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Johnson & Johnson Led High-Grade Bond Market Last Week

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Deals overview

US corporates dominated the primary market for high-grade bonds in the week ended February 26, 2016. They made up 57.1%, or $29.3 billion, of all issues. US financials made up 25.2% of all issues, while Yankee issuers made up 12.7% of total issuance.

The week ended February 26 brought the year-to-date issuance of high-grade corporate bonds to $226.5 billion.

Issuances by high-grade corporates form part of mutual funds such as the Hartford Total Return Bond HLS Fund – Class IA (HIABX) and the Prudential Total Return Bond Fund – Class A (PDBAX).

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Details of Johnson & Johnson’s issue

Johnson & Johnson (JNJ), through its family of companies, is engaged in the research and development, manufacture, and sale of a broad range of products in the healthcare field. It issued Aaa/AAA rated high-grade bonds worth $7.5 billion in seven parts on February 25, 2016:

  • $300 million in three-year FRNs (floating rate notes) issued at three-month LIBOR ( London interbank offered rate) + 27 basis points (or bps)
  • $700 million in 1.1% three-year notes issued at a spread of 27 bps over similar-maturity Treasuries
  • $1.0 billion in 1.7% five-year notes issued at a spread of 47 bps over similar-maturity Treasuries
  • $500 million in 2.1% seven-year notes issued at a spread of 62 bps over similar-maturity Treasuries
  • $2.0 billion in 2.5% ten-year notes issued at a spread of 75 bps over similar-maturity Treasuries
  • $1.0 billion in 3.6% 20-year bonds issued at a spread of 100 bps over similar-maturity Treasuries
  • $2.0 billion in 3.7% 30-year bonds issued at a spread of 115 bps over similar-maturity Treasuries

Details of Cisco Systems’ issue

Cisco Systems (CSCO) issued A1/AA- rated high-grade bonds worth $7.0 billion on February 22, 2016, through six parts:

  • $1.0 billion in two-year FRNs issued at three-month LIBOR + 60 bps
  • $1.3 billion in 1.4% two-year notes issued at a spread of 65 bps over similar-maturity Treasuries
  • $1.0 billion in 1.6% three-year notes issued at a spread of 70 bps over similar-maturity Treasuries
  • $2.5 billion in 2.2% five-year green notes issued at a spread of 100 bps over similar-maturity Treasuries
  • $500 million in 2.6% seven-year notes issued at a spread of 110 bps over similar-maturity Treasuries
  • $750 million in 3.0% ten-year notes issued at a spread of 120 bps over similar-maturity Treasuries
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Details of Mitsubishi UFJ Financial Group’s issue

Japan’s Mitsubishi UFJ Financial Group (MTU) manages the affairs of its subsidiaries within the group and the business of the group as a whole along with all relevant ancillary business. It issued A1/A rated high-grade bonds worth $5.0 billion in three parts on February 23, 2016:

  • $400 million in five-year FRNs issued at three-month LIBOR + 188 bps
  • $2.1 billion in 3.9% five-year notes issued at a spread of 215 bps over similar-maturity Treasuries
  • $2.5 billion in 3.0% ten-year notes issued at a spread of 180 bps over similar-maturity Treasuries

Details of Wells Fargo’s issue

Wells Fargo (WFC) is a diversified, community-based financial services company. It issued A2/A rated high-grade bonds worth $3.8 billion in two parts on February 26, 2016:

  • $1.0 billion in 2.5% five-year notes issued at a spread of 125 bps over similar-maturity Treasuries
  • $2.8 billion in five-year FRNs issued at three-month LIBOR + 134 bps

Details of Goldman Sachs’ issue

Goldman Sachs (GS) is a global investment banking, securities, and investment management firm that provides a wide range of financial services. It issued A3/BBB+ rated high-grade bonds worth $3.6 billion in two parts on February 22, 2016:

  • $600 million in five-year FRNs issued at three-month LIBOR + 177 bps Treasuries
  • $1.3 billion in 2.9% five-year notes issued at a spread of 168 bps over similar-maturity Treasuries
  • $1.8 billion in 3.8% ten-year notes issued at a spread of 203 bps over similar-maturity Treasuries

In the next article, we’ll look at investment-grade bond fund flows.

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