Investment Grade New Issue Re-Cap 06.13.17 – Mischler Financial
June 14, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 06.13.17- Investment Grade New Issue Re-Cap

 

Investment Grade Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Re-Cap

Syndicate IG Corporate-only Volume Estimates

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

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

 

 

Investment Grade New Issue Re-Cap – Sessions in Session; S&P & DOW Close at All-Time Highs; Nasdaq Within One Point!

The morning session was subdued with only 4 Corporate issuers tapping our IG dollar DCM pricing 4 tranches for a total of $2.40b.  The SSA space saw 3 issuers print 3 tranches for an additional $2.843b thereby bringing the all-in IG day totals to 7 issuers, 7 tranches and $5.243b.

  • The IG Corporate WTD total is now 51.99% of this week’s syndicate midpoint average forecast or $11.35b vs. $21.83b.
  • MTD we’ve now priced more than 54.51% after just the first two days of June or $49.595b vs. $90.98b.
  • There are now 3 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • The IADB upsized its 5-year Global FRNs new issue today to $600mm from a minimum $500mm at the launch.
  • Double “BB” rated HY asset class matched a new post credit low of +227.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues, was <13.08> bps.
  • BAML’s IG Master Index tightened 1 bp to +118 versus +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.13.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +160 versus +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.2b on Monday versus $11.1b on Friday and $12.8b the previous Monday.
  • The 10-DMA stands at $15.4b.

 

Global Market Recap

 

  • U.S. Treasuries – closed mixed, little changed & with a flatter curve.
  • Overseas Bonds – JGB’s mixed. Gilts hit hard. Bunds down. Peripherals better bid.
  • 3mth Libor – Set at the highest yield (1.24556%) since March 2009.
  • Stocks – Solid gains for U.S. stocks led by the NASDAQ as of 3:30pm.
  • Overseas Stocks – Asia & Europe rallied except the Nikkei & FTSE (small losses).
  • Economic – PPI YoY 0.1% lower than last while core CPI YoY increased 0.2%.
  • Overseas Economic – Japan data weaker. U.K. CPI higher. EU & Germany ZEWs solid.
  • Currencies – USD mixed vs. the Big 5 & the DXY Index lost ground.
  • Commodities – The CRB hit its lowest level since April 2016. Crude oil improved.
  • CDX IG: -1.0 to 58.99
  • CDX HY: -1.86 to 321.27
  • CDX EM: -3.37 to 191.25

*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 continues missile tests with improving accuracy in defiance of protests in G-Zero world.
ELEVATED
BREXIT Fallout
·           U.K. PM May is on the hot seat but softer BREXIT talks are expected as a result.
CAUTION
“U.S. political gridlock”
Fed Balance Sheet
·           FOMC Rate Decision 2pm Wed. 6./14;  This week BOE, SNB & BOJ all expected to be unchanged.

·           GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/

Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

·           Trump’s pulling U.S. from Paris Climate Accord perceived as ceding leadership in G-0 world.

·           Trump tax reform challenges & consensus GOP support to pass legislation questioned.

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

·           U.S. partisan politics/gridlock/media bias against Trump/talk/tweet addiction and perjury.

·           Shrinking the Fed’s  balance sheet/higher volatility 2H17.

·           Italian debt-to-GDP ratio is 133% and threatens EU economic improvements/Five Star movement

setback in municipal election defeats on June 11th. EU skeptic support may have peaked.

·           ISIS becoming scattered across wider MENA region and more difficult to contain as a result.

·           U.K. terror alert lowered to “Severe” vs. “Critical.” Attack “highly likely” vs. “imminent.”

MODERATE ·           Venezuelan civil unrest

·           Russia meddling in international elections/Russia in expansion mode.

·           China hard landing?

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

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

IG Corporate New Issuance This Week
6/12-6/16
vs. Current
WTD – $11.35b
June 2017
Forecasts
vs. Current
MTD – $49.595b
Low-End Avg. $21.00b 54.05% $90.04b 55.08%
Midpoint Avg. $21.83b 51.99% $90.98b 54.51%
High-End Avg. $22.67b 50.07% $91.92b 53.95%
The Low $15b 75.67% $75b 66.13%
The High $41b 27.68% $110b 45.09%

 

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

Above is the opening extract from Quigley’s Corner aka “QC”  Tuesday, June 17, 2017  Memorial Day 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.

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