Educate Your Board on Subordinated Debt Markets Now

Over the last year, and in particular since the 2019 novel coronavirus (COVID-19) pandemic arose in March, there has been a significant increase in subordinated debt (sub debt) issuances by bank holding companies. According to S&P Market Intelligence, from May through August of this year there were 66 sub debt issuances totaling $3.9 billion. During the same period in 2019, there were 13 issuances totaling $832.5 million. These numbers are based on publicly available information and likely underreport the total number of sub debt issuances to some degree.

This trend holds true within our local Midwest region as well. As shown in the chart below, long-term borrowings (including sub debt) for bank holding companies with less than $3 billion in consolidated assets increased 16.4 percent from June 30, 2019, to June 30, 2020. We expect that percentage to increase further when year-end FR Y-9SPs are filed.

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