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Visa Inc Led the High-Grade Bond Market Last Week

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Overview of deals

US financials were the biggest issuers of high-grade bonds in the week ended December 11, making up 49.7% or $16.0 billion, of all issues. US corporates were the second biggest, making up 28.3% of all issues. Meanwhile, Yankee issuers issued $6.6 billion worth of high-grade bonds and made up 20.5% of the total issuance. The week ended December 11, 2015, brought the year-to-date issuance of high-grade corporate bonds to $1.5 trillion.

Issuances by high-grade corporates form part of mutual funds like the Janus Flexible Bond Fund – Class A (JDFAX) and the TIAA-CREF Bond Index Fund – Retail Class (TBILX).

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Visa Inc

Visa Inc (V) issued A1/A+ rated high-grade bonds worth $16.0 billion via six parts:

  • $1.75 billion in 1.20% two-year notes issued at a spread of 30 basis points over similar-maturity Treasuries
  • $3.0 billion in 2.20% five-year notes issued at a spread of 57 basis points over similar-maturity Treasuries
  • $2.25 billion in 2.80% seven-year notes issued at a spread of 82 basis points over similar-maturity Treasuries
  • $4.0 billion in 3.15% ten-year notes at a spread of 97 basis points over similar-maturity Treasuries
  • $1.5 billion in 4.15% 20-year bonds issued at a spread of 117 basis points over similar-maturity Treasuries
  • $3.5 billion in 4.30% 30-year bonds issued at a spread of 132 basis points over similar-maturity Treasuries

Visa Inc intends to use the proceeds for the acquisition of Visa Europe Limited.

Schlumberger Holding

Schlumberger (SLB) issued A2/AA- rated high-grade bonds worth $6.0 billion in five parts:

  • $500 million in 1.90% two-year notes at a spread of 97 basis points over similar-maturity Treasuries
  • $1.3 billion in 2.35% three-year notes at a spread of 112 basis points over similar-maturity Treasuries$3.0
  • $1.6 billion in 3.00% five-year notes issued at a spread of 137 basis points over similar-maturity Treasuries
  • $850 million in 3.625% seven-year notes at a spread of 162 basis points over similar-maturity Treasuries
  • $1.75 billion in 4.00% ten-year notes issued at a spread of 177 basis points over similar-maturity Treasuries

Schlumberger Holding will use the net proceeds from the offering for general corporate purposes. This includes financing a portion of the consideration of Schlumberger’s pending acquisition of Cameron International (CAM).

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Suisse Group Funding (Guernsey) Limited

Credit Suisse Group Funding (Guernsey) Limited is a subsidiary of Credit Suisse (CS). It issued high-grade bonds worth $2.0 billion last week. The single-tranche Baa2/BBB+ rated five-year issue was raised at a coupon of 3.13%. The high-grade bonds were issued at a spread of 150 basis points over similar-maturity Treasuries.

Toronto-Dominion Bank

Toronto-Dominion Bank (TD) is headquartered in Toronto, Canada. It issued Aa1/AA- rated high-grade bonds worth $2.0 billion in two parts:

  • $250 million in five-year FRNs (floating rate notes) issued at three-month LIBOR[1. Intercontinental Exchange London Interbank Offered Rate] + 93 basis points
  • $1.75 billion in 2.50% five-year notes issued at a spread of 87.5 basis points over similar-maturity Treasuries

Marathon Petroleum

Marathon Petroleum (MPC) issued Baa2/BBB rated high-grade bonds worth $1.5 billion in three parts:

  • $600 million in 2.70% three-year notes at a spread of 150 basis points over similar-maturity Treasuries
  • $650 million in 3.40% five-year notes at a spread of 175 basis points over similar-maturity Treasuries
  • $250 million in 5.85% 30-year bonds at a spread of 290 basis points over similar-maturity Treasuries
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