Teva Pharmaceutical Finance Issued the Most High-Grade Bonds

Deals overview

US corporates dominated the primary market for high-grade bonds in the week ending July 22—making up 52.8% or $16.0 billion of all the issues. US financials made up 36.5%, while Yankee bond issuers made up the remaining 10.7% of the total issuance.

The week ending July 22 brought the year-to-date issuance of high-grade corporate bonds to $973.1 billion.

Teva Pharmaceutical Finance Issued the Most High-Grade Bonds

Issuances by high-grade corporates form part of 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).

Details of Teva Pharmaceutical Finance’s issue

Teva Pharmaceutical Finance, a subsidiary of Teva Pharmaceutical Industries (TEVA), issued Baa2/BBB rated high-grade bonds worth $15 billion through six parts on July 18:

  • $1.5 billion in 1.4% two-year notes issued at a spread of 75 basis points over similar-maturity Treasuries
  • $2.0 billion in 1.7% three-year notes issued at a spread of 85 basis points over similar-maturity Treasuries
  • $3.0 billion in 2.2% five-year notes issued at a spread of 110 basis points over similar-maturity Treasuries
  • $3.0 billion in 2.8% seven-year notes issued at a spread of 145 basis points over similar-maturity Treasuries
  • $3.5 billion in 3.2% long ten-year notes issued at a spread of 160 basis points over similar-maturity Treasuries
  • $2.0 billion in 4.1% long 30-year bonds issued at a spread of 185 basis points over similar-maturity Treasuries

Teva intends to use the net proceeds from this offering towards the cash portion of the purchase price for its previously announced acquisition of Allergan’s (AGN) worldwide generic pharmaceuticals business Actavis Generics (ACT), to pay related fees and expenses, and for general corporate purposes.

Details of Wells Fargo’s issue

Wells Fargo (WFC) issued A2/A high-grade bonds worth $3.6 billion on July 18 through two parts on July 18:

  • $600 million in five-year FRNs (floating rate notes) issued at LIBOR + 102.5 basis points
  • $3.0 billion in 2.1% five-year notes issued at a spread of 100 basis points over similar-maturity Treasuries

Details of Morgan Stanley’s issue

Morgan Stanley (MS) issued high-grade bonds worth $3.0 billion on July 20. The single-tranche A3/BBB+ rated ten-year issue was raised at a coupon of 3.1%. The high-grade bonds were issued at a spread of 163 basis points over similar-maturity Treasuries.

Details of Citigroup’s issue

Citigroup (C) issued high-grade bonds worth $1.5 billion on July 18. The single-tranche Baa3/BBB rated 12-year sub-issue was raised at a coupon of 4.13%. The high-grade bonds were issued at a spread of 258 basis points over similar-maturity Treasuries.

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