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Investment-Grade Corporate Bond Issuance Reaches 10-Week High

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Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $51.4 billion were issued in the primary market in the week ending May 20, 2016. This is the highest issuance since March 11, 2016. High-grade issuance came in at $50.7 billion in the previous week. The number of issuers fell to 18 from 34 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) and the Strategic Advisers Core Income Fund (FPCIX) fell 0.6% each week-over-week. The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) fell 1.1% week-over-week.

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Major issuers

Dell Corporation, The Southern Company (SO), HSBC Holdings (HSBC), and CVS Health (CVS) were among the large issuers of investment-grade bonds in the week ending May 20.

Issuance by quality and maturity

Fixed-rate issues formed 96.6% of the total issuance, while floating-rate issues worth $1.8 billion were issued last week.

Looking at the credit ratings of issues, BBB rated issuers were the most prolific. They made up 69.6%, or $35.8 billion, of total issuance. They were followed by A rated issuers, which formed 23.1% of the week’s issuance. Meanwhile, AA rated papers formed 7.3% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 30.2% of all issues, was in the ten-year maturity category. It was followed by the five-year maturity category, which commanded 25.3% of the total issuance. The three-year maturity category made up 14.6% of the total issuance last week.

Among the long-term maturity categories, the 30-year category made up 14.6% of the total issuance. Meanwhile, the greater-than-30–year and perpetuals categories didn’t see any issuance for the seventh consecutive week.

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

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