Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank
July 10, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 07.10.17 – Break in “Summer Slowdown”; IG Issuers Are Back, Deutsche Bank Grabs Day’s #1 Spot Corporate Debt Issuance  

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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 – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

Investment Grade New Issue Re-Cap

Following today’s 9 IG Corporate issuers announcing 17 tranches between them totaling $11.99b some actually proffered, “What summer slowdown?”  Today was a welcome return of robust activity for our dollar IG DCM. With the six-pack U.S. banks set to begin releasing Q2 earnings this Friday with Citigroup, J.P. Morgan and Wells Fargo up to bat first, it can’t come soon enough.  Next Tuesday, July 18th BAML and GS follow and MS announces on Wednesday, July 19th.  Mischler Financial is proud to announce that it served as a Co-Manager on today’s two-part $2.25b 3-year FXD/FRN for Deutsche Bank/NY Branch. So, without further ado, of all today’s IG issuance Deutsche Bank/New York branch is the Deal….of….the….Day!

We just completed four weeks that finished as the 1st, 3rd, 4th and 6th ranked slowest weeks of the year.  It’s been that slow for issuance, despite credit spreads grinding tighter and tighter.  The average Banking sector issue reached an average spread of T+98 which matches it’s post Crisis low; the Insurance sector also tied its PC low at +120 while both the Leisure and Services sectors set new PC tights at +112 and +109 respectively.  One year ago today the top four IG asset classes were an average +43.75 bps from their post Crisis lows. This morning they are a mere 7 bps from their PC tights or +36.75 bps tighter.  Looking across the major 19 IG sectors, a year ago today they were an average +55.84 bps from their PC tights while this morning they are now only 10.84 bps away or <45> bps tighter as a group.  Those are a pair of very dramatic statistics. There are currently 14 new issues in the credit pipeline split 12 to 2 insofar as Yankee vs. SSA.

Let’s now take a look at how this week’s IG Corporate volume numbers stack up against the WTD and MTD syndicate estimates:

 

  • The IG Corporate WTD total is 65.70% of this week’s syndicate midpoint average forecast or $11.99b vs. $18.25b.
  • MTD we’ve priced 21.02% of the syndicate forecast for June or $17.74b vs. $84.40b.
  • There are now 14 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • IHS Markit Ltd. upsized today’s tap of its outstanding 4.75% 144a/REGS Senior Notes due 2/15/2025 to $300mm from $250mm at pricing. The total outstanding amount is now $800mm
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 16 IG Corporate-only new issues, excluding HIS, was <17.36> bps.
  • BAML’s IG Master Index tightened 1 bp to +112 vs. +113.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.07.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +154 vs. +155.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.5b on Friday versus $17.5b on Thursday and $12.6b the previous Friday.
  • The 10-DMA stands at $14.3b.

 

Global Market Recap

 

  • U.S. Treasuries – Better bid led by the 7yr on a quiet day.
  • Overseas Bonds – JGB’s down except the 30yr. European bonds finally had a good day.
  • Stocks – Better bid lead by the NASDAQ heading into the close.
  • Overseas Stocks – Asia closed mixed. Europe closed with gains.
  • Economic – Not a factor today.
  • Overseas Economic – China inflation unchanged. Japan mixed. Europe non-event.
  • Currencies – The USD was little changed vs. the Big 5.
  • Commodities – Traded well during NY trading hours.
  • CDX IG: -0.03 to 61.61
  • CDX HY: -1.69 to 341.25
  • CDX EM: -4.25 to 201.53

*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 launches ICBM on July 4th. Continues development, improving accuracy & distance  in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S.  sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.                      
ELEVATED
BREXIT Fallout
·          U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian  domestic bank bail-out outside EU “rule of law” concern for EU stability.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
·          Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned/Dems lose 4 consecutive special elections despite so-called “media bias.”

·          U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

·          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.

·          Italian debt-to-GDP ratio is 133% – world’s 3rd highest. €17bn gov’t. bail out of two Italian banks.

·          Closing in on ISIS is very problematic as it is scatterring across a wider MENA region and Europe.

·          Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

·          Central banks shrinking balance sheets/higher volatility in 2H17.

MODERATE ·          Trump/Putin meet at G-20 Summit in Hamburg last week. Move toward mutual cease fire in Syria; to identify de-escalation zones; discussed hacking controversy and agreed to improved relations.

·          China hard landing – rising corporate debt have the OECD and IMF concerned.

·          Venezuela – tumbling oil prices/Maduro resistance impacting ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/10-7/14
vs. Current
WTD – $11.99b
July 2017
Forecasts
vs. Current
MTD – $17.74b
Low-End Avg. $17.83b 67.25% $83.87b 21.15%
Midpoint Avg. $18.25b 65.70% $84.40b 21.02%
High-End Avg. $18.67b 64.22% $84.92b 20.89%
The Low $15b 79.93% $70b 25.34%
The High $28b 42.82% $111b 15.98%

 

Above is the opening extract from Quigley’s Corner aka “QC” Monday, July 10, 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 securities industry’s oldest minority broker-dealer owned-operated by Service-Disabled Veterans. 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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Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank