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Investment-Grade Corporate Issuers Made a Big Comeback Last Week

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Investment-grade corporate bonds: Deals and volumes

Investment-grade corporate issuance in the primary market jumped to $54.775 billion in the week ended May 8, 2015. There was no issuance on May 8. The weekly total was 114.2% higher than the previous week’s issuance, which was worth $25.575 billion. This was the fourth week so far this year in which primary market corporate bond issuance has topped a volume of $50 billion. Last week, the number of issuers rose to 26—double the number in the previous week.

After having stayed away following the monetary policy statement that was released the previous week, investment-grade corporate issuers returned to the primary market in full force. As a result, borrowing activity picked up substantially from the previous week.

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Last week, Treasury yields mostly rose, and investment-grade corporate bonds yields did too—though the rise was muted and diminished as the week progressed. The increased yields led to a fall for the iShares Barclays 20+ Year Treasury Bond ETF (TLT). Meanwhile, the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD) posted a small rise.

AbbVie (ABBV), Shell International, a subsidiary of Royal Dutch Shell (RDS.A), Apple (AAPL), and Enterprise Products (EPD) were the biggest issuers of investment-grade bonds in the week ended May 8.

Issuance by quality and maturity

Fixed-rate issues formed 96.8% of all issuances last week. Looking at the credit ratings of issues, BBB-rated issuers were the most prolific. They made up 55.4% of the total, representing $30.325 billion in issuance. These were followed by AA-rated issuers, which formed 32.9% of the week’s total issuance.

The largest chunk of issuance, making up 29.8% of all issues, was in the ten-year maturity category. This was followed by the 30-year maturity category, representing 24.1% of issuances. The over-30-year maturity category saw issuances worth $400 million, after hitting $1.25 billion in the previous week. Perpetuals didn’t see any issuance last week, for the second consecutive week.

In the next part of this series, we’ll highlight the major deals in the week ended May 8—including pricing, credit rating, and yields.

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