IG Corporate Debt Issuance-7th Busiest Month; Entergy Louisiana Snapshot
September 29, 2016   //   by Mischler MarCom   //   Debt Market Commentary, Recent Deals  

Quigley’s Corner 09.28.16 –Entergy Lousiana; Investment Grade Debt Issuance: Sep is 7th Busiest Month Ever


QC Quote of The Day: “Demand for IG corporate credit and particularly the defensive nature of the utility sector is resounding..”


Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

Deal-of-the-Day: Entergy Louisiana, LLC

Entergy Louisiana, LLC Final Pricing Details

A Brief Look at Entergy’s Call to Diversity and Social Responsibility

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 21st

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 European equities were all up across the boards this morning and Deutsche Bank stock (NYSE:DB) rallied back a bit despite “counter party risk” being a topic of discussion in some circles.   September has witnessed market volatility swing 10yr Treasury yields within a very wide 20 bp band from 1.72% to 1.49%.  Driving that volatility are the recent policy decisions and comments from the Central Banks, namely the FOMC, ECB, BOE and BOJ.  Oil markets, highly correlated to the month’s wild equity swings we’ve witnessed hasn’t helped stability at all.  Still, we’ve wound up pricing $136b in new IG Corporate issuance and $161b including SSA.  Heap indigestion on top of that and the fact that corporates are averaging anywhere from 0-10 bps NICs with utilities averaging 0-5 bp NICs and it illustrates just how resilient and amazing this primary market month has been.  All of the recent market volatility elevated the importance of this morning’s Durable Goods Number forecast to be <1.5%> against the 4.4% prior number.  It delivered a 0.00% and primary markets were off to the races given the stable back drop.

Having said all that, it was not a crowded day for issuance today creating a nice opportunity for several companies to print new deals. 5 IG Corporate issuers owned today’s IG primary markets pricing 8 tranches between them totaling $6.90b.  We have now priced 54% of this week’s syndicate midpoint average forecast for IG Corporates or $12.65b vs. $23.30b.  MTD we’re now over 23% above the syndicate estimate or $143.418b vs. $116.02b.  September all-in (IG Corporate plus SSA) issuance is now $168b which ranks as the 7th busiest month on record with two more days remaining! It’s pretty safe to say that September will finish as the second busiest month of 2016.

As Team Mischler was an active 2.50% Co-Manager on today’s Entergy Louisiana, LLC $400mm 10-year Collateral Trust Mortgage Bond new issue, it was the clear winner to be crowned as the session’s Deal-of-the-Day!  For the deal drill-down please scroll just below. Entergy Louisiana is a sub of Entergy Corp., NYSE: ETR


Global Market Recap


  • S. Treasuries: Small losses across curve. First all-out losing session in the last 11.
  • Stocks – U.S. & Europe stocks rallied. Nikkei traded poorly & China small losses.
  • Economic – Durables were better than expected but nothing to get excited about.
  • Currencies – The CAD rallied with higher crude oil. The USD outperformed the Yen.
  • Commodities – Big rally for crude oil as OPEC agreed on a production cut (no details given).
  • CDX IG: -2.0 to 75.42
  • CDX HY: -9.68 to 404.28
  • CDX EM: -0.53 to 234.0

*CDX levels are as of 3:30PM ET today.

-Tony Farren


IG Primary & Secondary Market Talking Points


  • The average spread compression from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues was 18.875 bps.
  • BAML’s IG Master Index widened 1 bp to +143 versus +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +138.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +190.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.2b on Tuesday versus $12.8b Monday and $19.1b the previous Tuesday.
  • The 10-DMA stands at $15.8b.


Syndicate IG Corporate-only Volume Estimates for This Week and September


IG Corporate New Issuance This Week
vs. Current
WTD – $12.65b
September 2016 vs. Current
MTD – $143.418b
Low-End Avg. $22.13b 57.16% $115.45b 124.23%
Midpoint Avg. $23.30b 54.29% $116.02b 123.61%
High-End Avg. $24.48b 51.67% $116.59b 123.01%
The Low $15b 84.33% $80b 179.27%
The High $36b 35.14% $150b 95.61%


Deal-of-the-Day: Entergy Louisiana, LLC

entergy louisianaThe fairly quiet and stable day made it a good one for the few issuers who had the foresight to take advantage of an uncrowded new issue calendar, to print new deals.  One of those astute Treasury/Funding teams was Entergy that announced and priced a $400mm “will not grow” 10-year Collateral Trust Mortgage Bond for Entergy Louisiana, LLC through joint leads BNP Paribas, Goldman Sachs, KeyBanc, SMBC Nikko and U.S. Bancorp.  Co-Managers were Mischler Financial Group, Inc., Regions, Toronto Dominion and Williams Capital.

