uploads///US Investment Grade Bond Market Issuance

Investment-Grade Corporate Bond Issuance Rises


Sep. 30 2015, Updated 4:00 p.m. ET

Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $32.35 billion were issued in the primary market in the week ending September 25, 2015. Investment-grade corporate bond issuance rose last week after having dropped in the previous week. The number of issuers rose to 26 from 12 in the previous week.

Last week, Treasury yields rose nearly across the yield curve. Yields on investment-grade corporate bonds, which tend to follow cues from Treasuries, also rose for the week ending September 25.

A rise in yield leads to a fall in returns of mutual funds such as the MFS Total Return Bond A (MRBFX).

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Major issuers

UBS Group Funding (Jersey) Ltd (UBS), Wells Fargo & Company (WFC), Sysco Corporation (SYY), Citigroup (C), Applied Materials (AMAT), and Svenska Handelsbanken AB were among the biggest issuers of investment-grade bonds in the week ending September 25.

Issuance by quality and maturity

Fixed-rate issues made up 90.6% of the total issuance for the week. Floating-rate issues worth $3.05 billion were raised last week.

In terms of credit rating, A rated issuers were the most prolific. They made up 43.9%, or $14.2 billion, of total issuance. They were followed by BBB rated issuers, which formed 37.7% of the week’s issuance. AAA rated papers, which had not seen any issuance for the previous two weeks, constituted 7.0% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 51.2% of all issues, was in the ten-year maturity category. It followed by the five-year maturity category, which commanded 27.4% of the total issuance. The three- and seven-year maturity categories did not see any issuance.

Long-term maturity categories such as 30-year, >30-year, and perpetuals, made up 6.8%, 3.1%, and 3.9%, respectively, of the total issuance last week. However, these categories had not seen any issuance in the previous week.

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


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