uploads///US Investment Grade Bond Market Issuance

Investment-Grade Corporate Bond Issuance Records Highest Issuance

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Mar. 1 2016, Updated 4:04 p.m. ET

Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $51.4 billion were issued in the primary market in the week ended February 26, 2016. This was the highest recorded in February and higher compared to bonds worth $34.0 billion issued in the previous week. The number of issuers increased to 28 from 16 in the previous week.

Last week, yields on investment-grade corporate bonds fell. 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

Johnson & Johnson (JNJ), Cisco Systems (CSCO), Mitsubishi UFJ Financial Group (MTU), Wells Fargo (WFC), and Goldman Sachs (GS) were among the large issuers of investment-grade bonds in the week ended February 26.

Issuance by quality and maturity

Fixed-rate issues formed 89.6% of the total issuance, while floating-rate issues worth $5.4 billion were raised last week.

Looking at the credit ratings of issues, A rated issuers were the most prolific. They made up 49.6%, or $25.5 billion, of total issuance. They were followed by BBB rated issuers, which formed 31.0% of the week’s issuance. AAA rated papers formed 18.5% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 41.1% of all issues, was in the five-year maturity category. It was followed by the ten-year maturity category, which commanded 32.3% of the total issuance. The three-year maturity category made up 8.5% of the total issuance last week.

Long-term maturity categories such as the 30-year and >30-year categories made up 8.3% and 2.0% of the total issuance, respectively, last week. Perpetuals didn’t see any issuance for the third consecutive week.

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

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