20th Century Bond Yields-Knowing the Past for the Future-Mischler Comment
October 13, 2016   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 10.12.16  Investment Grade Corporate Debt Comments: 20th Century Bond Yields


Investment Grade Corporate Debt New Issue Re-Cap

Global Market Recap

IG Primary & Secondary Market Talking Points

FOMC: Minutes: Headlines & Text

Knowing the Past for the Future – “20th Century Bond Yields”

Consumers Power Company Supplemental Indenture – 2.875% FMBs due 1977 Dated Sept 1, 1947

A Special Salute to Women’s Syndicate Association 2016 Holiday Charity Gala

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 5th  

IG Credit Spreads (by Rating/Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab


It was a slow day today in our IG dollar DCM with one lone corporate issuer – Sumitomo Mitsui Trust Bank – pricing a $1b two-part 3-year FXD/FRN. I should add, however, that overall volume benefitted nicely from the SSA’s KfW $5b 3-year bringing the all-in IG day totals to 2 issuers, 3 tranches and $6b.


Let’s look at the global re-cap followed by the pertinent IG primary and secondary market talking points and a quick snapshot of WTD and MTD volumes in relation to syndicate forecasts and a look at today’s FOMC Minutes Headlines and Text.


o   U.S. Treasuries – Losing session for USTs but they did close above the session low prices.

o   Overseas Bonds – JGB’s closed mixed with long end bid. Poor session in Europe.

o   3mth Libor – Set at the highest yield since May 2009 (0.88111%).

o   Stocks – U.S. mixed at 3:30pm. Europe more red than green. Asia closed down.

o   Economic – The FOMC Minutes were a mixed bag. We have a divided Fed.

o   Currencies – USD mixed. The DXY Index traded over 98 for the 1st time since March.

o   Commodities – Crude oil & gold had small losses. Wheat traded poorly.

o   CDX IG: +0.03 to 75.78

o   CDX HY: -0.31 to 406.40

o   CDX EM: -3.25 to 237.40

*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 2 IG Corporate-only new issues was 15.00 bps.
  • BAML’s IG Master Index tightened 1 bp to +138 vs. +139.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +134 vs. +135.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +184 vs. +185.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $11.2b on Friday versus $17.3b Thursday and $15.3b the previous Friday.
  • The 10-DMA stands at $15.8b.


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


IG Corporate New Issuance This Week
vs. Current
WTD – $11.605b
October 2016 vs. Current
MTD – $28.205b
Low-End Avg. $14.15b 82.01% $87.83b 32.11%
Midpoint Avg. $15.02b 77.26% $88.59b 31.84%
High-End Avg. $15.89b 73.03% $89.35b 31.57%
The Low $10b 116.05% $75b 37.61%
The High $20b 58.025% $125b 22.56%


FOMC Minutes: Headlines & Text


o   Substantial majority of officials saw risks as roughly balanced.

o   A few officials still saw risks weighted to the downside.

o   Several FOMC members saw rate rise “relatively soon.”

o   The decision to wait was a ”close call.”

o   It was noted that a “reasonable argument” could be made to hike.

o   A number of officials saw policy firming over the next few years.

o   Many FOMC members saw few signs of inflation pressure.

o   Several officials saw multiple headwinds to inflation.

o   Many saw some labor market slack remaining.

o   Differing views were voiced on the extent of labor market slack.

o   Some saw more scope for growth without pressuring the labor market.

o   Cost/benefit of undershooting full employment was discussed.


Consumers Energy Company’s John Murphy Transcends The Records for the “QC!” 

