MetLife-Navigating Life Together; Global Funding Dashboard
December 13, 2016   //   by Mischler MarCom   //   Debt Market Commentary, Recent Deals  

Quigley’s Corner 12.12.16 – MetLife Global Funding Deal Dashboard

 

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

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

MetLife Global Funding Deal Dashboard

MetLife’s Veteran Inclusive Partnership

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending December 7th     

IG Credit Spreads by Rating & Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Tomorrow’s Calendar

 

 

Our IG DCM is certainly winding down the year. Today there were only 2 issuers that priced 4 tranches between them totaling $2.75b or over 45% of this week’s syndicate midpoint average forecast calling for $6.00b.  However that’s not to say there is nothing to write about because there is.  MetLife’s portion of today’s calendar was 73% in the form of their $2b 3-part 2yr FXD/FRN and 10yr FXD tranche.  Mischler Financial was honored and privileged to be invited to serve as an active 2.00% underwriter on MetLife’s 10yr tranche.  You know what that means?  Today’s MetLife 10-year Note transaction IS today’s “QC” Deal-of-the-Day.  Let’s get to the recaps, talking points and volume tables first followed by the MetLife Deal Dashboard, Drill Down and a surprising story about advertising and MetLife’s new rebranding.

 

Global Market Recap

 

  • S. Treasuries – Closed mixed & little changed but had a big comeback during NY hours.
  • Overseas Bonds – 30yr JGB lost 9 bps. Core & semi core EU red. Peripherals mixed.
  • 3mth Libor – Set at highest yield since May 2009 (0.95872%).
  • Stocks – S&P & NASDAQ red at 3:45pm while the Dow is green.
  • Overseas stocks – Europe more red than green. Nikkei rallied. China hit hard.
  • Economic – U.S. calendar not a factor today but will be later in the week.
  • Currencies – Poor day for the USD losing ground vs. all of the Big 5.
  • Commodities – Crude oil rallied (non-OPEC cuts) but closed $2 off of its high print.
  • CDX IG: +1.21 to 68.10
  • CDX HY: +2.65 to 358.23
  • CDX EM: -3.80 to 245.56

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • Enbridge Inc. upsized today’s 60NC10 fixed-to-floating rate Junior Subordinated Notes Hybrid new issue to $750mm from $500mm at the launch.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 4 IG Corporate-only new issues was <15.75> bps.
  • BAML’s IG Master Index was unchanged at +133.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.27.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +173 vs. +174.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.7b on Friday versus $16.1b on Thursday and $25.0b the previous Friday.

 

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

 

IG Corporate New Issuance This Week
12/12-12/16
vs. Current
WTD – $2.75b
December 2016
Forecasts
vs. Current
MTD – $38.955b
Low-End Avg. $4.74b 2.75% $40.87b 95.31%
Midpoint Avg. $6.00b 45.83% $41.52b 93.82%
High-End Avg. $7.26b 37.88% $42.17b 92.38%
The Low $0.1b/”0” 2,750.00% $30b 129.85%
The High $10b 27.5% $60b 64.92%

 

 

 

MetLife Global Funding I $1b 10yr FXD 144a/REGS FA-backed Notes Deal Dashboard

For the MetLife relative value study I looked at the outstanding MET 1.95% Secured Notes due 9/15/2021 that were T+80 pre-announcement. Applying a 20-25 bps (call it 22.5 bps) for the 5s/10s credit curve gets you to T+102.50 inferring a negative or <5.5> bps NIC vs. today’s final T+97 spread level.

Another approach to fair value would be to look at the outstanding MET Global Senior Unsecured 3.60% due 11/13/2025 that were T+90 (G+99) before today’s MET new issue hit the tapes.  The new MET 10-year Holdco was T+105-110 (call it T+107.5). FA-backed paper is also better rated and typically trades inside Holdco paper.  So call fair value from this angle T+100-105 or T+102.5 also pegging NIC on today’s new T+97 10year as negative <5.5> bps.

