Westpac Banking Issued the Most High-Grade Bonds Last Week

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).

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

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

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

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.