Investment-Grade Corporate Bond Issuance Bounced Back

Deals and volumes of investment-grade corporate bonds

High-grade bond issuance bounced back last week as the Brexit storm calmed down and foreign money kept flowing in the US bond market. Investment-grade corporate bonds worth $30.3 billion were issued in the primary market in the week to July 22, 2016. High-grade issuance stood at $19.3 billion in the previous week. However, the number of issuers fell from 15 in the previous week to 12 last week.

Investment-Grade Corporate Bond Issuance Bounced Back

Funds such as the iShares Intermediate Credit Bond ETF (CIU) and the Vanguard Intermediate-Term Corporate Bond Fund (VCIT) help you to invest in high-grade bonds.

Major issuers

Teva Pharmaceutical Finance—a subsidiary of Teva Pharmaceutical Industries (TEVA), Wells Fargo (WFC), Morgan Stanley (MS), and Citigroup (C) were among the large issuers of investment-grade bonds in the week to July 22.

Issuance by quality and maturity

Fixed-rate issues formed 97.2% of the total issuance, while floating-rate issues worth $0.9 billion were issued last week.

Looking at the credit ratings of issues, BBB rated issuers were the most prolific. They made up 74.3%, or $22.5 billion, of the total issuance. They were followed by A rated issuers—they formed 22.4% of the week’s issuance. Meanwhile, AA rated papers formed 3.3% of the total issuance.

In terms of maturity, the largest chunk of issuance, making up 40.8% of all the issues, was in the ten-year maturity category. It was followed by the five-year maturity category—it commanded 29.2% of the total issuance. The seven-year maturity category made up 9.9% of the total issuance last week.

The long-term maturity category such as the 30-year made up 6.6% of the total issuance. Meanwhile, the greater than 30-year and perpetual categories didn’t see any issuance last week.

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