The week ending August 15, high-grade corporate bond (AGG) issuance was subdued despite the favorable market conditions. Issuance volumes plunged to 33% over the previous week. In the week ending August 15, more than 17 corporate investment-grade bond (LQD) transactions issued $16.7 billion.
Normally, issuance has a July to August seasonal slowdown. Also, primary market issues surged in the previous week. Further corporate borrowers emerged of the earnings blackout period, spiking issuance to $25 billion within the week that ended on August 8.
The majority of issuers took to capital markets, paying off costlier and older debt. Additionally, issuers took to capital markets basically for general corporate purposes. Among the largest issuer offerings was the UBS with $4.5 billion capital enhancement issues, accounting for more than 25% of weekly issuance.
Ten percent of the issuance was accounted for the floating rate note, issuing the balance on a fixed-rate. A total of four issuers with floating rate notes hit the market for $1.6 billion total. Interest rates are expected to increase by 2015, but most borrowers intend to lock in interest rates through fixed-rate issues.
The most common issuance by quality is the A-rated borrowers, accounting for a total of 51% in the week that ended August 15, while the most popular issuance by maturity is the 5-year maturities, accounting for a total of 38% issuance.