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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 $23.7 billion were issued in the primary market in the week ended April 15, 2016. High-grade issuance stood at $25.3 billion in the previous week. The number of issuers fell to 15 from 18 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.

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Major issuers

Bank of America (BAC), Credit Suisse (CS) subsidiary Credit Suisse Group, Lowe’s Company (LOW), and Wells Fargo (WFC) were among the largest issuers of investment-grade bonds in the week ended April 15.

Issuance by quality and maturity

Fixed-rate issues formed 90.9% of total issuance, while floating-rate issues worth $2.2 billion were issued last week.

Looking at credit ratings, BBB-rated issuers were the most prolific. They made up 51.0%, or $12.1 billion, of total issuance. A-rated issuers followed with 36.8% of total issuance. Meanwhile, AA-rated papers formed 12.2% of total issuance.

In terms of maturity, the largest chunk of issuance, making up 47.6% of all issues, was in the ten-year maturity category. It was closely followed by the five-year maturity category, which commanded 25.9% of total issuance. The three-year maturity category made up 12.6% of total issuance last week.

Long-term maturity categories such as the 30-year maturity category made up 8.5% of total issuance. The over 30-year category didn’t see any issuance for the second consecutive week. Perpetuals also didn’t see any issuance for the second consecutive week.

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

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