Investment-Grade Corporate Bond Issuance Fell Last Week

Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $45.0 billion were issued in the primary market in the week ending August 12, 2016. High-grade issuance had stood at $51.5 billion in the previous week. The number of issuers fell from 34 in the previous week to 31 in the week ending August 12. Issuers are lining up and have been pushing deals forward to avoid any volatility later in the year caused by uncertainty regarding the timing of an interest rate hike and the US presidential election.

Investment-Grade Corporate Bond Issuance Fell Last Week

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

Major issuers

Westpac Banking Corporation (WBK), Duke Energy Corporation (DUK), Amgen (AMGN), and Berkshire Hathway (BRK.A) were among large issuers of investment-grade bonds in the week ending August 12.

Issuance by quality and maturity

Fixed-rate issues formed 94.9% of the total issuance, while floating-rate issues worth $2.3 billion were issued last week.

In terms of the credit ratings of issues, BBB rated issuers were the most prolific. They made up 59.3%, or $26.7 billion, of total issuance. They were followed by AA rated issuers, which formed 17.8% of the week’s issuance. Meanwhile, A rated papers formed 15.6% of the total issuance.

In terms of maturity, the ten-year maturity category commanded the largest chunk of issuance, making up 32.5% of all issues. It was followed by the three-year maturity category, which commanded 17.2% of the total issuance, while the five-year maturity category made up 12.2% of the total issuance.

In the long-term maturity categories, the 30-year category made up 12.8% of the total issuance. Meanwhile, the greater-than-30-year and perpetual categories made up 6.0% and 10.3% of the total issuance, respectively.

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