The deal announced in the early morning session post the 8:30 economic data releases as a $400mm “will not grow” CTMB new issue carrying initial price thoughts in the T+110 “area” before ratcheting in nicely to T+95 “area” guidance with “area” defined as +/-5 bps. It launched at the tightest side of guidance to launch and price at T+90.  That’s a full 20 bps of spread compression wherein the average IG Corporate contraction from IPTs to the launch this month has been more like 15 bps. A great level for the issuer, leads and Co-Managers to have achieved together.

Relative value was straight line on today’s new 10-year.  We looked at the outstanding Entergy Arkansas (A2/A) 3.50% due 4/01/2026 that was T+86 (G+90) pre-announcement, and the Entergy Louisiana 3.25% due 4/01/2028 that was T+103 bid or G+98.  Since the latter is a 12-year I adjusted 5 bps for the 12s/10s curve getting me to G+93. Taking an average of those two comps equates to a G+91.5 inferring that today’s new issue priced with a negative 1.5 bp NIC or <1.5> bp concession at today’s final T+90 pricing spread level.

I know I sound like a broken record, but really folks, demand for IG corporate credit and particularly the defensive nature of the utility sector is resounding.  Today’s order book topped out at $1.6b before the tighter launch level saw several tier I accounts drop their orders. The final order book held in extremely well without them finishing at $1.1b for a still very strong 2.75x bid-to-cover rate.  I am particularly pleased and even more proud to say that our tier II and III incremental/tertiary middle markets accounts did not drop from the book at all except for one limit order.  It was the single most satisfying outcome on a new issue since reinventing myself in the diversity space nearly 12 years ago.  A lot of that satisfaction comes from working with an issuer like Entergy and a lead left like Goldman Sachs who believe in, embrace and WILL reward the value-added proposition.

What Does True “Inclusion” Mean on Deal Day?
It’s all about involvement from start to finish.  Of critical importance is Entergy’s consistent mandate to introduce true best practices throughout the deal day issuance process,  and to include their co-managers on all calls pertaining to the deal as follows:


  • Auditor Due Diligence Call
  • Organizational and Market Update Call
  • Business Due Diligence Call
  • Go-No Go Call
  • Guidance Call
  • Launch Call
  • Pre-Pricing Due Diligence Call
  • Pricing Call


That right there is called getting us involved.  We feel a part of the deal in that we’re immediately informed as the call takes place.  We sound more informed in discussions with accounts and it just makes for a much more professional and complete approach for Co-Managers.

The Entergy Louisiana, LLC Deal Dashboard


Trading at
the Break
ETR 10yr +110a +95a (+/-5) +90 +90 <20> bps <1.5> 89/87 <1>


………and here’s a look at final book sizes and the oversubscription rate:


ETR Issue Tranche Size Book at the Top Final Book
10yr $400mm $1.6b $1.1b 2.75x


A Brief Look at Entergy’s Call to Diversity and Social Responsibility


As the nation’s oldest Service Disabled Veteran broker dealer you all know that wear our SDVBE certification/dedication proudly. When the opportunities knock we expect to be the best there is at providing value to our customers (issuers, syndicate teams and accounts).  I extol the virtues of our give-back component at every opportunity I get right here in the “QC” and all of Mischler’s employees embraces our veteran causes with one common, shared ethos.

It follows then that when we are granted opportunities to serve on transactions, we extol those same virtues held near and dear to the Issuers who we serve.  So please give a bit of time to the below.  There’s so much more to what Entergy and its wholly-owned subsidiaries do for diversity and social responsibility, but I thought I’d highlight some recent recognition they’ve received in 2016.  True to their corporate slogan it’s about “The Power of People.” It’s nice for bankers to know how to bank and structure deals, but the below is also helpful for them to better understand the corporate culture behind the issuers whose mandates they seek to secure. It brings the entire process full circle and makes the endeavor more than just about the money!

You should all know that Entergy has once again been named to the Dow Jones Sustainability North America Index. The index measures performance in economic, environmental and social dimensions against industry peers around the globe. Entergy was one of only four U.S. electric utilities named to the index. The company achieved perfect scores of 100 in the focus areas of Corporate Citizenship and Philanthropy, Biodiversity, Climate Strategy and Water-Related Risks. This is the 15th consecutive year Entergy has been included on either the World or North America index or both.