 

 

GS Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
MET +115a +100a (+/-3) +97 +97 <18> bps <5.5> 95/94 <2>

 

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

 

MET  Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
MET $1b $2.5b 2.50x

 

Final Pricing – MET $1b 3.45% 10yr due 12/18/2026 @ $99.933 to yield 3.458% or T+97

 

The Guy-in-the-Corner Bids Adieu to Y&Rs Long Ago “Snoopy” Campaign and Welcomes in MetLife’s New Green and Blue.

metlife-debt-market-mischler

Given my 4+ years as a film producer at Young & Rubicam Advertising – my first job after graduating from USC’s School of Cinematic Arts – how happy I am to tell you the story about MetLife’s huge re-branding campaign that will roll out throughout 2017.  It all begins with a new logo and tagline which is “MetLife. Navigating life together.” The logo is a simple letter “M” (see above) that brings together the MetLife brand’s classic blue and new green that is reflective of the company’s partnership with its customers.  It also means farewell to the 31 long and sweet years that MetLife had enjoyed employing Charles Schulz’s Peanuts characters in their branding campaigns.

The reason for the change is simple – MetLife was looking to transform its brand to convey that it is a Company actively engaged in ongoing, frequent partnerships around navigating and solving life’s challenges.  MetLife is transforming its brand as it is becoming more focused on the types of customers it serves and the brand to reflect that.  Given the underlying motivation and strategy of its re-branding campaign I am very proud to say that Mischler is happy to share “blue and green” today with MetLife.  We appreciate our partnership with MetLife and those who we liaised with on today’s 10-year FA-backed 10-year new issue.

Life IS change.  We are constantly reminded of that fact.  I fondly recall producing test commercials for MetLife way back during my earlier career at Y&R from 1983 thru 1987. It was a long and wonderful campaign that served its purpose well through the years but all good things give way to improvements and such is MetLife’s new roll-out.  Good bye Snoopy and hello Blue and Green!

P.S. Don’t worry about Snoopy. He’ll enjoying a wonderful retirement with his pal Charlie Brown.

 

MetLife’s Veteran Inclusive Partnership

MetLife is a diverse employer.  How do we know? Simple. Everything at a Company starts from the top down folks.  So, what does MetLife Chairman, CEO and Chief Executive Officer, Steven A. Kandarian think about Diversity and Inclusion?
“………A diverse workforce and a culture of inclusion are essential to the way MetLife does business and how we treat our employees.  We are committed to diversity and inclusion at MetLife, and strive to be known as an inclusive global company that attracts, develops and retains the best talent.  A workforce that reflects our customer base is essential to our continued success.”

Global Chief Diversity and Inclusion Officer, Elizabeth Nieto continued, “as a global company, our goal is to honor the cultures, backgrounds, unique experiences and perspectives that our employees, customers and suppliers bring to enhance the “fabric of a world class company”…..that is MetLife.”

The company ensures fairness in vetting and evaluating its diversity vendors and partners.  It leverages the best practices of The National Veteran Business Development Council, Women President’s Educational organization and the National Minority Supplier Development Council among others to institute a meaningful evaluation process to identify, qualify and partner with its well-vetted partnerships with diverse companies such as Mischler Financial Group, Inc.

Additionally, MetLife recognizes that hiring veterans is not just the right thing to do, but it is also the right thing for its global business.  Veterans after all, leave the military with discipline, an ability to lead and passion for service commensurate with MetLife’s own core values.  That’s the reason MetLife fosters a company culture honoring the wealth of experiences, traits and skills of those who have served or continue to serve their country.  As a result, MetLife is regularly recognized on GI Job’s Military Friendly Employers list.

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

 

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
12/12
AVERAGES
WEEK 12/05
AVERAGES
WEEK 11/28
AVERAGES
WEEK 11/21
AVERAGES
WEEK 11/14
New Issue Concessions <1.83> bps 4.26 bps 3.53 bps 4.5 bps 3.62 bps
Oversubscription Rates 2.15x 3.68x 3.38x 2.99x 2.78x
Tenors 6 yrs 9.21 yrs 10.84 yrs 12.14 yrs 11.28 yrs
Tranche Sizes $688mm $760mm $711mm $929mm $1,039mm
Avg. Spd. Compression
IPTs to Launch
<15.75> bps <22.24> bps <17.60> bps <16.07> bps <17.69> bps

 

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.

