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The Results Are in, But Who Issued the Most High-Grade Bonds?

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Updated

Deals overview

Supranational, Agency, and Sovereign dominated the primary market for high-grade bonds in the week ended February 5, making up 50.7% or $6.2 billion, of all issues. US Corporates made up 36.6% of all issues while EM (emerging market) issuers commanded 7.4% of total issuance.

The week ending February 5 brought the year-to-date issuance of high-grade corporate bonds to ~$181.6 billion.

Issuances by high-grade corporates form part of mutual funds like the Hartford Total Return Bond HLS Fund Class IA (HIABX) and the TIAA-CREF Bond Index Fund Retail Class (TBILX).

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Details of Home Depot’s issue

Home Depot (HD) is the world’s largest home improvement specialty retailer. It issued A2/A rated high-grade bonds worth $3 billion on February 3 via three parts:

  • $1.4 billion in 2.0% five-year notes issued at a spread of 80 bps over similar-maturity Treasuries
  • $1.3 billion in 3.0% ten-year notes issued at a spread of 120 bps over similar-maturity Treasuries
  • $350 million in ~4.3% 30-year on-tap bonds issued at a spread of 150 bps over similar-maturity Treasuries

National Rural Utilities’ issue

National Rural Utilities Cooperative Finance Corporation is a nonprofit finance cooperative created and owned by America’s electric cooperative network. It issued A1/A rated high-grade bonds worth $700 million in two parts on February 3:

  • $350 million in ~1.7% three-year notes issued at a spread of 80 bps over similar-maturity Treasuries
  • $300 million in 2.7% seven-year notes issued at a spread of 115 bps over similar-maturity Treasuries
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Starbucks’s issue

Starbucks Corporation (SBUX) is the premier roaster and retailer of specialty coffee in the world. It issued high-grade bonds worth $500 million on February 1. The single-tranche A2/A- rated five-year issue was raised at a coupon of 2.1%. The high-grade bonds were issued at a spread of 75 bps over similar-maturity Treasuries.

The company plans to use the net proceeds from the offering for general corporate purposes. Goldman Sachs (GS), J.P. Morgan (JPM), and Morgan Stanley (MS) served as the joint book-runners of the offering.

Praxair’s issue

Praxair (PX) produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings. It issued high-grade bonds worth $275 million on February 4. The single-tranche A2/A rated ten-year on-tap issue was raised at a coupon of 1.2%. The high-grade bonds were issued at a spread of 108 bps over similar-maturity Treasuries. The company plans to use the net proceeds from the offering for general corporate purposes.

In the next and final part of this series, we’ll look at the investment-grade bond fund flows from the week ending February 5.

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