Dec. 1 (Bloomberg) — Goldman Sachs Group Inc., the biggest U.S. securities firm to convert to a bank, plans to sell 1.5 billion euros ($1.9 billion) of three-year government-backed bonds, making it the second U.S. lender to issue debt in the currency under the guarantee program.

The notes, backed by the Federal Deposit Insurance Corp., will be priced to yield 45 basis points more than the benchmark mid-swap rate, said a person with knowledge of the sale, who declined to be identified before the sale is completed. JPMorgan Chase & Co. raised about $2.8 billion last week from guaranteed bonds denominated in euros and pounds.

“We’ve seen that there is a market for government- guaranteed debt in euros from the U.K. banks,” said Oliver Judd, a credit analyst at Aviva Investors in London. Goldman and JPMorgan are “previous issuers in euros, so they’re known, and the bonds pay a premium to government paper.”

U.S. banks started selling government-backed debt after Washington-based FDIC changed the terms of the guarantee on Nov. 21, to ensure investors would be paid immediately in the event of a default. The rules match those in the U.K., where banks have sold about $34 billion of state-backed debt since Oct. 22.

New York-based Goldman’s bonds will yield about 1.5 percentage points more than similar-maturity German government debt, based on euro swap rates. That compares with the 1.33 percentage-point spread on JPMorgan’s 1.5 billion euros of notes due 2011 that it issued Nov. 27, according to data compiled by Bloomberg.

The three-year swap rate, the cost to exchange fixed interest payments for floating rates, is about 104 basis points higher than government debt yields.

JPMorgan, Morgan Stanley and Goldman have issued $17.25 billion of bonds under the FDIC guarantee.

Moody’s Investors Service will rank the Goldman bonds at Aaa, its top investment-grade rating, and Standard & Poor’s will grade the debt an equivalent AAA.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWVS3U_5sdoY&refer=home

Thanks for your comment…

No, I’m not recommending S&P’s trading risk assessment as a mandated framework…

I included it as a marker for firm level controls…

I wanted to sketch out in the post the various levels that limits or controls are developed for… global, national, firm levels…

I realized after writing the post that it was just a fuzzy sketch of my idea… I think my mind must of been elsewhere when writing it… I should try and focus on the idea and harden it up.

Thanks again, Cate