While many of us are anticipating the upcoming Independence Day celebrations and the numerous firework shows across the nation, the fixed income capital market space has created their own fireworks over the past six months. Once again Drew Jamner, Credit Analyst, of Informa Global Markets (IGM) has provided us with expertise and some great insight on what transpired within the fixed income capital markets during the second quarter of 2015.
New issues in the investment grade corporate credit market space during Q2 2015 set new records that surpassed records previously set in Q1 2015. These astonishing quarters have contributed to a record setting first half of the year. The total volume of new investment grade corporate credit issuances during the second quarter came in at $359.081bn (ex SSA), which outpaced the first quarter of 2015 which came in at $351.569bn (ex SSA). Combined, these two quarters propelled the first half of 2015 into areas never seen. The volume during the first six months of 2015 was an astounding $710.651bn (ex SSA) which came from 480 deals/891 tranches and clearly bested the first half of 2014 ($609.823bn) which was the previous high water mark by 16.5%. The month of May led the way during the second quarter with a record setting month of $155.018bn new issuances from 91deals\185 tranches (ex-SSA). AT&T’s six part, $17.5bn deal was the largest deal during the quarter and the third largest deal of all time, while AbbVie’s $16.700bn six part deal also contributed to the record quarter.
M&A activity within the investment grade corporate credit arena also contributed to the fireworks. M&A linked bond trades totaled $81.500bn during the second quarter, while the first quarter totaled $62.350bn. The first half of 2015 M&A ($143.85bn) activity was eye-popping when looking at it in a historical context. Not only did the first six months of 2015 exceed all other first half totals in history, it easily outpaced previous full year totals which all failed to break -the $100bn mark. To get a full understanding of how big the first half of 2015 was, one must compare it to recent activity during a full year. 2012 provided us with the highest volume of activity with $99.925bn worth of deals during the year. The first six months of 2015 has outpaced the entire 2012 year by a whopping 44%.
In their first quarter review, our friends within the IGM group said M&A volume would be the “swingfactor” for the overall investment grade corporate credit market activity. They were spot on as the stupendous increase in M&A volume was the main factor in what was an incredible first half for the investment grade corporate credit market. It will be fascinating to see if the investment grade corporate credit market fireworks will continue through the second part of 2015 or if the potential hike in interest rates cause the second half of 2015 to be a dud.
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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