No Investment-Grade Corporate Bond Issuance due to Rate Hike



Deals and volumes of investment-grade corporate bonds

There was no issuance of investment-grade corporate bonds in the primary market in the week to December 18, 2015. With the rise in interest rates, the investment-grade issuers became worried that the credit risk and default risk may rise. In the previous week, investment-grade corporate bonds worth $32.2 billion were issued. The number of issuers went down to zero from 11 in the previous week.

Last week, yields on investment-grade corporate bonds rose. And as a result, weekly returns of the American Century Diversified Bond Fund – Class A (ABNDX) and the Strategic Advisers Core Income Fund (FPCIX) were down by 0.5% and 0.3%, respectively.

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No issuers in the week ended December 18

There was no issuance in the high grade bond market last week. At the end of the week ended December 18, the year-to-date issuance of high grade corporate bonds stood at $1.5 trillion.

In the previous week, Visa (V) had emerged as the biggest issuer, having issued $16.0 billion worth of high grade bonds. Meanwhile, Schlumberger Holding (SLB) had issued high grade bonds worth $6.0 billion. Credit Suisse Group Funding (Guernsey) Limited, a subsidiary of Credit Suisse AG (CS), and Toronto-Dominion Bank (TD) each had issued high grade bonds worth $2.0 billion. Plus, Marathon Petroleum (MPC) had issued high grade bonds worth $1.5 billion in the previous week.

In the next part of the series, we’ll look at Lipper fund flows data.


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