uploads///US Investment Grade Bond Market Issuance

Investment-Grade Corporate Bond Issuance Resumes after Lull

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Jul. 16 2015, Updated 9:07 a.m. ET

Deals and volumes for investment-grade corporate bonds

Investment-grade corporate bonds worth $39.225 billion were issued in the primary market in the week ended July 10, 2015. This was several times higher than issuance worth $500 million in the previous week. The number of issuers jumped to 17 from a solitary issuer the week before.

Last week, Treasury yields (SHY) rose nearly across the yield curve from the previous week’s level. Investment-grade corporate bonds, which tend to follow cues from Treasuries, also saw yields rising. The sharpest rise came on the penultimate and last trading days of the week. A rise in yields led to a fall in ETFs like the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD).

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Major issuers

The following were among the biggest issuers of investment-grade bonds in the week ended July 10.

  • Charter Communications (CHTR)
  • American International Group (AIG)
  • General Motors Financial Co., a subsidiary of General Motors (GM)
  • Toyota Motor Credit, a subsidiary of Japanese auto giant Toyota Motor (TM)
  • Deere & Company (DE)

Issuance by quality and maturity

Fixed-rate issues formed 92% of the total issuance last week. Floating-rate issues worth $3.15 billion were raised last week, the highest since March 6, 2015. Looking at the credit ratings of issues, BBB rated issuers continued to be the most prolific. They made up 59.5%, or $23.325 billion, of the total issuance. They were followed by AAA rated issuers, which formed 22.3% of the week’s issuance.

In terms of maturity, the largest chunk of issuance, which made up 26.3% of all issues, was in the three-year maturity category. It was followed by the ten-year maturity category, which commanded 23.9% of the total issuance.

Bonds of five-year maturity formed 20.3% of the total issuance. The >30-year maturity category saw issuance after three weeks of a lull. The quantum was $500 million. Meanwhile, perpetuals didn’t see any issuance for the fourth successive week.

In the next part of this series, we’ll highlight the major deals, including pricing, credit rating, and yields.

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