uploads///Total IG Bond Issuance in Week Ending Aug

Westpac Banking Issued the Most High-Grade Bonds Last Week

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Aug. 17 2016, Published 8:49 a.m. ET

Deals overview

US corporates dominated the primary market for high-grade bonds in the week ending August 12, making up 36.6%, or $16.5 billion, of all issues. Yankee issuers made up 27.5%, while US financial issuers made up the remaining 20.2% of the total issuance. The week ending August 12 brought the year-to-date issuance of high-grade corporate bonds to $1.1 trillion, 5% higher than the issuance in the same period in 2015.

Issuances by high-grade corporates form part of the Vanguard Total Bond Market ETF (BND), the iShares 1–3 Year Credit Bond ETF (CSJ), and the SPDR Barclays Short Term Corporate Bond ETF (SCPB).

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Details of Westpac Banking Corporation’s issue

Westpac Banking Corporation (WBK) issued Aa2/AA- rated high-grade bonds worth $5.0 billion via five parts on August 11:

  • $500 million in three-year FRNs (floating-rate notes) issued at LIBOR (Intercontinental Exchange London Interbank Offered Rate) + 56 basis points
  • $1.5 billion in 1.6% three-year notes issued at a spread of 75 basis points over similar-maturity Treasuries
  • $500 million in five-year FRNs issued at LIBOR + 85 basis points
  • $1.5 billion in 2.0% five-year notes issued at a spread of 87.5 basis points over similar-maturity Treasuries
  • $1.0 billion in 2.7% ten-year notes issued at a spread of 115 basis points over similar-maturity Treasuries

Details of Duke Energy Corporation’s issue

Duke Energy Corporation (DUK) issued Baa1/BBB+ rated high-grade bonds worth $3.75 billion on August 9 via three parts:

  • $750 million in 1.8% five-year notes issued at a spread of 70 basis points over similar-maturity Treasuries
  • $1.5 billion in ~2.7% ten-year notes issued at a spread of 115 basis points over similar-maturity Treasuries
  • $1.5 billion in ~3.8% 30-year bonds issued at a spread of 150 basis points over similar-maturity Treasuries
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Details of Amgen’s issue

Amgen (AMGN) issued Baa1/A rated high-grade bonds worth $3.75 billion on August 10 via four parts:

  • $750 million in ~1.9% five-year notes issued at a spread of 80 basis points over similar-maturity Treasuries
  • $750 million in ~2.3% seven-year notes issued at a spread of 95 basis points over similar-maturity Treasuries
  • $1.25 billion in 2.6% ten-year notes issued at a spread of 110 basis points over similar-maturity Treasuries
  • $1.0 billion in 4.4% 30-year on-tap bonds issued at a spread of 175 basis points over similar-maturity Treasuries

Details of Berkshire Hathway’s issue

Berkshire Hathway (BRK.A) issued Aa2/AA rated high-grade bonds worth $2.0 billion on August 8 via four parts:

  • $250 million in two-year FRNs issued at LIBOR + 15 basis points
  • $500 million in ~1.2% two-year notes issued at a spread of 43 basis points over similar-maturity Treasuries
  • $250 million in three-year FRNs issued at LIBOR + 26 basis points
  • $1.0 billion in 1.3% three-year notes issued at a spread of 48 basis points over similar-maturity Treasuries

In the next article, we will look at investment-grade bond fund flows.

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