A Tribute to Roger Moore’s AAA-Rated Bond; Mischler Debt Market Comment
May 24, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 05.23.17- Tribute to Roger Moore’s AAA-Rated Bond

Below is the opening extract from Quigley’s Corner aka “QC” Tuesday May 23, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest 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 is one of three distinctive market comment 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. The QC 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 email: rkarr@mischlerfinancial.com or via phone 203.276.6646

Investment Grade New Issue Re-Cap:  Bonds, Bonds and Roger Moore’s AAA Rated Bond

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates

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 May 17th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline – $216.2 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

The vibrant IG primary DCM continued along its trajectory today with 9 IG Corporate issuers pricing 18 tranches between them totaling $13.325b.  The SSA space saw KfW boost the volume totals with a $5b 3-year for an all-in IG day total of 10 issuers, 19 tranches and $18.325b.

 

  • The IG Corporate WTD total is over 109% of this week’s syndicate midpoint average forecast or $33.40b vs. $30.48b.
  • MTD we’ve now priced more than 115% just above the IG Corporate mid-range syndicate projection for May or $142.338b vs. $123.42b.
  • There are now 6 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $159.738b.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Great-West Lifeco upped its 30-year Senior Notes new issue to $700mm from $500mm at the launch and at the tightest side of guidance.
  • Public Storage increased its $25 PerpNC5 preferred new issue today to $250mm from $100mm.
  • Activision Blizzard Inc. its $1.2b 3-part 5-, 10- and 30-year Senior Notes new issue launch 5 bps tighter than the tightest side of guidance today on each of the three tranches.  A rarity among rarities and worth posting here..
  • DDR Corp. increased its 10-year Senior Notes new issue to $450mm from $300mm.
  • Ascension Health upsized the tap of its 3(a)(4) exempt 3.945% Senior Unsecured Notes due 11/15/2046 to $225mm vs. $220mm bringing the new total to $925mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 15 IG Corporate-only new issues, that displayed price evolution and excluding today’s $25 Perp NC5 Preferred was <21.73> bps.
  • The average spread compression including today’s $25 PerpNC5 Preferred was <21.00>.
  • BAML’s IG Master Index was unchanged at +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp +112 versus +113.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.4b on Monday versus $11.3b on Friday and $15.4b the previous Monday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap

 

  • U.S. Treasuries – 4th losing session in a row for the UST market.
  • Overseas Bonds – JGB’s better except the 5yr. Europe closed mixed.
  • Stocks – 4th winning session in a row for U.S. stocks
  • Overseas Stocks – Asia closed down while Europe rallied.
  • Economic – U.S. data was a mixed bag. FOMC Minutes tomorrow.
  • Overseas Economic – Japan data was mixed. Solid data in Europe except the U.K.
  • Currencies – USD traded very well during NY hours.
  • Commodities – CRB, natural gas, gold & wheat closed red while crude oil moved higher.
  • CDX IG: -0.29 to 61.91
  • CDX HY: -0.74 to 327.04
  • CDX EM: -3.89 to 193.37

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·           N. Korea “deployment and mass production” of ballistic missiles that could reach Japan & Guam.

·           Increasing tensions between North Korea (pop: 24mm) & South Korea (pop: 44mm).

·           Dictator Kim Jong-Un increasingly belligerent and irreverent to international community.

·           Disruption of political landscape in the Pacific Rim.

ELEVATED
BREXIT Fallout/
Terror Event in U.K.
·           Suicide bombing in Manchester kills 22 wounding over 50. ISIS claimed responsibility.

·           Pres. Trump lashes out at terrorists; urges unity of people of all faiths to destroy radical factions.

·           Contentious U.K./EU negotiations over BREXIT. U.K. threatens to abandon talks.

·           2nd Scottish independence referendum Fall 2018 or Spring 2019. Also support for a vote in Ireland.

CAUTION
“Trump Factor”
·          Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·          FBI Controversy over firing of Comey/Russia scandal?

·          Potential mid-term election loss to Dems in 11/2018 will impede any progress/GOP dissension.

·          U.S. partisan politics reach zenith combined with media war against Trump

·          Will the Donald be able to fulfill campaign promises & how long before his tax reform plan?

MODERATE
“Dysfunction Junction”
·          Syria/Terrorism/Venezuelan civil unrest/Brazil’s scandal & new recession.

·          Russia meddling in international elections/Russia in expansion mode

MARGINAL
2018 U.S. Recession
·         Chance of a 2018 U.S. recession.

·         Highly fractious Italian political landscape. 64 governments in 72 Post WWII years.

·         Italy’s 5 Star Movement & EU skeptic parties have more influence than in other EU elections.

·         As Italian elections approach, EU risks increase significantly/Italian debt-to-GDP ratio is 133%.

