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Investment-Grade Corporate Bond Issuance Bounced Back

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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.

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.

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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.

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