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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 $18.4 billion were issued in the primary market in the week to April 1, 2016. The high-grade issuance stood at $15.0 billion in the previous week. The number of issuers rose to 11 from nine in the previous week.

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

UBS Group Funding (Jersey) Limited, a subsidiary of UBS Group AG (UBS), Occidental Petroleum (OXY), Toronto-Dominion Bank (TD), and Omnicom Group (OMC) were among the large issuers of investment-grade bonds in the week to April 1.

Issuance by quality and maturity

Fixed-rate issues formed 91.2% of the total issuance while floating-rate issues worth $1.6 billion were raised last week.

Looking at the credit ratings of issues, BBB rated issuers were the most prolific. They made up 66.3%, or $12.2 billion, of total issuance. They were followed by A rated issuers, which formed 21.5% of the week’s issuance. AA rated papers formed 12.2% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 37.0% of all issues, was in the ten-year maturity category. It was closely followed by the five-year maturity category, which commanded 36.7% of the total issuance. The three-year maturity category made up 2.7% of the total issuance last week.

Long-term maturity categories such as the 30-year made up 8.7% of the total issuance while the over 30-year category has not seen any issuance for two consecutive weeks. Meanwhile, perpetuals also did not see issuance last week.

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

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