Browsing articles in "Debt Market Commentary"
FIGs Lead Day’s DCM Funding; Gulf Power Co “Deal-of-the-Day”- Mischler Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.15.17 FIGs Lead DCM Funding; Southern Co’s Gulf Power Building The Future of Energy 

 

Investment Grade Corporate Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates This Week and May

Building the Future of Energy – Gulf Power Co. $300mm 3.30% Senior Notes due 5/30/2027

Answering Another Call of Duty: Southern Company’s Commitment to the Military – Pride. Duty. Honor. Discipline.

A Reiteration of Mischler’s 2017 Memorial Day Month Pledge

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 10th         

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

 

12 IG Corporate issuers announced deals today pricing 16 tranches between them totaling $13.50b.  There was no SSA activity in the session. The day’s highest volume deals came from two FIGs namely HSBC Holdings Plc and Wells Fargo that each printed a $3 billion transaction.  Additionally, today’s IG dollar DCM featured a total of four 2-part transactions from ANZ Banking Group Ltd., ANZ Banking Group NY Branch, BPCE and Manufacturers & Traders Trust.  However, the session’s Deal-of-the-Day belongs to Southern Company’s subsidiary Gulf Power Co. that issued a $300mm 3.30% due 5/30/2027.  You know what that means!  If it’s a Deal-of-the-Day, I’m writing about it; and if I’m writing about it, it means Mischler Financial, the nation’s oldest Service Disabled Veteran broker dealer served on the deal as an active 3.00% Co-Manager.

Let’s first run through today’s IG primary market tally and re-caps before we take the deep dive into the Gulf Power deal.

  • The IG Corporate WTD total is now over 45% of this week’s syndicate midpoint average forecast or $13.50b vs. $29.73b.
  • MTD we’ve now priced nearly 70% of the IG Corporate mid-range syndicate projection for May or $86.138b vs. $123.42b.
  • There are now 8 IG Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $93.538b.

 

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 16 IG Corporate-only new issues was <18.67> bps which includes the Dominion Energy Inc. remarketing.
  • 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 was unchanged at 1.12.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +162 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 $14.7b on Friday versus $17.9b on Thursday and $13.7b the previous Friday.
  • The 10-DMA stands at $16.7b.

 

Global Market Recap

 

  • S. Treasuries – Small losses in very light volume.
  • Overseas Bonds – JGB’s were mixed. Long end in EU core & semi core struggled.
  • Stocks – Bid heading into close. S&P’s and NASDAQ traded at all-time highs.
  • Overseas Stocks – Asia better, expected small loss for Nikkei. FTSE & DAX reach all-time highs.
  • Economic – Empire manufacturing weaker. NAHB housing stronger. Full calendar tomorrow.
  • Overseas Economic – Japan PPI YoY highest since November, 2014. Weaker data in China.
  • Currencies – Back-to-back down days for the DXY Index.
  • Commodities – CRB, crude oil, gold, copper & silver higher. Down day for wheat.
  • CDX IG: -0.83 to 61.78
  • CDX HY: -2.56 to 324.66
  • CDX EM: -3.40 to 190.85

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/15-5/19
vs. Current
WTD – $13.50b
May 2017
Forecasts
vs. Current
MTD – $86.138b
Low-End Avg. $28.69b 47.05% $122.27b 70.45%
Midpoint Avg. $29.73b 45.41% $123.42b 69.79%
High-End Avg. $30.77b 43.87% $124.56b 69.15%
The Low $20b 67.50% $100b 86.138%
The High $40b 33.75% $150b 57.43%

 

Answering Another Call of Duty: Southern Company’s Commitment to the Military – Pride. Duty. Honor. Discipline.

Southern Company knows that veterans are the foundation of military service and of the utility Company. After they have served their nation, Southern Company seeks and encourages veterans to turn their military training into an opportunity to serve its 4.5 million customers.

Veterans are a natural fit for Southern Company because the cultures of the military and the utility industry are very similar – both exemplify dedication, commitment to safety, teamwork and excellence in all they do. This is why many veterans who have joined Southern Company are not just participants, but leaders, in the company.

Veterans currently account for 10% of Southern Company’s employees. The company’s military recruitment and development efforts have earned Southern Company a designation as the highest-ranked utility on G.I. Jobs’ Top 100 Military Friend Employers list for six consecutive years. The company has also been recognized as a Top 10 Company for Veterans by DiversityInc., a Most Valuable Employer by CivilianJobs and a Best for Vets Employer by Military Times EDGE.

