It’s a popular night to announce capital raises.
Moment after Wells Fargo (WFC) said it would raise $6 billion through a common share offering, Morgan Stanley (MS) says it’s selling $2 billion in common stock and $3 billion in non-FDIC guaranteed debt. The common share offering should easily cover the $1.5 billion capital needed, as has been reported in various leaks.
The non-FDIC debt sale has less to do with capital needs than it does signalling. Look at us, the market will buy our debt without Sheila Bair’s lipstick traces on it
(On a side note, since our government has a policy of no haircuts for bondholders, we’re tempted to ask if there’s actually such thing as non-guaranteed debt, but that’s another post).