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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 $25.5 billion were issued in the primary market in the week ended October 23, 2015. Investment-grade corporate bond issuance fell 21.7% that week compared to the previous week. The number of issuers fell from 23 to 16.

Treasury yields rose across the yield curve in the week ended October 23. However, yields on investment-grade corporate bonds, which usually tend to follow cues from Treasuries, remained unchanged that week.

Weekly returns of the Prudential Total Return Bond Fund – Class A (PDBAX) were up 0.05%.

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Major issuers

Citigroup (C), Coca-Cola (KO), JPMorgan Chase & Co. (JPM), Royal Bank of Canada (RY), and FedEx (FDX) were among the biggest issuers of investment-grade bonds in the week ended October 23.

Issuance by quality and maturity

Fixed-rate issues formed 94.9% of the total issuance in the week ended October 23. Floating-rate issues worth $1.3 billion were raised that week.

Looking at the credit ratings of issues, BBB rated issuers were the most prolific. They made up 35.2%, or $9.0 billion, of total issuance. They were followed by AA rated issuers, which formed 28.5% of the week’s issuance. AAA rated papers formed 21.6% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 38.7% of all issues, was in the five-year maturity category. It was followed by the three-year maturity category, which commanded 29.5% of the total issuance. The ten-year maturity category made up 25.0% of the total issuance.

Long-term maturity categories such as 30-year made up 4.9% of the total issuance. The >30-year category didn’t see any issuance that week. Perpetuals didn’t see any issuance for the fourth consecutive week.

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

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