$52.5 Billion In Virtually Free US Bank Debt Due Next Month

We were one of the earliest to raise concerns about the future impact of the maturing TLGP debt that was 'given' to the bank-holding-companies in the middle of the crisis three years ago. December is the first month with very significant maturities as more than $52bn comes due, with $14.9bn next week alone. The banks face at least two major problems from this debt maturing: 1) It is sizable and primary markets seem unlikely to be able or willing to soak up such large issuance without significant concessions, and 2) The extremely low cost of funds for this debt means that rolling into market rates will drastically impact earnings (as interest expenses jump - should fundamentals matter again). BAC faces $3.6bn maturing, MS $3.75bn, and JPM $7.55bn next week alone.