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Dell Issued the Most High-Grade Bonds Last Week

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Deals overview

US corporates dominated the primary market for high-grade bonds in the week ending May 20, making up 70.4%, or $28.9 billion, of all issues. US financials made up 24.0% of total issuance, while Yankee bond issuers made up 4.9% of all issues. The week ending May 20 brought the year-to-date issuance of high-grade corporate bonds to $724.9 billion.

Issuances by high-grade corporates form part of mutual funds and ETFs like the Strategic Advisers Core Income Fund (FPCIX), the Prudential Total Return Bond Fund Class A (PDBAX), the Vanguard Total Bond Market ETF (BND), and the iShares 1-3 Year Credit Bond ETF (CSJ).

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Details of Dell Corporation’s issue

Dell Corporation issued Baa3/BBB- rated high-grade bonds worth $20.0 billion via six parts on May 17:

  • $3.75 billion in 3.5% three-year notes issued at a spread of 250 basis points over similar-maturity Treasuries
  • $4.5 billion in 4.4% five-year notes issued at a spread of 312.5 basis points over similar-maturity Treasuries
  • $3.75 billion in 5.5% seven-year notes issued at a spread of 387.5 basis points over similar-maturity Treasuries
  • $4.5 billion in 6.0% ten-year notes issued at a spread of 425 basis points over similar-maturity Treasuries
  • $1.5 billion in 8.1% 20-year bonds issued at a spread of 550 basis points over similar-maturity Treasuries
  • $2.0 billion in 8.4% 30-year bonds issued at a spread of 575 basis points over similar-maturity Treasuries

The proceeds of the issue will be used for the acquisition of EMC Corporation (EMC).

Details of The Southern Company’s issue

The Southern Company (SO) issued Baa2/BBB+ rated high-grade bonds worth $8.5 billion on May 19 via seven parts:

  • $500 million in 1.6% two-year notes issued at a spread of 70 basis points over similar-maturity Treasuries
  • $1.0 billion in 1.9% three-year notes issued at a spread of 80 basis points over similar-maturity Treasuries
  • $1.5 billion in 2.4% five-year notes issued at a spread of 100 basis points over similar-maturity Treasuries
  • $1.25 billion in 3.0% seven-year notes issued at a spread of 130 basis points over similar-maturity Treasuries
  • $1.75 billion in 3.3% ten-year notes issued at a spread of 145 basis points over similar-maturity Treasuries
  • $500 million in 4.3% 20-year bonds issued at a spread of 165 basis points over similar-maturity Treasuries
  • $2.0 billion in 4.4% 30-year bonds issued at a spread of 180 basis points over similar-maturity Treasuries
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Details of HSBC Holdings’ issue

HSBC Holdings (HSBC) issued A1/A rated high-grade bonds worth $8.0 billion on May 18 via four parts:

  • $1.0 billion in five-year FRNs (floating-rate notes) issued at three-month LIBOR + 166 basis points
  • $2.5 billion in 3.0% five-year notes issued at a spread of 160 basis points over similar-maturity Treasuries
  • $2.0 billion in 3.6% seven-year notes issued at a spread of 195 basis points over similar-maturity Treasuries
  • $2.5 billion in 3.9% ten-year notes issued at a spread of 210 basis points over similar-maturity Treasuries

Details of CVS Health’s issue

CVS Health (CVS) issued Baa1/BBB+ rated high-grade bonds worth $3.5 billion on May 16 via two parts:

  • $1.75 billion in 2.1% five-year notes issued at a spread of 92 basis points over similar-maturity Treasuries
  • $1.75 billion in 2.9% ten-year notes issued at a spread of 122 basis points over similar-maturity Treasuries

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

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