uploads///Total IG Bond Issuance in WE Jan

Anheuser-Busch Had Record Issuances in High-Grade Bonds Last Week

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Jan. 19 2016, Updated 2:32 p.m. ET

Deals overview

Yankee bond issuers dominated the primary market for high-grade bonds in the week ended January 15, making up 81.2%, or $50.75 billion, of all issues.

US financials and US corporates made up 12.0% and 6.3%, respectively, of all issues. The week ended January 15 brought the year-to-date issuance of high-grade corporate bonds to $92.15 billion.

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 Anheuser-Busch InBev’s issue

Anheuser-Busch InBev (BUD) is a brewing company that issued $46.0 billion in high-grade bonds rated A2/A- on January 13. This was the second-largest high-grade bond issuance on record, via seven parts:

  • $4.0 billion in 1.9% three-year notes issued at a spread of 85 bps over similar-maturity Treasuries
  • $500 million in five-year FRNs (floating rate notes) issued at three-month LIBOR + 126 basis points
  • $7.5 billion in 2.65% five-year notes issued at a spread of 120 bps over similar-maturity Treasuries
  • $6.0 billion in 3.3% seven-year notes issued at a spread of 150 bps over similar-maturity Treasuries
  • $11.0 billion in 3.65% ten-year notes issued at a spread of 160 bps over similar-maturity Treasuries
  • $6.0 billion in 4.7% 20-year bonds issued at a spread of 190 bps over similar-maturity Treasuries
  • $11.0 billion in 4.9% 30-year bonds issued at a spread of 205 bps over similar-maturity Treasuries

Anheuser-Busch plans to use the proceeds of the issuance to back the acquisition of SAB Miller (SBMRY).

Details of Macquarie Bank Limited’s issue

Macquarie Bank Limited is a provider of financial, advisory, investment, and fund management services. It issued Aa2/A-rated high-grade bonds worth $2.5 billion in four parts on January 12:

  • $400 million in three-year FRNs (floating rate notes) issued at three-month LIBOR+118 basis points
  • $600 million in 2.35% three-year notes at a spread of 120 bps over similar-maturity Treasuries
  • $800 million in 2.85% five-year notes issued at a spread of 135 bps over similar-maturity Treasuries
  • $700 million in 3.9% ten-year notes at a spread of 180 bps over similar-maturity Treasuries
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Details of Toronto-Dominion Bank’s issue

Toronto-Dominion Bank (TD) provides a full range of banking services and is headquartered in Toronto, Canada. It issued $1.25 billion in high-grade bonds rated Aa1/AA- on January 14 in two parts:

  • $500 million in three-year FRNs (floating rate notes) issued at three-month LIBOR+84 basis points
  • $750 million in 1.95% three-year notes at a spread of 85 bps over similar-maturity Treasuries

Details of Royal Bank of Canada’s issue

Royal Bank of Canada (RY) issued high-grade bonds worth $1.25 billion on January 11. The single-tranche five-year issue rated Aa3/AA- was raised at a coupon of 2.50%. The high-grade bonds were issued at a spread of 95 bps over similar-maturity Treasuries.

In the final article in this series, we will look at investment-grade fund flows.

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