More supply than expected, again; reviewing drivers

Research evidence excerpt

More supply than expected, again; reviewing drivers

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High Grade Banks

More supply than expected, again;

reviewing drivers

Rating Change - Credit

Supply surprises again, raising FY est to $323B 08 July 2026

2Q26 bond supply was $91B, nearly double our $47B expectations, primarily driven by High Grade Credit

higher GSIB senior holdco issuance as was also the case in 1Q26. Through 1H26, United States

Category I-IV banks have issued $199B, with $123B from GSIB senior holdco debt Banks

across major currencies. GSIB holdco sub and Category IV bank bond issuance also Tom Curcuruto, CFA

surprised to the upside. We raise our FY26 expectations by $91B to $323B to reflect i) Research Analyst

higher than expected 2Q26 issuance, ii) adding $35B for additional debt funding needs BofAS+1 646 855 6870

over 3Q and 4Q to reflect further GSIB asset growth and iii) removal of our assumption tom.curcuruto@bofa.com

that 1Q debt issuance included a pull forward of funding. We believe markets activity Gabriel Vieira

Research Analyst

and volatility from geopolitical events and AI themes (capital raising, business model BofAS

winners/losers, etc.) that are benefiting prime services/brokerage businesses is also gabriel.vieira@bofa.com

contributing to GSIB asset growth, primarily via global markets balance sheets and more

specifically in broker-dealer entities. This is further supported by trends in hedge fund

borrowing and leverage. See pages 2-5.

Fundamentals solid, shareholder returns to continue

The fundamental backdrop for banks remains solid, with expectations of 10% revenue High Grade Banks: Spreads snap back

growth in both net interest income (NIM expansions plus mid-single digit loan growth) but concerns accumulate 02 April

and fee income for FY26.