Corporate Responsibility Magazine’s 2016 list of the 100 Best Corporate Citizens

Entergy is also ranked 18th on Corporate Responsibility Magazine’s 2016 list of the 100 Best Corporate Citizens. Entergy was the highest-ranking electric utility on the list. In the category of philanthropy and community support, Entergy was ranked number 4. The list recognizes companies demonstrating transparency and accountability in highly competitive industries. This is the seventh time Entergy has been named to the list.


Cogent Reports – 2016 Most Trusted Utility Brand


During 2016, Cogent Reports conducted online surveys with more than 50,000 customers of the country’s 129 largest utility companies. Results placed Entergy as one of the top utilities nationwide in brand trust. Cogent Reports attributes the high score to Entergy’s focus on charitable giving, community volunteerism and support of low-income customers.

Saving the best for last, you all know Mischler is the nation’s Oldest Service Disabled Veteran broker dealer and our commitment to giving back to veteran causes is a shared ethos among all Team Mischler employees.  We honor Entergy for winning the 2016 Patria Award and send our heartfelt thanks and Mischler five-star salute to all of you in Treasury/Funding for being part of the Entergy’s culture and commitment to giving back to our nation’s veterans. 


Pro Patria Award

In 2016, Entergy won the 2016 Pro Patria Award from the U.S. Department of Defense’s Employer Support of the Guard and Reserve for promoting supportive work environments for members of the National Guard and Reserve. And among 2,400 nominees, Entergy was also named one of the 30 finalists for the 2016 Secretary of Defense Employer Support Freedom Award, the highest recognition given by the Department of Defense’s Employer Support of the Guard and Reserve.

So, I think it’s clear to see that Entergy is not only constantly moving the needle forward for diversity and inclusion in our IG dollar Debt Capital Markets but it is ingrained in ETR’s corporate culture.  This evening’s “QC” lays out a picture perfect illustration of what it means when a company Entergy consistently focuses work on growing and expanding diversity and social responsibility.  When an issuer gives Mischler an opportunity to grow sustainably, this daily owes it to that Company to extol the virtues of all the great things it is doing toward effective and landmark Corporate Governance. We take it seriously and the companies we serve do as well.  That is a story you will always find here in the “QC.”

Issuers do care and are looking for diversity co-managers who consistently deliver quality orders to their transactions in order to capture new investors to their profile.  I also know that when the world’s largest financial institutions lend to and bank the U.S. Fortune 500, issuers care a lot about who does it right, who does it wrong, and who doesn’t do it all.  So, maybe think about that and dedicate a section of your pitch books to diversity and social responsibility.  In our highly competitive financial services industry it just might be the difference between a mandate or not; an active role or a passive one; a role or none at all.  I am telling you this because the guy-in-the-corner really is in your corner.  It’s all helpful advice.
And of course, thanks to all of our tier II and III high quality middle markets accounts  – you all know who you are – yet I can’t mention you by name.  You are all great business partners, not to mention those who are longtime friends outside the office.  You’ve been there from the get go and as I always say, “it’s about the quality of the order” and in that regard, “you’re all BlackRock in our book.”  Thank you!

Entergy Louisiana, LLC Final Pricing Details

$400mm ETR 2.40% CTMBs due 9/01/2026 @ $99.577 to yield 2.448% or T+90. MW+15

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate

Above is the opening extract from Quigley’s Corner aka “QC”  Wednesday Sept 28 2016 distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer, the QC observations is one of three distinctive research content pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

To receive Quigley’s Corner, please contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone.

*Sources: Bank of America/Merrill Lynch, Bloomberg, Bond Radar, Dow Jones Newswire, IFR, Informa Global Markets, Internal Mischler, LCDNews, Market News International, Prospect News, Standard & Poor’s Ratings Services, S, Thomson Reuters and of course, a career of sources, contacts, movers and shakers from syndicate desks to accounts; from issuers to originators; from academicians to heads of research, and a host of financial journalists, et al.

Mischler Financial Group’s “U.S. Syndicate Closing Commentary”  is produced weekly by Mischler Financial Group. No part of this document may be reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.  “Mischler Financial” Group and the Mischler Financial Group. Article IG Corporate Debt Issuance-7th Busiest Month; Entergy Louisiana Snapshot