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UBS Group Funding Issues $4.3 Billion Worth of High-Grade Bonds

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Deals Overview

US corporates were the biggest issuers of high-grade bonds in the week ending September 25, making up 29.8%, or $9.65 billion, of all issues. Yankees were the second biggest issuers, making up 28.0% of all issues and accounting for issuance worth $9.05 billion.

Meanwhile, US financials accounted for 22.4% of all issues. Supranationals, Agencies and Sovereigns, or SAS, returned to the primary market after no issuance for two consecutive weeks and accounted for 11.9% of all issuance.

The week ending September 25 brought the year-to-date issuance of high-grade corporate bonds to $1.192 trillion.

Issuances by high-grade corporates form part of mutual funds such as the Vanguard Total Bond Market Index Inv (VBMFX) and the PIMCO Total Return A (PTTAX).

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Details of UBS Group Funding (Jersey) Limited’s issue

UBS Group Funding (Jersey) Limited (UBS), via its subsidiaries, issued BBB+ rated high-grade bonds worth $4.3 billion in three parts:

  • $300 million in five-year FRNs (floating rate notes) at three-month LIBOR + 144 basis points
  • $1.5 billion in 2.920% five-year notes at a spread of 150 basis points over similar-maturity Treasuries
  • $2.5 billion in 4.125% ten-year notes at a spread of 195 basis points over similar-maturity Treasuries

Details of Wells Fargo & Company’s issue

Wells Fargo & Company (WFC) issued bonds worth $2.5 billion last week. The single-tranche A2/A+ rated bonds were issued for ten years with a coupon rate of 3.55%. The high-grade bonds were issued at a spread of 137.5 basis points over similar-maturity Treasuries.

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Details of Sysco Corporation’s issue

Sysco Corporation (SYY), which distributes food products and a wide variety of non-food products to both independent and chain restaurant customers and to other healthcare and educational facilities, issued A2/A- rated high-grade bonds worth $2.0 billion in three parts:

  • $750 million in 2.60% five-year notes at a spread of 120 basis points over similar-maturity Treasuries
  • $750 million in 3.75% ten-year notes at a spread of 160 basis points over similar-maturity Treasuries
  • $500 million in 4.85% 30-year bonds at a spread of 190 basis points over similar-maturity Treasuries

Details of Citigroup’s issue

Citigroup (C) issued bonds worth $2.0 billion last week. The single-tranche Baa3/BBB+ rated bonds were issued for 12 years with a coupon rate of 4.45%. The high-grade bonds were issued at a spread of 235 basis points over similar-maturity Treasuries.

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Details of Applied Materials’s issue

Applied Materials (AMAT) issued A3/A- rated high-grade bonds worth $1.8 billion in three parts:

  • $600 million in 2.625% five-year notes at a spread of 115 basis points over similar-maturity Treasuries
  • $700 million in 3.900% ten-year notes at a spread of 175 basis points over similar-maturity Treasuries
  • $500 million in 5.100% 20-year bonds at a spread of 210 basis points over similar-maturity Treasuries

Details of Svenska Handelsbanken AB

Swedish bank Svenska Handelsbanken AB issued Aa2/AA- rated high-grade bonds worth $1.5 billion in two parts:

  • $250 million in five-year FRNs (floating rate notes) at three-month LIBOR + 93 basis points
  • $1.25 billion in five-year notes at a spread of 98 basis points over similar-maturity Treasuries
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