When I write my “Best and Brightest” syndicate forecast poll as we enter each new month I include a section titled “Knowing the Past for the Future” that takes a look at a decade’s worth of that month’s IG Corporate and SSA issuance.  It helps put the current forecast into historical perspective.  I then include an average over the past decade, five years and three years showing a year-by-year issuance break-out across that decade.  Many find it very helpful, useful and informative so, I do it.  Well guess what?  History is relative and it seems current market participants continue to enjoy records and “top ten lists” as does most of our nation.  “What’s the largest week of all-time?”..……..”What’s the highest IG Corporate monthly volume of all-time?” or how about ………….”…the lowest yield or coupon of all-time?”  A very astute and super good guy by the name of John Murphy at Consumers Energy Company  (NYSE:CMS) located in Jackson, Michigan reached out to me this morning regarding last evening’s “QC.”


Here’s what he wrote:


Hope you’re well.  I continue to enjoy your market commentary.  While catching up on the end of last week’s versions, I noted the following info from your Thursday edition:

“However, all issuers should know that if you blinked you might have missed some historic news.  In speaking with Andrea Johnson of Informa Globalmarkets (US) Inc. she discovered and revealed that “the President and Fellows of Harvard College priced the lowest ever 30-year yield and set a new all-time low for 40-year coupons.”

You’ll see from your attached commentary from 2012 in the third paragraph below, you addressed this same subject regarding perceived ‘lowest ever” 30-yr rates.  Certainly today’s low rates are remarkable, but as you indicated below, they are modern low rates, not lowest ever.  I’ve attached a scan from the supplemental indenture of one of Consumers Energy’s (formerly Consumers Power) early 30 year bonds from 1947 (2 7/8%).  Best wishes.

John Murphy


And here is a re-print of my closing commentary dated March 10, 2012 that John is referring to:

All time low investment grade rated corporate bond coupons: In addition, I’d like to mention that a respected elder statesman of the U.S. utility industry, who also happens to be an avid reader of this daily, delineated for me the difference between the “modern era” of bond yields with those of the 20th century specifically during the 1950s.  Many financial information and data services publish various top ten or top twenty low coupon rate grids and the like.  People enjoy placing facts and data in historical contexts and quite honestly, our society loves to know “the biggest this” and “the lowest that”, “who is number one” and “what are the top ten”.  It’s an extension of our culture.  The reader was very kind to express his enjoyment of my write ups however he observed that references to all-time low coupons should be modified to “modern history.”  From 1945 thru the early 1950s high grade corporate bond yields hovered at around 2.75% to 3%.  He particularly identified several 30-year FMBs that carried low 3% coupons noting that there are other utilities with similar histories.  So, we acknowledge the history lesson, we enjoy such exchanges and encourage any of our readers to chime in with opinions, suggestions or snippets of history that make for fun and informative exchanges which result in a better product.  As a result of this great “history lesson” going forward I will identify low coupon records in the context of “modern history,”  After all, available data bases are wonderful and helpful sources of information, but history didn’t start when those data bases began.  I’d also like to thank the reader for the friendly and informative exchange as well as for supplying me with a reference page that he stumbled upon in an old textbook. It graphs what interest rate “indices” illustrate from what he jokingly referred to as the “Pleistocene era.”  The sub 3% era on the graph for corporate 30-year bonds corresponds nicely with several U.S. utilities’ “golden age” of coupon rates.  Treasury/Funding teams as well as all market participants should get a kick out the below chart titled “20th Century Bond Yields” and followed by the “Indenture” cover.

Please enjoy!


Knowing the Past for the Future – “20th Century Bond Yields”


Consumers Power Company Supplemental Indenture – 2.875% FMBs due 1977 Dated September 1, 1947






Now THAT right there folks is pretty cool stuff! Definitely a wealth of knowledge whom we appreciate! John is highly respected and regarded in our domestic utility sector and he literally personifies the term “Know the Past for the Future” especially given his 40+ years at CMS.  Thank you John for the e-mail this morning pal.


For those of you wondering, Andrea Johnson’s data base dates back to 1993 hence, “of the modern era.”……….and “yes” AJ enjoyed the well-intended and collegial history lesson.


