July is now fifth busiest high-grade month on record

(Adds more detail)

By Natalie Harrison

NEW YORK, July 31 (IFR) - US investment-grade issuers raised US$132.252bn selling bonds in July, making it the fifth busiest month on record and the third busiest in 2015, according to IFR data.

The tally of new high-grade deals was 75% higher than the previous record of US$75.773bn that was set in July 2013.

Bulk of the volumes were due to corporates funding jumbo acquisitions despite challenging conditions.

"It was definitely a very sporadic month, and you saw deals jamming the market at the same time when there were windows of opportunity," said one New (KOSDAQ: 160550.KQ - news) -York based syndicate banker.

The Bank of America Merrill Lynch Master Index hit its widest levels of the year this week at Treasuries plus 156bp.

As a result of broader market volatility due to worries about Greece and Chinese stock markets at the end of June and into July, the first high-grade deal did not price until July 7.

Cable services company Charter Communications (NasdaqGS: CHTR - news) topped the list of largest deals with a US$15.5bn secured debt sale to fund its US$31bn purchase of Time Warner Cable (Xetra: T3W1.DE - news) .

This was closely followed by pharmacy operator CVS Health, which printed a US$15bn six-part offering to finance its takeover of Omnicare (NYSE: OCR - news) and Target Pharmacies.

There were two other bond deals of US$5bn or more in July that financed acquisitions for UnitedHealth and Intel (Swiss: INTC.SW - news) .

Despite the rush, the market seems to have digested deals fairly well. The US$3bn 10-year bond sold by CVS on July 13 at Treasuries plus 155bp has tightened 10bp to T+155bp. Bank of America's US$2.5bn 10-year issue from this week is trading 7bp tighter than its launch spread at T+160bp.

BUSY AUGUST

Bankers are now forecasting a busier-than-usual August.

One banker said issuance could be as high as US$60-80bn if markets remain stable, or closer to US$40bn-$50bn. In August 2014, issuance amounted to US$45.56bn.

"We think the market will be busy right up until the last week of the month," said the banker.

Among likely issuers in August could be US biotechnology company Celgene Corp (Swiss: CELG.SW - news) . It agreed to buy Receptos Inc (NasdaqGS: RCPT - news) in July for US$7.2bn and said it would come to the bond market in August to refinance the US$5bn bridge loan backing the deal.

The possibility of a Federal Reserve rate hike in September provides issuers with a big incentive to bring deals in August, but volatility in Chinese markets will keep market participants on edge.

"The administration is propping up the market, but when you see 5-10% intraday swings in China's stock market, that's not good," said the banker. (Reporting by Natalie Harrison; Editing by Shankar Ramakrishnan)