Bank of America Corp. on Friday borrowed $15 billion in the corporate bond market, smashing the record set a day earlier by one of its largest financial rivals for the biggest bank bond ever sold.

The six-part sale, rated A2, A minus and A plus, attracted orders that outstrip supply, allowing bankers to dial back the amount of spread the bonds will offer investors, above risk-free Treasurys
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said a person with direct knowledge of the dealings.

Pricing on BofA’s
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largest $4.5 billion class of bonds due April 2032 was set to clear at a spread of 110 basis points above risk-free Treasurys, down from initial expectations in the 125 basis point area.

The banking giant said proceeds would be used for general corporate purposes, in a regulatory filing. That can include funding its new $25 billion share buyback program, which was announced earlier this week alongside the bank reporting a doubling of profit in the first quarter compared with a year prior. It also released $2.7 billion of its reserves, boosting its bottom line.

Related: Get ready for stock buybacks to roar back

The Dow Jones Industrial Average
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and S&P 500 index
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both closed at fresh record highs Friday, after a week in which stellar bank earnings help provide an upbeat tone around the U.S. economic recovery.

The mega bond sale from Bank of America follows on the heels of JP Morgan & Chase‘s
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$13 billion bond deal on Thursday, which Bloomberg said was the largest of its kind ever from a major lender. It held that record only for a day.

Big U.S. banks issued a total of $39 billion worth of senior secured debt in the first quarter of 2021, down from $63.2 billion for the first three months of 2020, according to analysts at CreditSights.

Analysts at CreditSights said to expect at least some banks to issue debt this year to meet regulatory needs, after the Federal Reserve opted not to extend an exemption ending March 31 that allowed banks during the pandemic to exclude Treasurys and deposits with the central bank from a calculation of a key bank capital measure, known as the supplementary leverage ratio (SLR).

Bank of America, however, does not plan to use proceeds from its new debt offering to offset the SLR change, according to the person familiar with the dealing.

CreditSights analysts wrote that Bank of America’s regulatory capital levels already included “surpluses such that regulatory needs shouldn’t be an issue,” in a Friday note.



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