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Issuance Matters: More on Investment-Grade Corporate Bonds from the Week Ending February 5

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Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth ~$12.2 billion were issued in the primary market in the week ending February 5, 2016. This was lower than the $23.1 billion we saw issued the previous week, and the number of issuers fell to 12 from 14 the previous week.

However, last week, the yield on investment-grade corporate bonds nudged up. As a result, the weekly returns of the T. Rowe Price New Income Fund (PRCIX) and the Janus Flexible Bond Fund Class A (JDFAX) were flat.

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Major Issuers

Home Depot (HD), National Rural Utilities Cooperative Finance Corporation, Starbucks (SBUX), and Praxair (PX) were among large issuers of investment-grade bonds in the week ending February 5.

Issuance by quality and maturity

Fixed-rate issues formed 94.3% of the total issuance while floating-rate issues worth $0.7 billion were raised in the week ending February 5. As for the credit ratings of issues, AAA-rated issuers were the most prolific, making up 46.6%, or $5.7 billion, of the total issuance. These were followed by A-rated issuers, which formed 40.7% of the week’s issuance. BBB-rated papers formed 9.4% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 38.9% of all issues, was in the five-year maturity category. This was followed by the three-year maturity category, which commanded 35.6% of the total issuance, and the ten-year maturity category, which made up 12.9% of the total issuance that week.

Meanwhile, long-term maturity categories, such as the 30-year, made up 2.9% of the total issuance, while >30-year category did not see any issuance for the fourth consecutive week. Perpetuals made up 1.2% of total issuance last week.

In the next part of this series, we’ll highlight the major deals from the week ending February 5, including pricing, credit rating, and yields.

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