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Emera US Finance Issued the Most High Grade Bonds Last Week

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Deals overview

Yankee bond issuers dominated the primary high grade bond market in the week ended June 10, making up 30.3%, or $10.2 billion, of all issues. US corporates made up 23.8% of total issuance while US financials made up 16.0% of all issues. The week ended June 10 brought the year-to-date issuance of high grade corporate bonds to $856.8 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 Index Fund (BND), the iShares 1-3 Year Credit Bond Fund (CSJ), and the SPDR Barclays Short Term Corporate Bond ETF (SCPB).

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Details of Emera US Finance’s issue

Emera US Finance, a limited partnership that is wholly owned directly and indirectly by Emera, issued Baa3/BBB rated high grade bonds worth $3.3 billion via four parts:

  • $500 million in three-year notes issued at a spread of 125 basis points over similar-maturity Treasuries
  • $750 million in five-year notes issued at a spread of 150 basis points over similar-maturity Treasuries
  • $750 million in ten-year notes issued at a spread of 190 basis points over similar-maturity Treasuries
  • $1.3 billion in 30-year bonds issued at a spread of 230 basis points over similar-maturity Treasuries

The proceeds of the issue will be used to fund the acquisition of TECO Energy (TE).

Details of Fortive’s issue

Fortive issued Baa3/BBB rated high grade bonds worth $2.3 billion via four parts:

  • $300 million in three-year notes issued at a spread of 90 basis points over similar-maturity Treasuries
  • $750 million in five-year notes issued at a spread of 110 basis points over similar-maturity Treasuries
  • $900 million in ten-year notes issued at a spread of 145 basis points over similar-maturity Treasuries
  • $350 million in 30-year bonds issued at a spread of 175 basis points over similar-maturity Treasuries

The company will use the proceeds for its spin-off from Danaher (DHR).

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Bank of Nova Scotia’s issue

Bank of Nova Scotia (BNS) issued A3/A+ rated high grade bonds worth $1.3 billion via two parts:

  • $250 million in three-year FRNs (floating rate notes) issued at LIBOR + 66 basis points
  • $1.0 billion in three-year notes issued at a spread of 75 basis points over similar-maturity Treasuries

Details of Fifth Third Bank’s issue

Fifth Third Bank (FITB) issued high grade bonds worth $1.3 billion. The single-tranche A3/A- rated high grade bonds were issued at a spread of 105 basis points over similar-maturity Treasuries.

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

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