uploads///US Investment Grade Bond Market Issuance

Investment-Grade Corporate Bond Issuance Fell Marginally

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Deals and volumes

Investment-grade corporate bonds worth $32.8 billion were issued in the primary market in the week to November 20, 2015. The investment-grade corporate bond issuance fell 0.4% from the previous week. However, the number of issuers fell to 26 compared to 28 in the previous week.

Last week, the yields on investment-grade corporate bonds fell. As a result, the weekly returns of the John Hancock Bond Fund – Class A (JHNBX) and the Strategic Advisers Core Income Fund (FPCIX) rose 0.13% and 0.22%, respectively.

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Major issuers

Lockheed Martin (LMT), Westpac Banking, Novartis Capital—a subsidiary of Novartis AG (NVS), Duke Energy (DUK), and General Motors Financial Company—a wholly owned subsidiary of General Motors Company (GM) were among the biggest issuers of investment-grade bonds in the week to November 20.

Issuance by quality and maturity

Fixed-rate issues formed 97.0% of the total issuance last week. Floating-rate issues worth $1.0 billion were raised last week.

Looking at the credit ratings of the issues, BBB rated issuers were the most prolific. They accounted for 48.5%, or $15.9 billion, of the total issuance. AA rated issuers were next. They formed 32.3% of the week’s issuance. A rated papers formed 17.7% of the total issuance.

In terms of maturity, the ten-year maturity category accounted for the largest chunk of the issuance at 33.8% of all the issues. The five-year maturity category was next with 30.6% of the total issuance. The three-year maturity category accounted for 12.3% of the total issuance.

Long-term maturity categories like the 30-year accounted for 19.4% of the total issuance while the greater than 30-year category didn’t see any issuance last week. Perpetuals accounted for 2.3% of the total issuance last week. They didn’t witness any issuance in the previous week.

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

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