Investment Grade Debt: Who Will Issue at Record Low Yield?
October 14, 2016   //   by Mischler MarCom   //   Debt Market Commentary, Recent Deals  

Quigley’s Corner 10.13.16  Who Will Issue at Record Low Yield?


Investment Grade Debt New Issue Re-Cap – Strong Day for IG Issuance

Toyota Motor Credit Corp. $2b 3-part Deal Dashboard

Toyota Finance Eyes Bond Issue with Record-Low 0.0003% yield

Global Market Recap

IG Primary & Secondary Market Talking Points

Oversubscription Rates for IG New Issuance

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

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 nice day for IG primary markets as 5 IG Corporate issuers priced 13 tranches between them totaling $8.25b.  SSA chimed in as well with 2 issuers, 2 prints and a total of $3.5b bringing the all-in IG day total to 7 issuers, 15 tranches and $11.75b.  We broke right thru the low-, midpoint and high-end syndicate estimates for IG Corporate issuance this week.  Versus the midpoint forecast, we priced $19.855b against $15.02b so, weekly supply is 32% above that number.  We are now 41% of the syndicate IG Corporate outlook for the month of October or $36.455b vs. $88.59b.

It was also a great day for Mischler Financial, the nation’s oldest SDVBE as we were privileged and honored to serve as a 1.00% active Co-Manager on Toyota Motor Credit Corp’s. $2b three-part 3yr FXD/FRN and 7yr FXD Senior Unsecured Notes new issue.

As you all recall from last week’s “QC” dated Wednesday, October 5, 2016 edition (time-stamped at 10:22PM ET I might add…..check your incomings!), “Toyota made Diversity & Inclusion history with a Mischler sponsored investor luncheon that gathered together 12 accounts in person in Manhattan and 46 dial-in investor participants.”  Needless to say we’re glad TMCC issued so close to that historic day last week.  Here’s an example of the type of investor feedback I received as orders were placed in to me today during the internal book build:

“We are very grateful and feeling up to speed and more well informed on TMCC than we have in some time thanks to your call last week.” 
Toyota Motor Credit Corp. $2b 3-part Deal Dashboard


Comparable Bid
Trading at
the Break
3yr FRN 3mnL+equiv 3mL+equiv 3mL+44 3mL+44 <14.5> bps TMCC 1.40% due 5/2019 G+53
*2bps 3s/5s cdt. curve adj.
3 bps


3mL+43/45 <1>
3yr FXD +low 70s/+72.5 +60a (+/-2) +58 +58 <14.5> bps TMCC 1.40% due 5/2019
*2bps 3s/5s cdt. curve adj.
3 bps 57/56 <1>
7yr FXD +hi 80s/+87.5 +77a (+/-2) +75 +75 <12.5> bps TMCC 2.625% due 1/2023
5 bps 72/70 <3>


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


TMCC Issue Tranche Size Final Book
3yr FRN 500mm $920mm 1.84x
3yr FXD 1,000mm $2.2b 2.20x
7yr FXD 500mm $1.15b 2.30x



And before I sign off, Mischler would like to congratulate Toyota Finance, a different issuer under the same Toyota umbrella, for setting a new yen record low yield.  That’s right!  I cannot say if it’s in “modern history” or “of all time” because I do not know of a John Murphy in Japan!  There’s only one JM.  However, suffice it to say, Nikkei Asian Review published the following as of this writing that was then also published as a Bloomberg news article as well:


October 14, 2016 3:15 am JST


Toyota Finance Eyes Bond Issue with Record-low 0.0003% yield


TOKYO — Toyota Finance is expected to issue new three-year bonds with an annual yield of about 0.0003%, the first Japanese corporate debt with an issue yield of less than 0.001%.

The Toyota Motor unit will iron out details as early as Friday, with plans to issue the debt by the end of the month. The company plans to raise about 25 billion yen ($241 million). At 0.0003%, the total annual borrowing cost for the debt comes to just 75,000 yen, or little more than $720.


The Bank of Japan decided to lead long-term interest rates to about 0% when it conducted a comprehensive review of its monetary easing policy in September. But yields on 10-year, five-year and two-year Japanese government bonds remain in negative territory, exerting downward pressure against yields on corporate debt. Amid a lack of options, mutual funds and institutional investors are turning even to corporate bonds with extremely low returns.



Toyota’s financial arm certainly lives up to the parent company’s slogan of “Let’s Go Places.”  Thanks for breaking new ground and for taking us onboard to one of those new “places.”

