uploads///Total IG Bond Issuance for WE June

Petrobras Issues 100-Year Tenure High-Grade Bonds

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About the deals

US corporates were the largest issuers of high-grade bonds in the week ending June 5, after US financial companies took the spot the previous week. Last week, high-grade bonds issued by US corporates made up 36.5% of all the issues, while US financials accounted for 17.3% of all the issues. Emerging market issuers formed 20.4% of all high-grade corporate bonds issued last week, while Yankee bond issuances made up 19.7% of the total issuance. The week ending June 5 brought the YTD (year-to-date) issuance of corporate high-grade bonds to $785.4 billion.

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

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Petrobras’ issue

Brazil-based energy major Petróleo Brasileiro S.A., or Petrobras (PBR), issued bonds worth $2.5 billion—the joint largest issuance last week. The single-tranche Ba2/BBB- rated bonds were issued for 100 years with a coupon of 6.85%. The final yield on the offering was set at 8.45%.

Citigroup’s issue

Citigroup (C) also issued high-grade bonds worth $2.5 billion. The single-tranche Baa3/BBB+ rated ten-year subordinated debt issue carried a coupon of 4.4%. It was issued at a spread of 208 bps (basis points) over similar maturity Treasuries.

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Precision Castparts’ issue

Metal part manufacturer Precision Castparts (PCP) raised A2/A- rated high-grade bonds worth $2 billion in four tranches:

  • $550 million in 2.25% five-year notes at a spread of 70 bps over similar maturity Treasuries
  • $850 million in 3.25% ten-year notes at a spread of 110 bps over similar maturity Treasuries
  • $275 million in 4.20% 20-year bonds at a spread of 130 bps over similar maturity Treasuries
  • $325 million in 4.375% 30-year bonds at a spread of 145 bps over similar maturity Treasuries

Marathon Oil’s issue

Energy company Marathon Oil (MRO) issued high-grade bonds worth $2 billion. The Baa1/BBB rated three-tranche issue consisted of:

  • $600 million in 2.70% five-year notes at a spread of 120 bps over similar maturity Treasuries
  • $900 million in 3.85% ten-year notes at a spread of 170 bps over similar maturity Treasuries
  • $500 million in 5.20% 30-year bonds at a spread of 225 bps over similar maturity Treasuries

Bank of Nova Scotia’s issue

Bank of Nova Scotia (BNS) issued Aa2/A+ rated bonds worth $1.35 billion in two tranches:

  • $500 million in three-year FRNs (floating rate notes) at three-month LIBOR + 47 bps
  • $850 million in 1.7% three-year notes at a spread of 70 bps over similar maturity Treasuries
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