Why Citigroup and CDP Financial were top borrowers last week

Market Realist

High-grade and high-yield bond markets assess risks ahead of FOMC (Part 3 of 9)

(Continued from Part 2)

Citigroup and CDP Financial

The week ending July 25 saw weekly investment-grade bond (LQD) issuance top $20 billion for the 22nd time this year. Issuance volumes in the week ending July 25 totaled $21.7 billion over 15 issues.

Major issuers included S&P 500 Index (VOO) component firms, eBay, Citigroup (C), Wells Fargo, Capital One Financial Corp., ConAgra Foods, and Broadcom Corp. (BRCM) (Data source: Bloomberg).

eBay issue was last week’s largest

eBay’s $3.5 billion, five-part issue was the biggest deal of the week. The A2 or A-rated borrower issued both fixed and floating rate notes as follows:

  • $450 million in three-year floating rate notes
  • $1.15 billion in five-year fixed rate notes
  • $400 million in five-year floating rate notes
  • $750 million in seven-year fixed rate notes
  • $750 million in ten-year fixed rate notes

Other major deals in the Tech, Media, and Telecom (or TMT) sector included Broadcom’s $600 million, two-tranche offering of ten and 20-year notes.

Financial institutions top borrowers this week

Financials sector borrowers accounted for ~36% of total issuance or $7.95 billion—up by ~$0.1 billion over the week ending July 18. Major financials sector borrowers included Citigroup (C) at $2 billion, CDP Financial at $2 billion, Manufacturers Traders Trust Co at $1.7 billion, and Capital One Financial Corp. at $1.25 billion.

Wells Fargo also issued $250 million in floating rate notes. The company is one of Warren Buffet-led Berkshire Hathaway’s (BRK-B) “Big-Four” investments. BRK-B is the largest shareholder in the lender.

Other investment-grade issuance

Other corporate sector borrowers included Daimler Financial at $2.5 billion in fixed and floating rate notes and ConAgra Foods at $550 million in two-year floating rate notes.

Emerging market issuers made up over 25% of issuance volumes or $5.6 billion in the week ending July 25. This was the highest level seen over the past several weeks. Issuance was dominated by the $3 billion two-part Export-Import Bank of China offering. This consisted of two tranches of $1.5 billion each, issued over five and ten-year maturities.

You can read about secondary market trends in the investment-grade bond market over the past week in the next section.

Continue to Part 4

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