Global Market Recap

  • S. Treasuries – Strong session for USTs & long end in Europe. U.S. bill market was well bid.
  • Stocks – U.S. stocks under heavy pressure early but are staging an afternoon rally.
  • Overseas Stocks – Poor day for Europe & HS. Nikkei small loss & China small gain.
  • Economic – The U.S. jobless claims data were off the charts good. Best in 43 years.
  • Currencies – USD lost ground vs. all of the Big 5.
  • Commodities – Copper down big & wheat up big. Crude small gain despite bearish inventories.
  • CDX IG: +0.18 to 75.70
  • CDX HY: +3.11 to 407.80
  • CDX EM: +0.50 to 237.34

*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 13 IG Corporate-only new issues was 22.19 bps.
  • BAML’s IG Master Index was unchanged at +137.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +132 vs. +133.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +183 vs. +184.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.7b on Wednesday versus $15.4b Tuesday and $18.7b the previous Wednesday.
  • The 10-DMA stands at $15.9b.


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


IG Corporate New Issuance This Week
vs. Current
WTD – $19.855b
October 2016 vs. Current
MTD – $36.455b
Low-End Avg. $14.15b 140.32% $87.83b 41.51%
Midpoint Avg. $15.02b 132.19% $88.59b 41.15%
High-End Avg. $15.89b 124.95% $89.35b 40.80%
The Low $10b 198.55% $75b 48.61%
The High $20b 99.275% $125b 29.16%


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


NICs, Bid-to-Covers, Tenors and Sizes


Here’s a review of this week’s key primary market driver averages for IG Corporates only through Wednesday’s session followed by the averages over the prior four weeks:

WEEK 10/03
WEEK 9/26
WEEK 9/19
WEEK 9/12
New Issue Concessions Holiday 3.19 bps 2.00 bps 4.36 bps 2.71 bps 0.69 bps 4.66 bps
Oversubscription Rates Holiday 3.48x 2.80x 4.20x 3.52x 3.23x 3.47x
Tenors Holiday 11.33 yrs 3 yrs 12.16 yrs 10.51 yrs 9.36 yrs 11.28 yrs
Tranche Sizes Holiday $663mm $500mm $523mm $646mm $964mm $710mm


New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

For ratings I use the better two of Moody’s, S&P or Fitch.



Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
CSX Corp. Baa1/BBB+ 2.60% 11/01/2026 700 +110a +95a (+/-5) +90 +90 CITI/CS/JPM/UBS
CSX Corp. Baa1/BBB+ 3.80% 11/01/2046 800 +155a +140a (+/-5) +135 +135 CITI/CS/JPM/UBS
CSX Corp. Baa1/BBB+ 4.25% 11/01/2056 700 +200a +180a (+/-2) +178 +178 CITI/CS/JPM/UBS
Ecolab Inc. Baa1/A- 2.70% 11/01/2026 750 +130a +105a (+/-5) +100 +100 CITI/CS
Ecolab Inc. Baa1/A- 3.70% 11/01/2046 250 +165a +135a (+/-5) +125 +125 CITI/CS
Global Bank Corp. BBB-/BBB- 4.50% 10/20/2021 550 +mid 300s/+350a +337.5a (+/-12.5) +325 +325 CITI/DB/JPM
KEXIM Aa2/AA FRN 10/21/2019 750 3mL+equiv 3mL+equiv 3mL+46 3mL+46 ANZ/BAML/CA/MS/MIZ
KEXIM Aa2/AA 1.50% 10/21/2019 750 +80a +65a (+/-5) +60 +60 ANZ/BAML/CA/MS/MIZ
KEXIM Aa2/AA 1.875% 10/21/2021 300 +90a +75a (+/-5) +70 +70 ANZ/BAML/CA/MS/MIZ
KEXIM Aa2/AA 2.375% 4/21/2027 700 +100a +75a (+/-5) +70 +70 ANZ/BAML/CA/MS/MIZ
Toyota Motor Credit Corp. Aa3/AA- FRN 10/18/2019 500 3mL+equiv 3mL+equiv 3mL+44 3mL+44 BAML/RBC/SMBC/SG
Toyota Motor Credit Corp. Aa3/AA- 1.55% 10/18/2019 1,000 +low 70s/+72.5 +60a (+/-2) +58 +58 BAML/RBC/SMBC/SG
Toyota Motor Credit Corp. Aa3/AA- 2.25% 10/18/2023 500 +hi 80s/+87.5 +77a (+/-2) +75 +75 BAML/RBC/SMBC/SG



Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Japan Int’l. Cooperation Agency A+/AA+ 2.125% 10/20/2026 500 N/A RG: MS+60a
Kingdom of Sweden Aaa/AAA 1.125% 10/21/2019 3,000 MS+8a MS+7a MS+6 +20.45 BARC/GS/HSBC/SEC


Indexes and New Issue Volume

Above is the opening extract from Quigley’s Corner aka “QC” Thursday Oct 13 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: 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.

Investment Grade Debt: Who Will Issue at Record Low Yield?