Quigley’s Corner 12.18.17 FIG Heaven – Make Reservations Now for January Seating
Investment Grade New Issue Re-Cap – 2017 Sets Two All-Time Volume Records
Looking Ahead to Potential FIG Issuance in January 2018
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates For This Week, December & January 2018
Global Market Recap
The “QC” Geopolitical Risk Monitor
NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches
Indexes and New Issue Volume
Lipper Report/Fund Flows – Week ending December 13th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
New Issue Pipeline
M&A Pipeline Highlights
Rates Trading Lab
Economic Data Releases
Tomorrow’s Calendar
Below is the opening extract from Quigley’s Corner aka “QC” Monday December 18 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.
Investment Grade New Issue Re-Cap
IG Corporate and SSA new issuance posted another shut-out today. However, even if we get no new supply for the remainder of this year, 2017 already won out as the highest volume year on record for both IG Corporate and all-in IG Corporate + SSA new issuance. This year’s IG Corporate total beat last year by $48.138b or 3.75% more while all-in volume beat by $23.595b or 1.45%. Congratulations to all the issuers, bankers, syndicate desks and accounts that made it possible.
Taking a look at the prior six years, each year’s total volume surpassed the prior in both categories:
| Year | IG Corporates (bn) | IG Corps + SSA (bn) |
| 2017 | $1,333.355 | $1,648.746 |
| 2016 | $1,285.217 | $1,625.151 |
| 2015 | $1,268.448 | $1,512.838 |
| 2014 | $1,129.33 | $1,367.97 |
| 2013 | $1,051.19 | $1,334.76 |
| 2012 | $1,025.31 | $1,254.33 |
It’ll be tough to do this again next year though as the call is for a 10% reduction in 2018 IG Corporate issuance should the new tax reform bill be signed law and the subsequent repatriation of billions of dollars of offshore funds combining with a new and improved 21% corporate tax.
NAHB Housing was the lone piece of economic data today and it surprised to upside in a big way posting a 74 from 70 expectations and a 69 prior reading. That’s an 18-year high! It’s a strong market for homebuyers with national home prices up about 6% YoY. With strong labor and an improving economy, the outlook is good for home real estate sales.
Looking Ahead to Potential FIG Issuance in January 2018
Next up, I guess we were all a bit stymied by today’s zero issuance activity. But some good souls out there turned it into an opportunity to get creative and work on things they might otherwise not have the time to. So, without further ado, I decided to re-print (with permission of course) a very interesting and informative piece written by none other than Bob Elson. Many of you with Bloomberg terminals may know Bob. Most everyone in syndicate does. For the following piece, Bob did the heavy-lifting on what to expect from the big banks or the U.S. six-pack as we roll into the new year. Not bad for an old dog who remembers when the T30 14% due 2011 traded at a discount. Given the aforementioned Oscar lead in who else to better give a shout out than Bob Elson who has been “Bond Salesman to the Stars since 1971?” They don’t make’em like they used to folks and he/they are a class act.
Take it away Bobby E. –
The Large Banks Have January Maturities, They Have a History of January Issuance and for Some, Strikingly Large 2018 Maturities:
Bank of America has $3b maturing Jan. 11
- Jan. 17, 2017: priced $6.75b in 4 parts
- Issued in Dec. 2015, rather than Jan. 2016
- Jan. 16, 2015: priced $2.5b
- Jan. 15, 2014: priced $4.5b in 2 parts
- Jan. 8, 2013: 3 tranche deal totaling $8.25b
- Jan. 19, 2012: $2.25b 10Y
- Hasn’t been seen since Sept.
