May 7 (Reuters) - U.S. lender Truist Financial ( TFC )

has sold $27.7 billion of low-yielding investments to focus on

better alternatives that offer higher rates of interest, the

bank said on Tuesday.

The sale would result in an after-tax loss of $5.1 billion

in the second quarter, the bank said.

Lenders that bought bonds during the near zero-interest rate

era have been looking to offload those securities and reinvest

the proceeds into higher-yielding alternatives.

Rate hikes by the Federal Reserve have also created an

incentive for banks to reposition the balance sheet.

Truist's transaction, along with the sale of its insurance

brokerage unit, left the lender with $39.4 billion in capital to

deploy for investment.

The lender had invested nearly $18.7 billion of the total in

short-duration securities, while the remaining would be held as

cash, it said.

The repositioning would generate 5.27% in yield for Truist,

much higher than the 2.80% the offloaded investments would have

offered.