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Investment-Grade Corporate Bond Issuance Fell Last Week

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Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $26.275 billion were issued in the primary market in the week to October 2, 2015. Investment-grade corporate bond issuance fell last week after having risen in the previous week. The number of issuers fell to nine from 26 in the previous week.

Last week, Treasury yields fell in double digits nearly across the yield curve. Yields on investment-grade corporate bonds, which tend to follow cues from Treasuries, also fell for the week ended October 2. A fall in yields leads to a rise in returns of mutual funds like the MFS Total Return Bond A (MRBFX).

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Major issuers

Hewlett-Packard Enterprise Company, a subsidiary of Hewlett-Packard Company (HPQ), Enbridge Energy Partners (EEP), WEA Finance, a subsidiary of Westfield America, PPL Electric Utilities, a subsidiary of PPL Corporation (PPL), and PECO Energy Company, a subsidiary of Exelon Corporation (EXC), were among the biggest issuers of investment-grade bonds in the week to October 2.

Issuance by quality and maturity

Fixed-rate issues formed 97.7% of the total issuance last week. Floating-rate issues worth $0.6 billion were raised last week.

BBB-rated issuers were the most prolific. They made up 68.8%, or $18.08 billion, of total issuance. They were followed by AA-rated issuers, which formed 28.5% of the week’s issuance. A-rated papers formed 2.7% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 34.8% of all issues, was in the three-year maturity category. It was followed by the five-year maturity category, which commanded 17.1% of the total issuance. The seven-year category, which had not seen any issuance for the previous two weeks, formed 9.9% of total issuance.

The 30-year and >30-year long-term maturity categories made up 12.2% and 3.3%, respectively, of the total issuance last week. However, perpetuals did not see any issuance last week.

In the next part of the series, we’ll highlight the major deals of last week.

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