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Investment-Grade Corporate Bonds Issued in the Week Ended October 9

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Investment-grade corporate bonds’ deal and volumes

Investment-grade corporate bonds worth $26.55 billion were issued in the primary market in the week to October 9, 2015. The investment-grade corporate bond issuance rose marginally compared to the previous week. The number of issuers rose to 20 from nine in the previous week.

Last week, Treasury yields rose in double-digits nearly across the yield curve. Yields on investment-grade corporate bonds, tending to follow cues from Treasuries, also rose for the week ended October 9.

A rise in yield leads to a fall in mutual funds’ returns like the PIMCO Total Return A (PTTAX) and the MFS Total Return Bond A (MRBFX).

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Major issuers

EDF SA, PepsiCo (PEP), General Motors (GM), Rolls-Royce, and Ford Motor Credit Company—a subsidiary of Ford Motor Company (F) were among the biggest issuers of investment-grade bonds in the week to October 9.

Issuance by quality and maturity

Fixed-rate issues formed 89.8% of the total issuance last week. Floating-rate issues worth $2.7 billion were raised last week.

If we look at the credit ratings of issues, we can see that A rated issuers were the most prolific. They made up 45.8%, or $12.15 billion, of the total issuance. They were followed by BBB-rated issuers. They formed 23.2% of the week’s issuance. AAA- rated papers formed 22.6% of the total issuance. AA-rated papers made up 8.5% of the total issuance. They hadn’t seen any issuance in the previous week.

In terms of maturity, the largest chunk of issuance, making up 40.9% of all the issues, was in the five-year maturity category. It was followed by the ten-year maturity category. It accounted for 18.3% of the total issuance.

The long-term 30-year and greater than 30-year maturity categories made up 10.7% and 1.3%, respectively, of the total issuance last week. However, perpetuals didn’t see any issuance for the second consecutive week.

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

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