- Has near $28b of 2018 maturities, by far the largest year in its debt distribution
- Scheduled to announce earning Jan. 17
Citigroup has near $25b maturing in the new year, the largest in its debt distribution
- Jan. 4, 2017: priced 3-part deal for $5.25b; this was prior to announcing earnings Jan. 18
- Jan. 5, 2016: priced $2b 10Y; prior to earnings Jan. 15
- Jan. 29, 2015: priced $2.5b 3Y after announcing earnings Jan. 15
- Jan. 3, 2013: priced $1.75b 3Y prior to its Jan. 17 earnings
- Jan. 19, 2012: priced $1b 30Y following its Jan. 17 earnings release
- Citi will announce earnings Jan. 16
Goldman Sachs has near $6b due Jan. 18-22
- Jan. 23, 2017: priced $8b in 3 parts
- Jan. 20, 2015: priced $5.5b in 3 parts
- Jan. 28, 2014: priced $2.5b 5Y
- Jan. 16, 2013: priced $5b in 2 parts
- Jan. 19, 2012: priced $4.5b 10Y
- 2018 maturities near $26b, the largest in its debt distribution
- Earnings scheduled for Jan. 17
JPMorgan has ~$8.7b due Jan. 15-25
- Jan. 25, 2017: $2.75b priced
- Jan. 15, 2015: priced $6.25b in 2 parts
- Jan. 14, 2014: priced $2b Jr Sub
- Jan. 21, 2014: priced $5.25b in 5 parts
- Jan. 17, 2013: priced 3 part deal for $6.4b
- Jan. 13, 2012: priced $3.25b 10Y
- Has near $27b coming due next year, the largest in its debt distribution
- Will exit earnings blackout Jan. 12
Morgan Stanley has ~$2b due Dec. 28 and ~$2.1b due Jan. 5
- Jan. 17, 2017: priced $8.25b in 3 parts
- Jan. 22, 2016: priced 3-part deal totaling $5.5b
- Jan. 22, 2015: $5.5b in 3 parts
- Jan. 21, 2014: $2.75b in 2 parts
- Jan. 23, 2013: $500m 3Y
- Its 2018 maturities total ~$17.4b
- Has not been seen since July
- Earnings scheduled for Jan. 16
Wells Fargo, ~$4.1b Jan. 16-22
- Jan. 17, 2017: priced $5b in 2 parts
- Jan. 22, 2016: priced $4b in 2 parts
- Jan. 15, 2015: priced $2b Jr Sub
- Jan. 26, 2015: priced $2.65b in 2 parts
- Jan. 16, 2014: priced $1.7b 7Y
- Priced $2.1b in Dec. 2012 rather than Jan. 2013
- 2018 maturities total ~$12.3b
- Has issued in Nov.-Dec. in four of the past five years
- Last issued in July
- Earnings are Jan. 12
If you have a Bloomberg terminal, my strong advice is to reach out to Bob Elson and ask him to add you to his distribution list. It’s free and you’ll likely get good intel along with some very funny jokes now and then. Please tell him “the guy-in-the-corner” sent you. Thanks Bob! -RQ
Here’s a look at WTD and MTD IG Corporate new issuance volume as measured against the syndicate desk estimates:
- The IG Corporate WTD total is 0.00% of this week’s syndicate midpoint average forecast or $0.00m vs. $994mm.
- MTD we’ve priced 79.96% of the syndicate forecast for December IG Corporate new issuance or $26.387bvs. $33b.
- There are now 5 issuers in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points
- The “AA” (+57) and “A” (+78) IG asset classes tied their post Crisis lows for the fourth consecutive session.
- The Real Estate (+111) and Services (+100) sectors set new post-Crisis lows.
- The Banking (+82) and Transportation (+104) investment grade sector spreads tied their post Crisis lows for the fourth consecutive day.
- The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s X IG Corporate-only new issues was <XX.XX> bps.
- BAML’s IG Master Index tightened 1 bp to +100 vs. +101.
- Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.95.
- Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +140 vs. +141. The +140 reached on July 30th 2014 represents the post-Crisis low.
- Investment grade corporate bond trading posted a final Trace count of $12.7b on Friday versus $15.9b on Thursday and $14.7b the previous Friday.
- The 10-DMA stands at $16b.
Syndicate IG Corporate-only Volume Estimates For This Week, December & January 2018
Above is the opening extract from Quigley’s Corner aka “QC” Monday December 18 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.