Next up………………………………………


Women’s Syndicate Association 2016 Holiday Charity Gala to Help Raise Funds for “Strong Women, Strong Girls” (SWSG)


Speaking of women who are great at what they do, much like Andrea Johnson who is the best at what she does, I received an IPREO wire this morning from The Women’s Syndicate Association (WSA).  I would guess that anyone in syndicate received the same this morning as well.  It is a cordial invitation to attend WSA’s 2016 Holiday Charity Gala on Wednesday, November 30, 2016.

Here it is:


Join us for a festive evening with the entire syndicate community, in an effort to raise proceeds for an important charity (listed below). Note:  This is a street-wide event, in which all attendees are welcome (i.e., non-members/members, males/females).

Venue details are as follows:

Date:            Wednesday, November 30, 2016

Time:            6:00pm – 10:00pm

Location:     Brasserie 8 ½

9 West 57th Street (Between 5th/6th Ave)

New York, NY 10017

Cost of the event is $150.00 per person, which includes Hors D’oeuvres, Buffet Dinner and Open Bar. Raffle tickets will be sold at the venue (cash only) to fund the selected charity.

Please use the following link to register and submit payment for all  guests, prior to November 23rd:


If you are interested in making a generous donation for this event, please contact Gina Kashinsky at gina.kashinsky@ipreo.com or 212.849.0363.  All donations are welcomed and appreciated!

We look forward to commencing the holiday season with you all in the most benevolent fashion!


A Word About the Women’s Syndicate Association     

With over 250 active members, including alumni, the Women’s Syndicate Association or “WSA” is valued for its success in helping women form lasting ties with colleagues across the financial services industry.  The WSA sponsors a wide variety of events throughout the year to create unique opportunities for its members to meet and share their experiences.  Through the Women’s Syndicate Association, members have been able to build mutually beneficial relationships that stretch from the workplace to their home life.  The “QC” is only too happy to promote the WSA for all they do to give back to wonderful causes 365 days of the year!  Chances are that most of my 3,500+ readership group, especially those in syndicate, have been attending the annual WSA shindig for years.  Let’s remember all the hard work the members of WSA do away from their meaningful annual reception as in the case of their latest fundraiser for Strong Women Strong Girls.

WSA’s 2016 Beneficiary: Strong Women Strong Girls (SWSG)

Founded in 2004, this non-for-profit organization is dedicated to mentoring females in under-resourced communities to build strength and empowerment. Strong Women, Strong Girls strives to support positive mentoring relationships between college women and pre-adolescent girls in underserved local communities with the vision that every girl realizes her inner strengths to dream and do.

Some glaring FACTS about women and girls that you need to know:

o   Today, a girl’s self-esteem peaks in the 4th grade, when she is just 9 years old.

o   Today, women represent only 11% of the engineers in the work force.

o   Today women make up only 18% of the House of Representatives.

o   Today, working women are only paid 2/3 of what men make doing the same job.

o   Today, only 3% of women are CEO’s of Fortune 500 companies.


Those statistics need to be changed for the 52% of the world’s population – who are women.

And now the ask – please find it in yourselves to attend the upcoming WSA event and/or donate to this wonderful worthy cause that helps empower women to achieve their full potential.  Strong women make a difference in our world, our industry and in our personal lives.  As they say at SWSG: “Strong girls will dream farther; Strong women will help them get there.”  I’ll also add that dedicated and encouraging men will co-sign and support those dreams and achievements!  There’s everything right about this folks so get your check books out and write one to SWSG.  I donated today as well.

Please use the following link to register and submit payment for all  guests, prior to November 23rd:


If you are interested in making a generous donation for this event, please contact Gina Kashinsky at gina.kashinsky@ipreo.com or 212.849.0363.  All donations are welcomed and appreciated

As they say at Strong Women, Strong Girls:

Succeed like a girl.

There is no ceiling.

Thank you and have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate


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.

NICs, Bid-to-Covers, Tenors and Sizes

Above is the opening extract from Quigley’s Corner aka “QC” Wednesday Oct 12 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.