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Ryan Nauman
VP, Product and Market Strategist
Stephen Berei
VP, Client Services & Implementation
Jeremy Poulin
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Fixed Income Quarterly - Q1 2015

Apr 3, 2015 Ryan Nauman

There are many great benefits to being part of a large organization like Informa Investment Solutions. One of those benefits is the ability to gain exposure and access to experts within other groups of the organization. One group that I find particularly interesting is Informa Global Markets (IGM). IGM is one of the foremost authorities for real-time market commentary and analysis covering the capital markets. We have decided to team up with an expert at IGM to bring you a quarterly review of the fixed income capital markets. With the great help and knowledge from Informa Global Markets’ Credit Analyst, Drew Jamner, we bring to you our Q1 fixed income review…

The first quarter of 2015 brought us a blockbuster quarter of new issues in the investment grade corporate credit market space. March ended up providing us with the second largest month (by volume) of all time for new investment grade corporate issues with a total of $143.135bn (Ex-SSA), just behind September 2013, which came in at $147.903b (Ex-SSA). This record month helped contribute to a record quarter. The first quarter of 2015 amounted to the highest volume quarter ever (ex-SSA) for the investment grade credit markets. The $351.569b printed over the first three months of 2015 trounces the previous record set in Q1 2014 by 14.366% ($307.405b).

During Q1 2015 Merger & Acquisition (M&A) linked bond trades accounted for $62.350b or roughly 17.73% of overall issuance (ex-SSA figures). The largest trade over the quarter was the $21b 10-part behemoth from Actavis Funding SCS to fund its (Actavis') acquisition of the botox maker Allergan Inc. This trade stacked up as the second largest all-time, only behind Verizon's $49b deal in September 2013. Overall, the Healthcare sector accounted for the greatest portion of the M&A trades with approximately 71.45% of the total M&A linked bond issuance for the quarter, again led by the Actavis 10-part trade. In addition to the Actavis issue, other notable trades to hit during the quarter include but not limited to: XLIT Ltd ($1,000 mil), EMD Finance LLC ($4,000 mil), The JM Smucker Co ($3,650 mil), Zimmer Holdings Inc ($7,650 mil) and Merck & Co ($8,000 mil).

What can we take from this blockbuster quarter? Issuers are taking advantage of drops in a volatile interest rate environment. This high activity may also signal that issuers are feeling pressure to raise capital as the threat of rate hike from the Fed looms.

To learn more about Drew Jamner, Credit Analyst (Drew.Jamner@informagm.com) and the services provided by Informa Global Markets visit http://www.informagm.com.

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