 

IG

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Enbridge Inc. Ba1/BBB- 6.00% 60NC10 750 6.25%a 6.00% the # 6.00% $100.00 BAML/HSBC/JPM
MetLife Global Funding Aa3/AA- FRN 12/19/2018 500 3mL+equiv 3mL+equiv 3mL+43 3mL+43 DB/CITI/USB/WFS
MetLife Global Funding Aa3/AA- 1.75% 12/19/2018 500 +75a +65 the # +65 +65 DB/CITI/USB/WFS
MetLife Global Funding Aa3/AA- 3.45% 12/18/2026 1,000 +115a +100a (+/-3) +97 +97 DB/BARC/JPM/MS

           

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.27 1.27 0
IG27 66.89 68.095 1.205
HV27 137.825 136.006 <1.819>
VIX 11.75 12.64 0.89  
S&P 2,259 2,256 <3>
DOW 19,756 19,796 40  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $2.75 bn DAY: $2.75 bn
WTD: $2.75 bn WTD: $2.75 bn
MTD: $38.955 bn MTD: $44.905bn
YTD: $1,283.717 bn YTD: $1,623.651 bn

 

Lipper Report/Fund Flows – Week ending December 7th     

     

  • For the week ended December 7th, Lipper U.S. Fund Flows reported an inflow of $2.583b into Corporate Investment Grade Funds (2016 YTD net inflow of $41.047b) and a net inflow of $2.034bm into High Yield Funds (2016 YTD net inflow of $6.973b).
  • Over the same period, Lipper reported a net inflow of $1.761b into Loan Participation Funds (2016 YTD net inflow of $2.322b).
  • Emerging Market debt funds reported a net outflow of $1.005b (2016 YTD inflow of $4.738b).

 

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are an average 24.00 bps wider versus their post-Crisis lows!

 

ASSET CLASS 12/09 12/08 12/07 12/06 12/05 12/02 12/01 11/30 11/29 11/28 1-Day Change 10-Day Trend PC
low
IG Avg. 133 133 134 134 135 135 135 136 136 136 0 <3> 106
“AAA” 75 75 75 75 75 75 75 75 75 75 0 0 50
“AA” 81 82 82 82 82 83 83 84 84 83 <1> <2> 63
“A” 106 106 106 107 107 107 107 108 108 108 0 <2> 81
“BBB” 170 171 172 172 173 174 174 175 177 177 <1> <7> 142
IG vs. HY 295 305 308 316 323 329 327 331 333 330 <10> <35> 228

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:

Spreads across the major industry sectors are an average 30.00 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 12/09 12/08 12/07 12/06 12/05 12/02 12/01 11/30 11/29 11/28 1-Day Change 10-Day Trend PC
low
Automotive 121 121 121 121 121 122 122 123 123 123 0 <2> 67
Banking 123 124 124 125 125 126 125 125 126 126 <1> <3> 98
Basic Industry 170 172 173 174 175 176 175 177 175 175 <2> <5> 143
Cap Goods 99 99 100 100 100 101 101 102 101 101 0 <2> 84
Cons. Prod. 109 109 109 109 109 110 109 110 110 110 0 <1> 85
Energy 170 172 173 174 175 177 177 180 181 180 <2> <10> 133
Financials 152 153 154 154 155 155 154 155 157 157 <1> <5> 97
Healthcare 117 117 117 117 118 118 118 119 118 118 0 <1> 83
Industrials 135 135 136 136 137 137 137 139 139 139 0 <4> 109
Insurance 145 146 146 146 146 147 146 147 147 147 <1> <2> 120
Leisure 135 135 134 134 135 135 135 135 135 134 0 +1 115
Media 157 158 158 159 159 160 159 161 161 160 <1> <3> 113
Real Estate 143 143 143 143 144 144 144 144 142 142 0 +1 112
Retail 114 115 115 116 116 116 116 117 117 117 <1> <3> 92
Services 127 127 127 128 128 128 128 128 127 127 0 0 120
Technology 108 109 109 110 110 110 110 112 112 113 <1> <5> 76
Telecom 163 163 164 165 165 166 165 166 167 167 0 <4> 122
Transportation 131 132 133 135 135 135 135 136 135 135 <1> <4> 109
Utility 133 134 135 135 135 136 135 135 135 135 <1> <2> 104

 

New Issue Pipeline

Above is the opening extract from Quigley’s Corner aka “QC”  Tuesday December 12 2016 edition 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.

Quigley’s Corner 12.12.16 – MetLife Global Funding Deal Dashboard