Microsoft Led the High-Grade Bond Issuance Last Week

Lynn Noah
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Microsoft Stormed the High-Grade Bond Market Last Week

(Continued from Prior Part)

Deals overview

US corporates were the biggest issuers of high-grade bonds in the week ending October 30. They accounted for 67.1%, or $25.7 billion, of all the issues. US financials were the second-biggest issuers. They accounted for 16.4% of all the issues. Meanwhile, the market issued $4.8 billion worth of high-grade Yankee bonds. They accounted for 12.6% of the total issuance.

SAS (Supranational, Agencies, and Sovereigns) and emerging market issuers accounted for 2.6% and 1.3% of the total issuance, respectively.

The week ending October 30 brought the YTD (year-to-date) issuance of high-grade corporate bonds to $1.3 trillion.

Issuances by high-grade corporates form part of the mutual funds like the T. Rowe Price New Income Fund (PRCIX) and the Strategic Advisers Core Income Fund (FPCIX).

Details of Microsoft’s issue

Microsoft (MSFT) issued Aaa/AAA rated high-grade bonds worth $14 billion through seven parts:

  • $1.8 billion in 1.3% three-year notes issued at a spread of 30 basis points over similar-maturity Treasuries

  • $2.3 billion in 2.0% five-year notes issued at a spread of 50 basis points over similar-maturity Treasuries

  • $1.0 billion in 2.7% seven-year notes issued at a spread of 75 basis points over similar-maturity Treasuries

  • $3.0 billion in 3.1% ten-year notes issued at a spread of 95 basis points over similar-maturity Treasuries

  • $1.0 billion in 4.2% 20-year bonds issued at a spread of 125 basis points over similar-maturity Treasuries

  • $3.0 billion in 4.5% 30-year bonds issued at a spread of 150 basis points over similar-maturity Treasuries

  • $1.0 billion in 4.8% 40-year bonds issued at a spread of 180 basis points over similar-maturity Treasuries

Details of ACE INA Holdings’ issue

ACE INA Holdings is one of the world’s largest multi-line property and casualty insurance companies. It issued A3/A rated high-grade bonds worth $5.3 billion in four parts:

  • $1.3 billion in 2.3% five-year notes at a spread of 95 basis points over similar-maturity Treasuries

  • $1.0 billion in 2.9% seven-year notes at a spread of 115 basis points over similar-maturity Treasuries

  • $1.5 billion in 3.4% 10.5-year bonds at a spread of 135 basis points over similar-maturity Treasuries

  • $1.5 billion in 4.4% 30-year bonds at a spread of 150 basis points over similar-maturity Treasuries

Details of PNC Financial’s issue

PNC Bank National Association is a subsidiary of the PNC Financial Services Group (PNC). It issued A2/A rated high-grade bonds worth $1.8 billion in two parts:

  • $1.0 billion in 1.8% three-year notes at a spread of 78 basis points over similar-maturity Treasuries

  • $750 million in 2.5% five-year notes at a spread of 95 basis points over similar-maturity Treasuries

Details of Mead Johnson Nutrition’s issue

Mead Johnson Nutrition (MJN) manufactures nutrition formulas for babies and children. It issued Baa1/BBB- rated high-grade bonds worth $1.5 billion in two parts:

  • $750 million in 3.0% five-year notes at a spread of 150 basis points over similar-maturity Treasuries

  • $750 million in 4.1% ten-year notes at a spread of 195 basis points over similar-maturity Treasuries

Details of Hyundai Capital America’s issue

Hyundai Capital America is a part of the Hyundai Motor Group family of companies. It supports the financial services needs of Hyundai Motor America and KIA Motors America. It issued Baa1/A- rated high-grade bonds worth $1.5 billion in two parts:

  • $750 million in 2.4% three-year notes at a spread of 150 basis points over similar-maturity Treasuries

  • $750 million in 3.0% five-year notes at a spread of 160 basis points over similar-maturity Treasuries

Details of Capital One Financial’s issue

Capital One Financial (COF) is a financial services company. It offers credit cards, checking and savings accounts, auto loans, rewards, and online services to its clients. It issued high-grade bonds worth $1.5 billion last week. The single-tranche Baa1/BBB- rated ten-year subordinated notes were issued at a coupon rate of 4.2%. The high-grade bonds were issued at a spread of 215 basis points over similar-maturity Treasuries.

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