debt with healthy pricing of the bonds.
Deutsche Bank analyst Brian Bedell said the bond offering on Tuesday “rekindled some investor concerns” around whether the company holds enough cash to cover client moves to pull money out of savings accounts into higher-yielding products. “We do not see any significant changes to client cash withdrawal behavior, SCHW’s earnings profile, liquidity position or capital levels” since Schwab’s latest monthly update in July, he said.
The fixed-rate senior notes due 2026 priced at $99.916 per $100 of debt, with a spread to U.S. Treasuries of about 115 basis points, according to market sources. The bonds rose to $100.35 with a spread of 112 basis points on Wednesday and are performing well, sources said.Overall, most financial stocks moved into positive territory.
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