Jan 31 - The largest U.S. banks have generally moved quickly to address their 2013 funding objectives in January, issuing at least $25 billion in senior long-term debt this month, bolstering already strong liquidity positions. Fitch Ratings views this as an opportunistic response to the persistence of very low long-term borrowing costs, even though scheduled debt maturities for the five largest institutions are lower in aggregate by $130 billion compared with 2012. Major U.S. banks generally have ramped up issuance in January to take advantage of narrower bond spreads and still low all-in borrowing costs for long-term debt. With Treasury yields backing up in January (10-year yields now near 2%), we believe more banks may be encouraged to tap the capital markets early in the year to address 2013 maturities. In aggregate, the top five U.S. banks face $152 billion in maturing long-term debt this year (down from $282 billion in 2012). We expect large U.S. banks to continue working down long-term debt balances in 2013, though likely not at the pace seen in previous years. In part this reflects the lower volume of scheduled maturities this year after the last Temporary Liquidity Guarantee Program (TLGP) maturities were addressed in 2012. In addition, we believe major bank management teams regard their liquidity positions as generally solid, with good coverage of upcoming funding needs from cash and liquid assets on the balance sheet. As of year-end 2012, we estimate that the five largest U.S. banks' aggregate ratio of liquidity reserves to short-term debt and 2013 maturities stood at an ample 466%. Another factor supporting issuance volumes is the desire by banks to maintain large amounts of "bail-in" debt at the holding company level in anticipation of the eventual implementation of Title 2 of the Dodd-Frank Act, which will set guidelines for the Orderly Liquidation Authority (OLA) in the event of a bank failure. The question of how much bail-in debt should be held is still being discussed by global regulators, and potential metrics have not been determined. The aggregate ratio of total long-term debt to total assets for the top five banks stood at about 13% as of Dec. 31. The bulk of this debt is issued at the holding company level. We estimate that year-to-date long-term debt issuance by the five largest banks already accounts for approximately 16% of 2013 debt maturities. The largest amount of January issuance has been completed by JPM and Goldman Sachs , both of which have priced $8 billion of long-term debt so far this month. Among the top five institutions, Bank of America faces the highest long-term debt maturities, with $49 billion in current maturities (down from $97 billion in 2012). However, with $6 billion issued so far in 2013 and more than $370 billion in cash and highly liquid securities on the balance sheet, Bank of America is well positioned from a liquidity and funding perspective. As large bank bond spreads have tightened relative to comparably rated corporates, all-in borrowing costs have dropped to levels not seen since the financial crisis. New five-year issues this month are generally pricing near 2.0%, lowering debt service costs by replacing comparable maturing five-year obligations with coupons averaging 5.25%, according to our estimates. Over the longer term, assuming some material increases in interest rates, refinancing requirements for low-cost debt now being issued could be a negative factor if borrowing rate differentials flip meaningfully. However, large banks appear to recognize this risk and have taken a cautious approach to the laddering of future maturities. In addition, annual debt maturities will likely remain at far lower levels than in prior years as banks have generally worked down their balances of long-term debt considerably since the crisis and have greatly reduced reliance on short-term unsecured debt. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.