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Investment-Grade Corporate Bond Issuance Fell Slightly Last Week

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Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $43.4 billion were issued in the primary market in the week to March 18, 2016, which was the fifth highest issuance year-to-date (or YTD). This was lower as compared to bonds worth $44.6 billion, which were issued in the previous week. The number of issuers fell to 26 from 35 in the previous week.

Last week, yields on investment-grade corporate bonds fell. As a result, the weekly returns of the MFS Total Return Bond Fund – Class A (MRBFX) and the Janus Flexible Bond Fund – Class A (JDFAX) rose.

Investment-Grade Corporate Bond Issuance Fell Slightly Last Week

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Major issuers

Newell Rubbermaid (NWL), JPMorgan Chase (JPM), Apple (AAPL), and Anadarko Petroleum (APC) were among the large issuers of investment-grade bonds in the week to March 18.

Issuance by quality and maturity

Fixed-rate issues formed 91.0% of the total issuance while floating-rate issues worth $3.9 billion were raised last week. Looking at the credit ratings of issues, BBB rated issuers were the most prolific. They made up 46.4%, or $20.1 billion, of total issuance. They were followed by AA rated issuers, which formed 27.7% of the week’s issuance. A-rated papers formed 22.3% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 34.5% of all issues, was in the ten-year maturity category. It was followed by the five-year maturity category, which commanded 29.7% of the total issuance. The three-year maturity category made up 11.4% of the total issuance last week.

Long-term maturity categories such as the 30-year and over 30-year category made up 11.2% and 0.3%, respectively, of the total issuance last week. Meanwhile, perpetuals made up 0.8% of the total issuance last week.

In the next part of the series, we’ll highlight the major deals including pricing, credit rating, and yields.

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