uploads///US Investment Grade Bond Market Issuance

Why Did Investment-Grade Corporate Bonds’ Issuance Rise?


Nov. 3 2015, Published 8:55 a.m. ET

Deals and volumes

There were investment-grade corporate bonds worth $38.2 billion issued in the primary market in the week ending October 30, 2015. The issuance was the highest since September 18, 2015. Investment-grade corporate bond issuance rose 50.1% last week from the previous week. The number of issuers rose to 23 from 16 in the previous week.

Last week, Treasury yields rose across the yield curve. However, yields on investment-grade corporate bonds, which usually tend to follow cues from Treasuries, also rose in the week ending October 30.

Meanwhile, the Prudential Total Return Bond Fund – Class A (PDBAX) fell 0.45% last week.

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Major issuers

Microsoft (MSFT), ACE INA Holdings, PNC Bank National Association—a subsidiary of the PNC Financial Services Group (PNC), Mead Johnson Nutrition (MJN), Hyundai Capital America, and Capital One Financial (COF) were among the biggest issuers of investment-grade bonds in the week ending October 30.

Issuance by quality and maturity

Fixed-rate issues formed 94.9% of the total issuance last week. There were floating-rate issues worth $1.3 billion raised last week.

Looking at the credit ratings of the issues, AAA-rated issuers were the most prolific. They made up 36.6%, or $14.0 billion, of the total issuance. A-rated issuers formed 33.2% of the week’s issuance. BBB-rated issuers formed 20.9% of the total issuance.

In terms of maturity, the largest chunk of issuance, accounting for 28.9% of all the issues, was in the ten-year maturity category. The five-year maturity category was next. It commanded 21.3% of the total issuance. The three-year maturity category made up 17.0% of the total issuance.

Long-term maturity categories like the 30-year and greater than 30-year made up 20.5% and 3.7%, respectively, of the total issuance. Perpetuals didn’t see any issuance for the fifth consecutive week.

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


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