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Investment-Grade Corporate Bond Issuance Rose Last Week

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Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $25.3 billion were issued in the primary market in the week ending April 8, 2016. The high-grade issuance stood at $18.4 billion in the previous week. The number of issuers rose to 18 from 11 in the previous week.

Last week, the 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

BMW US Capital, LLC—a subsidiary of BMW AG, Mizuho Financial Group (MFG), Toyota Motor Credit Corporation—a financial subsidiary of Toyota Motor (TM), and Target (TGT) were among large issuers of investment-grade bonds in the week ending April 8.

Issuance by quality and maturity

Fixed-rate issues formed 93.5% of the total issuance while floating-rate issues worth $1.7 billion were raised last week.

Looking at the credit ratings of issues, A rated issuers were the most prolific. They made up 52.4%, or $13.3 billion, of the total issuance. They were followed by BBB rated issuers. They formed 26.6% of the week’s issuance. AA rated papers formed 21.1% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 39.6% of all the issues, was in the five-year maturity category. It was closely followed by the ten-year maturity category. It commanded 30.6% of the total issuance. The three-year maturity category made up 8.9% of the total issuance last week.

Long-term maturity categories such as the 30-year made up 9.8% of the total issuance while the greater than 30-year category hasn’t seen any issuance for three consecutive weeks. Meanwhile, perpetuals didn’t see any issuance in the last two weeks.

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

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