Must-know: An investment-grade bond update (Part 3 of 8)
U.S. bond underwriter rankings in 1Q14
Borrowers sold ~$20.45 billion worth of investment-grade corporate debt (LQD) in the primary market in the week ending July 4, across eight transactions. Last week brought the total issuance to ~$807.3 billion in 2014 year-to-date (or YTD). Total issuance in June—up to June 30—was estimated at $143 billion, while second quarter issuance was estimated at $385.3 billion (Data source: Bloomberg).
Issuance by maturity and quality
Borrowers continued to prefer fixed rate issues—not a surprise considering the historically low yield levels brought about by monetary accommodation. Fixed rate issuance made up ~91% of the total volume in the week ending July 4, up from ~86% the previous week.
About 32% of the total issuance was rated BBB—down from ~54% in the week ending June 27. The $10 billion Oracle issue, which was rated A+, skewed weekly comparisons in this regard, as the percentage of A-rated borrowers jumped from ~17% to ~49% last week.
Issuance by sector
Corporate borrowers accounted for ~59% of the issuance in the week ending July 4, up from about 44% in the previous week. The ratio of issuance volumes financial sector firms, declined to ~20%, compared to ~38% in the week ending June 27.
JPMorgan tops underwriter tables
JPMorgan (JPM) topped the Bloomberg Underwriter Rankings for U.S. bonds both in the second quarter and in 2014 YTD, with ~11.6% of the market share. The company underwrote a total of 648 issues amounting to ~$135 billion in the first two quarters of 2014. Bank of America Merrill Lynch and Barclays, stood second and third, respectively. The maximum number of issues were underwritten by Bank of America Merrill Lynch, at 1,485 (Source:Bloomberg).
Both JPMorgan (JPM) and Bank of America are part of the S&P 500 Index (SPY) and the iShares US Financials Index (IYF). The iShares Core U.S. Aggregate Bond ETF (AGG) which invests primarily in U.S. investment-grade bonds, holds debt issued by JPMorgan (JPM).
In the next section, we’ll analyze the major issuers in the primary market for investment-grade bonds last week, including Goldman Sachs and Anadarko Petroleum.
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