Investment-Grade Corporate Bond Issuance Rose Last Week



Deals and volumes of investment-grade corporate bonds

High-grade bond issuance rose as markets calmed down after the Brexit vote. Investors are attracted to the US bond market due to higher yields—compared to other developed countries.

Investment-grade corporate bonds worth $31.7 billion were issued in the primary market in the week to July 1, 2016. High-grade issuance stood at $2.8 billion in the previous week. The number of issuers rose from six in the previous week to 17 in the last week.

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

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Major issuers

Oracle (ORCL), Molson Coors Brewing Company (TAP), Express Scripts Holding Company (ESRX), and General Motors Financial Company—a financial services arm of General Motors (GM)—were among the large issuers of investment-grade bonds in the week to July 1.

Issuance by quality and maturity

Fixed-rate issues formed 99.2% of the total issuance, while floating-rate issues worth 250 million were issued last week.

The issuance was split between “A” rated and “BBB” rated issuers. “A” rated issuers made up 53.4%, or $17.1 billion, of the total issuance. “BBB” rated issuers formed 45.7% of the week’s issuance.

In terms of maturity, the largest chunk of issuance, making up 31.7% of all the issues, was in the five-year maturity category. It was followed by the ten-year maturity category. It commanded 23.5% of the total issuance. The three-year maturity category made up 7.1% of the total issuance last week.

The long-term maturity category such as the 30-year made up 24.0% of the total issuance. Meanwhile, the greater than 30-year category didn’t see any issuance. Perpetuals made up 0.3% of the total 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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