uploads///US Investment Grade Bond Market Issuance

Investment-Grade Corporate Bond Issuance Plummets: How Low?



Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $15.0 billion were issued in the primary market in the week ending March 24, 2016. This was the second lowest volume since the week ending February 12, which saw $1.0 billion issued. The issuance was down due to the Easter holiday weekend. The high-grade bond issuance stood at $43.4 billion in the previous week. The number of issuers fell to nine from 26 in the previous week.

Investment-Grade Corporate Bond Issuance Plummets: How Low?

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

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Major issuers

Citigroup (C), Sysco (SYY), FedEx (FDX), and Comcast (CMCSA) were among large issuers of investment-grade bonds in the week ending March 24.

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 accounted for 46.4%, or $20.1 billion, of total issuance. They were followed by AA rated issuers, which accounted for 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 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 the greater-than-30-year category made up 11.2% and 0.3% of the total issuance last week, respectively. Meanwhile, perpetuals made up 0.8% of the total issuance last week.

In the next part of this series, we’ll highlight the major deals and look at pricing, credit ratings, and yields.


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