OREANDA-NEWS. Lower coupons, particularly in the US non-financial investment-grade space, are helping to propel bond issuance to record levels, according to Fitch Ratings. The outstanding high-grade par-weighted average coupon was 4.46% at July 31, down from 4.68% one year earlier. The overall outstanding par-weighted average coupon was 5.1%.

The corporate bond universe totaled \\$3.9 trillion as of June 30, gaining 12% from the prior year and split 74%/26% between investment and speculative grade. Through the first half of the year, the investment grade portion accounted for \\$334 billion, or 73% of total volume. This segment amassed a record \\$192 billion during the second quarter, sending overall issuance to an all-time high quarterly mark of \\$258 billion.

US non-financial corporate bond issuance compiled a record \\$524 billion through July, a 44% gain from the year prior. A staggering \\$108 billion of volume was seen in May and new issuance averaged \\$87 billion from February through June.

'BBB' rated issuers spearheaded volume in the second quarter, totaling \\$101 billion. The pack was led by sizable transactions for AT&T Inc. and HJ Heinz Co.

Through the first half of 2015, 'BBB' volume is up 65% versus the same time frame in 2014. The pool rated 'A' also had an issuance surge, as the second-quarter total was double the first quarter. The retail, leisure and consumer products paced first-half volume at \\$212 billion (up 43% versus first-half 2014) while energy, utilities and infrastructure posted \\$103 billion (up 38%).

Looking ahead, just \\$266 billion is slated to mature over the next 18 months with \\$257 billion and \\$296 billion come due in 2017 and 2018, respectively.

Fitch believes that refinancing risk remains minimal with corporate bond issuance at its current pace. In addition, we continue to think a gradual rise in interest rates would have limited impact on US corporate credits as a whole, given the offsetting backdrop of US economic growth and aggressive refinancing by most companies over the last several years.