uploads///Total IG Bond Issuance for WE October

Microsoft Led the High-Grade Bond Issuance Last Week

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

Deals overview

US corporates were the biggest issuers of high-grade bonds in the week ending October 30. They accounted for 67.1%, or $25.7 billion, of all the issues. US financials were the second-biggest issuers. They accounted for 16.4% of all the issues. Meanwhile, the market issued $4.8 billion worth of high-grade Yankee bonds. They accounted for 12.6% of the total issuance.

SAS (Supranational, Agencies, and Sovereigns) and emerging market issuers accounted for 2.6% and 1.3% of the total issuance, respectively.

The week ending October 30 brought the YTD (year-to-date) issuance of high-grade corporate bonds to $1.3 trillion.

Issuances by high-grade corporates form part of the mutual funds like the T. Rowe Price New Income Fund (PRCIX) and the Strategic Advisers Core Income Fund (FPCIX).

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Details of Microsoft’s issue

Microsoft (MSFT) issued Aaa/AAA rated high-grade bonds worth $14 billion through seven parts:

  • $1.8 billion in 1.3% three-year notes issued at a spread of 30 basis points over similar-maturity Treasuries
  • $2.3 billion in 2.0% five-year notes issued at a spread of 50 basis points over similar-maturity Treasuries
  • $1.0 billion in 2.7% seven-year notes issued at a spread of 75 basis points over similar-maturity Treasuries
  • $3.0 billion in 3.1% ten-year notes issued at a spread of 95 basis points over similar-maturity Treasuries
  • $1.0 billion in 4.2% 20-year bonds issued at a spread of 125 basis points over similar-maturity Treasuries
  • $3.0 billion in 4.5% 30-year bonds issued at a spread of 150 basis points over similar-maturity Treasuries
  • $1.0 billion in 4.8% 40-year bonds issued at a spread of 180 basis points over similar-maturity Treasuries

Details of ACE INA Holdings’ issue

ACE INA Holdings is one of the world’s largest multi-line property and casualty insurance companies. It issued A3/A rated high-grade bonds worth $5.3 billion in four parts:

  • $1.3 billion in 2.3% five-year notes at a spread of 95 basis points over similar-maturity Treasuries
  • $1.0 billion in 2.9% seven-year notes at a spread of 115 basis points over similar-maturity Treasuries
  • $1.5 billion in 3.4% 10.5-year bonds at a spread of 135 basis points over similar-maturity Treasuries
  • $1.5 billion in 4.4% 30-year bonds at a spread of 150 basis points over similar-maturity Treasuries
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Details of PNC Financial’s issue

PNC Bank National Association is a subsidiary of the PNC Financial Services Group (PNC). It issued A2/A rated high-grade bonds worth $1.8 billion in two parts:

  • $1.0 billion in 1.8% three-year notes at a spread of 78 basis points over similar-maturity Treasuries
  • $750 million in 2.5% five-year notes at a spread of 95 basis points over similar-maturity Treasuries

Details of Mead Johnson Nutrition’s issue

Mead Johnson Nutrition (MJN) manufactures nutrition formulas for babies and children. It issued Baa1/BBB- rated high-grade bonds worth $1.5 billion in two parts:

  • $750 million in 3.0% five-year notes at a spread of 150 basis points over similar-maturity Treasuries
  • $750 million in 4.1% ten-year notes at a spread of 195 basis points over similar-maturity Treasuries
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Details of Hyundai Capital America’s issue

Hyundai Capital America is a part of the Hyundai Motor Group family of companies. It supports the financial services needs of Hyundai Motor America and KIA Motors America. It issued Baa1/A- rated high-grade bonds worth $1.5 billion in two parts:

  • $750 million in 2.4% three-year notes at a spread of 150 basis points over similar-maturity Treasuries
  • $750 million in 3.0% five-year notes at a spread of 160 basis points over similar-maturity Treasuries

Details of Capital One Financial’s issue

Capital One Financial (COF) is a financial services company. It offers credit cards, checking and savings accounts, auto loans, rewards, and online services to its clients. It issued high-grade bonds worth $1.5 billion last week. The single-tranche Baa1/BBB- rated ten-year subordinated notes were issued at a coupon rate of 4.2%. The high-grade bonds were issued at a spread of 215 basis points over similar-maturity Treasuries.

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