Deals and volumes of investment-grade corporate bonds
Investment-grade corporate bonds worth $50.7 billion were issued in the primary market in the week to May 13, 2016—the highest since March 11, 2016. High-grade issuance was at $29.4 billion in the previous week. The number of issuers rose to 34 from 21 in the previous week.
Last week, yields on investment-grade corporate bonds fell marginally. As a result, the MFS Total Return Bond Fund – Class A (MRBFX) rose 0.1% while the Janus Flexible Bond Fund – Class A (JDFAX) rose 0.2% week-over-week. The Vanguard Intermediate-Term Corporate Bond Fund (VCIT) rose 0.3% week-over-week.
Issuance by quality and maturity
Fixed-rate issues formed 95.4% of the total issuance. Floating-rate issues worth $2.4 billion were issued last week.
Looking at the credit ratings of issues, A-rated issuers were the most prolific. They made up 38.3%, or $19.4 billion, of the total issuance. They were followed by BBB-rated issuers. They formed 34.6% of the week’s issuance. Meanwhile, AA-rated papers formed 27.0% of the total issuance.
In terms of maturity, the largest chunk of issuance, making up 36.7% of all the issues, was in the ten-year maturity category. It was followed by the five-year maturity category. It commanded 20.8% of the total issuance. The three-year maturity category made up 10.9% of the total issuance last week.
Long-term maturity categories such as the 30-year made up 20.0% of the total issuance. Meanwhile, the greater than 30-year and perpetual categories haven’t seen any issuance for the sixth consecutive week.
In the next part of the series, we’ll highlight the major deals including pricing, credit rating, and yields.