Investment-grade bonds: Monsanto and energy firms make a splash

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Nov. 26 2019, Updated 3:32 p.m. ET

Investment-grade must-knows

Corporates accounted for about 44% of the total investment-grade debt (LQD) issuance for the week ended June 27. Financial sector (VFH) issuers accounted for ~38%.

Monsanto’s (MON) seven-part $4.5 billion debt offering was the largest primary market issuance in the week ended June 27. The $4.5 billion issue was also the company’s largest bond issue ever. The company plans to use the proceeds to fund part of its share repurchase program (Source: Bloomberg). Let’s take a look at other important deals.

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Other major domestic corporate issuers last week included Williams Partners’ (WPZ) two-part $1.25 billion notes issue. The company plans to use the proceeds for refinancing commercial paper obligations, funding capital expenditure, and general partnership purposes. Other issuers included Marin Marietta Materials with $700 million and Entergy Gulf States Louisiana with $300 million.

Major financial sector issuers included Toronto-Dominion Bank with $1.75 billion, Metropolitan Life Global Funding with $800 million, and Legg Mason with $650 million. The latter two issuers and Monsanto are part of the S&P 500 Index (IVV).

Secondary market trends

Investment-grade mutual funds recorded net inflows for the second consecutive week. Investors pumped in ~$1.5 billion in the week ended June 25. But this was down about 24% compared to the previous week’s net inflows estimated at about $1.96 billion. Year-to-date flows in investment-grade mutual funds as of June 25 were estimated at $42.1 billion (Source: Lipper).

A look at yields

In the next part of this series, we’ll analyze the yields, spreads, and returns on investment-grade corporate bonds over the week. Read on to find out more.

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