2 Feb

Investment-Grade Corporate Bond Issuance Falls

WRITTEN BY Lynn Noah FEATURED IN Company News, Insights, & Analysis

Deals and volumes of investment-grade corporate bonds

Investment-grade corporate bonds worth $23.1 billion were issued in the primary market in the week ended January 29, 2016. This was lower compared to bonds worth $28.8 billion that were issued in the previous week. However, the number of issuers rose to 14 from 13 in the previous week.

Last week, yields on investment-grade corporate bonds fell. As a result, weekly returns of the T. Rowe Price New Income Fund (PRCIX) and the Nuveen Short-Term Bond Fund Class A (FALTX) rose by 0.5% and 0.1%, respectively.

Investment-Grade Corporate Bond Issuance Falls

Major issuers

AT&T (T), Petróleos Mexicanos, Crown Castle International (CCI), US Bank NA Cincinnati, and Procter & Gamble (PG) were among the largest issuers of investment-grade bonds in the week ended January 29.

Issuance by quality and maturity

Fixed-rate issues formed 93.5% of total issuance last week. Floating-rate issues worth $1.5 billion were also raised.

Looking at the credit ratings of issues, “BBB” rated issuers were the most prolific. They made up 63.7%, or $14.7 billion, worth of total issuance. They were followed by “A” rated issuers, which formed 14.9% of the week’s issuance. “AAA” rated papers issuers formed 10.8% of total issuance.

In terms of maturity, the largest chunk of issuance, making up 30.5% of all issues, was in the five-year maturity category. It was followed by the ten-year maturity category, which commanded 30.0% of total issuance. The three-year maturity category made up 10.8% of total issuance.

Long-term maturity categories such as the 30-year category made up 7.5% of total issuance while the 30-plus-year category did not see any issuance last week. Meanwhile, perpetuals made up 3.9% of total issuance last week.

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

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