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After Ratings Outlook Revision, Goldman Sachs Eyes New FRN Offering

Goldman Sachs is shopping a public, benchmark offering of three-year, floating-rate notes guided to an A-/Baa1/A profile. Proceeds from the self-funded issue will be used for general corporate purposes.

Today’s deal marks the New York bank’s second three-year tenor so far this year. At the end of May, Goldman Sachs completed a $900 million offering of FRNs due June 2017 at L+62.5.

Initial whispers for today’s proposed three-year issue surfaced in the L+80 area.

Most recently in October, the bank placed a $3 billion, two-part offering due 2019, across FRNs at L+102, and 2.55% fixed-rate notes at T+120, or 2.59%.

At the end of June, Goldman Sachs printed a $4 billion deal, including 3.85% notes due July 2024 at T+135, or 3.87%, and 4.8% notes due 2044 at T+150, or 4.83%.

On Nov. 26, Standard & Poor’s revised its outlook on Goldman Sachs and Morgan Stanley’s (A-/Negative) core operating subsidiaries to stable, from negative. The ratings action came nearly one year after the final Volcker Rule was issued. “We view the operating trends for both firms as relatively stable and see less downside risk as regulatory proposals are finalized and these companies maintain top market shares in key businesses. This is in contrast with our initial expectation that regulations, particularly the Volcker Rule, could have had some negative impact on their business profiles. We believe the companies' capital positions and funding profiles are adequate for their asset mix, and both firms maintain sizable liquidity buffers,” the agency said.

The outlook on Goldman Sachs Group Inc., the operating and holding company remains negative.

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