DCM Market Anticipates $25b New IG Issuance Week of Oct 16
October 13, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 10.13.17 – Weekend Edition Debt Market Commentary; New IG Issuance Outlook: $25b Week of Oct 16

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates For This Week and September

Best & Brightest-Fixed Income Syndicate Desks Opine on Next Week Issuance

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 October 4th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 2 issuers across 3 tranches totaling $4.007b.  The SSA space was quiet.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

  • The IG Corporate WTD total is 155.97% of this week’s syndicate midpoint average forecast or $32.559b vs. $20.875b.
  • MTD we’ve priced 51.43% of the syndicate forecast for October IG Corporate new issuance or $47.154b vs. $91.68b.
  • There are now 9 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points 

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues was <12.00> bps.
  • BAML’s IG Master Index was unchanged at +103 vs. +104 and setting a new post-Crisis low.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.98.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at 1 bp to +147 vs. +148.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.1b on Thursday versus $17b on Wednesday and $16.9b the previous Thursday.
  • The 10-DMA stands at $16.7b.

 

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

 

IG Corporate New Issuance This Week
10/09-10/13
vs. Current
WTD – $32.559b
October 2017 vs. Current
MTD – $47.154b
Low-End Avg. $20.15b 161.58% $90.96b 51.84%
Midpoint Avg. $20.875b 155.97% $91.68b 51.43%
High-End Avg. $21.60b 150.74% $92.42b 51.02%
The Low $15b 217.06% $110b 42.87%
The High $26b 125.23% $75b 62.87%

 

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week 

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 19 of today’s respondents are in the top 20 and 21 are among 2017’s YTD top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 23 are in the top 26. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 81.44% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted. 

As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016 !!

Let’s dive right into this week’s primary market recap and data downloads –

North Korea still remains atop the geopolitical risk factors. The only news therein was yesterday’s announcement by the U.S. Geological Survey that it recorded an event at the sight of previous North Korean nuclear tests that measured 2.9 on the Richter scale implying it could have been triggered by further underground nuclear tests. Spain’s Catalon independence risks lowered from “Elevated” to “Cautious” as Puigdemont stopped short of declaring independence pushing instead for negotiations with Madrid. President Rajoy can invoke Article 155 to suspend the Catalan government and subsequently take over. If not, then Puigdemont’s coalition may fall apart. Trump’s shortlist for the new FOMC head has dwindled to 4 candidates – Yellen, Gary Cohn, Kevin Warsh and Jerome Powell. The market is looking at a 76% chance of a December rate hike off a bit from last week. Q3 earnings are underway with the big FIGs two-thirds done and with Goldman Sachs and Morgan Stanley announcing next Tuesday, October 17th.  Of the 4 six packs banks that already announced, should BAML, CITI, JPM or WFC not print today, next week’s volume could be quite robust.

Entering this morning’s Friday session –

  • The IG Corporate WTD total stands at $28.552b. We priced $7.677b more than this week’s average estimate of $20.875b or 36.78%.
  • MTD we have now priced 47.06% of the syndicate projection for October IG Corporates or $43.147b vs. $91.68b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,118.298b vs. $1,111.191b on October 13th, 2016 or $7.107b (0.64%) more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,380.756b vs. $1,406.275b on October 13th, 2016 or $25.519b (1.85%) less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages for the 33 IG Corporate-only deals that priced this week.

o   NICS:  <0.70> bps

o   Oversubscription Rates: 3.12x

o   Tenors: 10.03 years

o   Tranche Sizes: $865mm

o   Spread Compression from IPTs to the Launch: <20.62> bps

 

Here’s how this week’s critical primary market data compares against last week’s numbers entering this morning’s session:

 

  • Average NICs tightened 1.88 bps to an average <0.70> bps vs. 1.18 bps across this week’s 33 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.38-times to 3.12x vs. 3.50x.
  • Average tenors reduced by 1.97 years to an average 10.03 years vs. 12.00 years.
  • Tranche sizes grew by $257mm to $865mm vs. $608mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 33 IG Corporate-only new issues tightened by 2.22 bps to <20.62> bps vs. <18.40> bps.
  • Standard and Poor’s Investment Grade Composite Spreads was unchanged at +147.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning was unchanged at 0.98 week-on-week.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +103 vs. +104 setting a new post-Crisis low.
  • Spreads across the four IG asset classes was unchanged week-on-week at 1.75 bps measured against their post-Crisis lows.
  • The “BBB” asset class tied its post-Crisis low of +103.
  • The 19 major industry sectors also widened 0.68 bps to 6.00 vs. 5.32 bps also as measured against their post-Crisis lows.
  • Of note, the Banking, Insurance and Services sectors set new post-Crisis lows this week while Basic Industry, Capital Goods, Consumer Products and Transportation sectors tied their post-Crisis lows this week. In total 7 out of the 19 major industry sectors or 38%, set or tied post-Crisis lows.
  • For the week ended October 11th, Lipper U.S. Fund Flows reported an inflow of $2.415b into Corporate Investment Grade Funds (2017 YTD net inflow of $98.803b) and a net inflow of $966.777m into High Yield Funds (2017 YTD net outflow of $6.364b).
  • Taking a look at the secondary trading performance of this week’s 33 IG Corporate and 1 SSA new issues, of the 34 deals that printed, 19 tightened versus NIP for a 56.00% improvement rate, 10 widened (29.50%) and 5 were flat (14.50%).

Entering today’s Friday session here’s how much we issued this week:

  • IG Corps: $28.552b
  • All-in IG (Corps + SSA): $43.147b

And now ladies and gentlemen, as honored members of the “B&B” Hall of Fame it’s time for the guy-in-the corner to ask today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”
Thank you in advance for your time and contribution!

The “Best and the Brightest” in Their Own Words

……..……and here are their responses:

 

Above is the opening extract from Quigley’s Corner aka “QC”  Friday, Oct 13 weekend dedition 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.

DCM Market Anticipates $25b New IG Issuance Week of Oct 16