Merrill, other banks tap debt markets after losses

NEW YORK (Reuters) - Investment banks including Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz), UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) sold more than $13 billion in new debt on Tuesday in a move to shore up their balance sheets.

Financial firms "posted losses which eroded their capital base," said Manny Labrinos, fixed-income portfolio manager at Nuveen Investments in Los Angeles. "That's the reason for having to raise this capital."

Banks have been raising capital through sales of debt and preferred shares after writing down the value of securities held on their balance sheets, which includes mortgage-backed debt and corporate loans.

Merrill Lynch on Tuesday sold $7 billion in debt, the second largest investment-grade sale this year, according to Dealogic. General Electric Capital Corp, a unit of General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz), last week sold $8.5 billion of debt in the year's biggest sale to date.

The bank was also in the market with a $2.55 billion sale of preferred shares, according to International Financing Review, a Thomson Reuters publication.

Merrill last week recorded its third straight quarterly loss and said it planned to cut 2,900 more jobs after taking more than $6.5 billion in write-downs on subprime mortgages and other risky assets. For details, see ID:nN17461640

The bond sale included $1.5 billion of five-year notes priced at 3.25 percentage points over U.S. Treasuries, and $5.5 billion in 10-year notes priced at 3.20 percentage points over Treasuries, said market sources.

Wachovia also sold $3.5 billion on Tuesday, while UBS sold $2.5 billion and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) sold $1.5 billion.

Citigroup (C.N: Quote, Profile, Research, Stock Buzz) on Monday sold $6 billion in preferred shares, following a similar $6 billion sale by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) last week.