·         A referendum vote could result in a “QUITALY”/Also, China hard landing

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/22-5/26
vs. Current
WTD – $33.40b
May 2017
Forecasts
vs. Current
MTD – $142.338b
Low-End Avg. $29.69b 112.50% $122.27b 116.41%
Midpoint Avg. $30.48b 109.58% $123.42b 115.33%
High-End Avg. $31.27b 106.81% $124.56b 114.27%
The Low $20b 167.00% $100b 142.338%
The High $40b 83.50% $150b 94.89%

 

……….and Roger Moore,  the AAA Rated Bond

bond tribute roger moore AAA rated

 

 

The 25 Bond films have grossed a total of $7.1 billion in global box office receipts. It is estimated that half of the world’s population has seen a James Bond film. Ian Fleming’s 14 Bond books have sold over 100 million copies.  (I have read all them……twice!) So, it’s no wonder this USC film school graduate, long ago TV commercial film producer and film buff was bummed out this morning upon hearing of the passing of Sir Roger Moore at the age of 89 in Switzerland.  A private funeral will be held in Monaco so Roger will be going out in true Bond style.

It was another act of violence, this time in Manchester, England last evening that kept many viewers transfixed to their televisions. Thoughts and prayers extended for the 22 killed, the 59 injured and their respective families, relatives and friends. What makes it so difficult to fathom such an act in our civilized society is that yesterday’s suicide bombing took the lives of so many young children who had just enjoyed a concert. Tragic. So, tragic.  What also gripped me last night was that as I watched, it became immediately noticeable how objective the news reporting was as I switched cable news channels during commercial breaks. The journalists and anchors did their job as live feeds came in and the story developed before our eyes.  It was a tragedy that took the lives of innocent people to get the media industry to report objectively (FINALLY!) and they each did a highly commendable job.  But it left me wanting more from them and not just in covering last evening’s story but in covering news – generally speaking – as it should be every single day.

Segue to this morning’s coverage of Israeli Prime Minister Benjamin Netanyahu’s speech and introduction of President Trump who then spoke eloquently about history, religion, and the war on terror.  The message was clear – Christians, Jews and Muslims alike should unite to aggressively confront threats to our civilization and to each of our religions so we can all enjoy living together in our increasingly diverse world.

 

In light of the harsh realities of our new world order and common fight against terror it’s no surprise then to realize that for 55 years dating back to Dr. No in 1962, people have found and embraced a universal James Bond, the super spy character created by Ian Fleming. We all need a ruthless hero in the form of a good guy who at times has to execute bad things for the greater good. When he empties a full revolver into his first onscreen kill in Doctor No, he quips, “That’s a Smith & Wesson, and you’ve had your six.”  In film we can appeal to our primordial instincts and Bond exits as hero each time the world traveler tracks down and kills society’s evil thugs.  One can get away with that in film.  Like relative value studies, it’s part art part science.  It’s film, but it’s portrayed by real living performers.  Bond is decisive and gets his job down each and every time. He kills people who deserve to die and, viewers all agree, they need to go.  Just like terrorists in today’s world. Roger Moore starred in a total of seven Bond epics and endeared himself throughout the world audience through his refreshing portrayal of the daring character he played.  Following on the heels of Sean Connery, Moore knew from his first Bond adventure, Live and Let Die, that he couldn’t be the former so he added amusing humor to the character in a very deadpan, witty and raffish way admired the around the world.

Bond does it with class, adventure, luxury and with the most gorgeous people by his side in the world’s most exotic locations.  He has taste, style, sophistication and oh that sense of humor. A good guy killer wrapped in a tuxedo. With his mission accomplished Bond always takes a sabbatical from work as a reward for saving society from domineering bad guys and terrorists. So, last night’s tragic evening segued into a somber and seriously Presidential speech this morning that then turned into the sad news of the passing of Sir Roger Moore who in his own right did so much in his retirement as UNICEF’s world Ambassador – which he always said was his life’s greatest achievement.  Even Bond gives back to society! We need Bond. We like when the good guy wins.  When we get the bad guy and do it with  style, with panache and in a raffish way, it’s feels even better.  That’s Illusion vs. reality unfortunately.  A lot of things coming together here at once.  The tragedy in Manchester, a President serious about eradicating terrorism and the wish that we had some savior to execute the mission, like James Bond – a fictitious character who was perhaps best portrayed by Roger Moore, who sadly passed away today.

Last Scene From The Spy Who Loved Me

Bond (Roger Moore) and Asamova (Barbara Bach) are discovered by their respective bosses making love in a life boat capsule at sea:

M: 007?
Russian General Gogol: Triple X!!
Minister of Defense: Bond! What do you think you’re doing?
Bond: Keeping the British end up, sir.

Have a great evening!
Ron Quigley

 

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.

Above is the opening extract from Quigley’s Corner aka “QC”  Tuesday May 23, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest 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 is one of three distinctive market comment 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 email: rkarr@mischlerfinancial.com or via phone 203.276.6646

*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 daily 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.   Veteran-owned broker-dealer 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.

A Tribute to Roger Moore’s AAA-Rated Bond; Mischler Debt Market Comment