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McDonald’s Issues $6.0 Billion in High-Grade Bonds

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Deals overview

US corporates were the biggest issuers of high-grade bonds in the week ending December 4, making up 41.7%, or $14.0 billion, of all issues. US financials were the second biggest, making up 27.8% of all issues. Meanwhile, Yankee issuers issued $6.1 billion in high-grade bonds and made up 18.2% of the total issuance. The week ending December 4 brought the YTD (year-to-date) issuance of high-grade corporate bonds to $1.5 trillion.

Issuances by high-grade corporates form part of mutual funds like the Janus Flexible Bond Fund Class A (JDFAX) and the TIAA-CREF Bond Index Fund Retail Class (TBILX).

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Details of McDonald’s issue

McDonald’s (MCD) issued Baa1/BBB+ rated high-grade bonds worth $6.0 billion in five parts:

  • $750 million in 2.10% three-year notes issued at a spread of 90 basis points over similar-maturity Treasuries
  • $1.0 billion in 2.75% five-year notes issued at a spread of 115 basis points over similar-maturity Treasuries
  • $1.75 billion in 3.70% long ten-year notes issued at a spread of 155 basis points over similar-maturity Treasuries
  • $750 million in 4.70% 20-year bonds issued at a spread of 180 basis points over similar-maturity Treasuries
  • $1.75 billion in 4.88% 30-year bonds issued at a spread of 195 basis points over similar-maturity Treasuries

Details of Wells Fargo and Company’s issue

Wells Fargo and Company (WFC) issued A2/A+ rated high-grade bonds worth $2.5 billion in two parts:

  • $400 million in five-year floating-rate notes issued at three-month LIBOR + 101 basis points
  • $2.1 billion in 2.55% five-year notes at a spread of 93 basis points over similar-maturity Treasuries
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Details of Citigroup’s issue

Citigroup (C) issued Baa1/A- rated high-grade bonds worth $2.0 billion in two parts:

  • $350 million in three-year floating-rate notes issued at three-month LIBOR + 86 basis points
  • $1.7 billion in 2.05% three-year bonds at a spread of 87.5 basis points over similar-maturity Treasuries

Details of Solvay Finance America’s issue

Solvay Finance America, the US-based financial arm of international chemical group Solvay SA, issued Baa2/BBB+ rated high-grade bonds worth $1.6 billion in two parts:

  • $800 million in 3.40% five-year notes at a spread of 175 basis points over similar-maturity Treasuries
  • $800 million in 4.45% ten-year notes at a spread of 225 basis points over similar-maturity Treasuries

The proceeds of the bonds will be used to finance part of the intended acquisition of Cytec Industries (CYT).

Details of Analog Devices’ issue

Analog Devices (ADI) designs and manufactures analog, mixed-signal, and DSP (digital signal processor) integrated circuits used in electronic equipment. It issued A3/A- rated high-grade bonds worth $1.3 billion in two parts:

  • $850 million in 3.9% ten-year notes at a spread of 160 basis points over similar-maturity Treasuries
  • $400 million in 5.3% 30-year bonds at a spread of 225 basis points over similar-maturity Treasuries
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