uploads///Total IG Bond Issuance for WE April

US Financials Return to the High-Grade Primary Market

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Apr. 28 2015, Updated 1:06 a.m. ET

Deals overview

After several weeks of dominance by Yankee bonds, US financials hit the primary market in a big way in the week ending April 17. Bonds issued by investment-grade US financial companies made up 33.9% of all issues. Yankee bonds accounted for 16.9% of the total, with the entire quantum raised by financial companies.

On the other hand, US corporates accounted for just 2.1% of all issues in the week. The week ending April 17 brought the year-to-date issuance of corporate investment-grade debt to $497.31 billion.

Issuances by investment-grade corporates form part of the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD). Treasuries—the other investment-grade bond category—are tracked by ETFs like the iShares 1–3 Year Treasury Bond ETF (SHY).

Last week, US financial major Bank of America Corporation (BAC) issued bonds worth $5.0 billion, making it the highest issuer in the period.

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Details of Bank of America’s issue

Bank of America Corporation (BAC) issued bonds worth $5.0 billion. The three-tranche issue consisted of:

  • $2.0 billion in 2.25% Baa2/A- rated five-year notes at a spread of 100 bps over similar maturity Treasuries
  • $2.5 billion in 3.95% Baa3/BBB+ rated ten-year notes at a spread of 210 bps over similar maturity Treasuries
  • $500 million in 4.75% Baa3/BBB+ rated 30-year notes at a spread of 220 bps over similar maturity Treasuries

Details of Standard Chartered’s issue

Standard Chartered Plc is a provider of banking products and financial services to clients in Asia, Africa, and the Middle East. It issued investment-grade bonds worth $3.0 billion. The A2/A- rated four-tranche issue consisted of:

  • $250 million in three-year FRNs (floating rate notes) at three-month LIBOR + 64 basis points
  • $750 million in 1.70% three-year notes at a spread of 85 bps over similar maturity Treasuries
  • $1.25 billion in 2.25% five-year notes at a spread of 90 bps over similar maturity Treasuries
  • $750 million in 3.20% ten-year notes at a spread of 130 bps over similar maturity Treasuries

Details of other issues

Goldman Sachs (GS) raised $2.0 billion in Ba2/BB+ rated perpetual bonds. The sale had a preferred coupon of 5.375%.

JPMorgan Chase (JPM) issued bonds worth $2.0 billion, a Ba1/BBB rated issue was of perpetual bonds, which were preferred at a coupon of 5.30%.

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