Additionally, Southern Company is a founding partner of Troops to Energy Jobs program, supports the Joining Forces initiative, participates annually in more than 30 military recruitment events and partners with military transition centers across the country. Today, Southern Company and its subsidiaries including Gulf Power co. are the only electric utilities in the nation to partner with the U.S. Army, U.S. Navy, U.S. Marine Corps and U.S. Air Force to develop innovative energy projects both on and off base.

Navy Veteran Helps Recruit Top Veteran Talent

jamal-jessie southern co

Jamal Jessie

Veteran and Southern Company military recruiter Jamal Jessie says he views the U.S. Military as the best military in the world, so when he transitioned from a 20-year career with the U.S. Navy to civilian life in 2015, it only made sense to work for one of the best companies for veterans.

It was Southern Company’s ranking among GI Jobs Top 100 Military Friendly Employers that led Jamal there.

As Jamal tells it, “As a recruiter for the Navy, my scope of responsibility was vast. The leadership opportunities and the opportunity to build relationships set me up for success not only in the Navy but also now at Southern Company. I connected with and built relationships with people within the Navy and in the community, and that’s similar to what I do now – meeting with people on bases to attract top talent for Southern Company.”

May is National Military Appreciation Month, and citizens nationwide are encouraged to celebrate those who have served our country or are serving our country. Because the military and our industry’s cultures are similar – exemplifying dedication, commitment to safety, teamwork and excellence – we actively recruit military personnel who are transitioning out of service.  In fact, veterans account for 10 percent of our company’s 32,000 employees.

Without knowing it, Jamal had been preparing for his recruiting position for years. He joined the Navy after graduating from high school. Jamal spent his first 10 years in communications and was deployed at-sea four times. He then went on to serve as a full-time recruiter for 10 more years until he retired in 2014.

“Veterans play a huge part in our safety and in our lives, every day,” Jamal says, “and Southern Company gives us the opportunity to do the same thing here.”

When it comes to recruiting, Jamal says, “We are looking for the best of the best.” He partners with our operating companies and business units, developing strategies to recruit talent for specific positions. He travels to military bases where he fosters relationships and talks to military personnel who are transitioning from military to civilian working life to find that talent.

“We speak the same language, we have trust,” he says. “Southern Company values the veteran. We understand the teamwork and the training that veterans bring to our organization. The skills match is a huge advantage for both veterans and Southern Company.”

A Reiteration of Mischler’s 2017 Memorial Day Month Pledge.

Consistent with Mischler Financial Group’s annual initiative to commemorate Memorial Day and honor those who made the ultimate sacrifice while serving in our US military, this year we have dedicated a percentage of the month’s commission revenue to two organizations that are near and dear to our hearts and minds.

As we have done in prior Memorial Day and Veterans Day observances, Mischler is pleased to continue our support of Army Ranger Lead The Way Fund, the non-profit dedicated to raising funds to support disabled U.S. Army Rangers and the families of Rangers who have died, have been injured, or are currently serving in harm’s way.

As part of our May 2017 profit pledge, Mischler is equally proud to support the American Cancer Society via our sponsorship of the ACS 12th Annual Financial Services Cares Gala, which will be held June 22 at the New York Hilton Hotel. This year’s gala, which is expected to raise more than $1 million, will pay tribute to former KPMG Chairman & CEO Eugene O’Kelly, who passed away from cancer in 2005 and whose estate remains an ardent supporter of ACS cancer research grants.

Each of us here at Mischler, whether personally, through family members and/or friends and acquaintances, are all-too-familiar with the cancer’s devastating impact. Our support of the ACS is a testament to the crucial work it performs via research grants and assistance to patients undergoing treatment and their caregivers.

As the month of May pledge kicks off, thank you in advance to our sales/trading desk counterparties across the investment management industry and to the many Fortune 500 treasury teams we work with, for your ongoing support of our mission.

 

Dean A. Chamberlain (SDV)

Chief Executive Officer

Mischler Financial Group, Inc.

Southern Company and Mischler Financial truly is a formidable partnership not only when it comes to our day jobs in placing a new issue but also in our shared ethos of giving back opportunities to our military men and women in uniform – those willing to make the ultimate sacrifice.

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

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Investment Grade Debt Commentary–Credit Tightening, Investor Appetite Voracious
May 2017      Debt Market Commentary   

Quigley’s Corner 05.12.17 – Credit Tightening, Investor Appetite Voracious

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates This Week and May

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

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 May 10th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

 

What to do on a no-print Friday in the IG dollar DCM?  Well, how about speaking with the top 24 syndicate desks who underwrite over 80% of all debt issued in our market for starters?  I did just that as is done here in the “QC” each and every Friday.  Next week looks like a very robust one with sizeable upside potential. One syndicate guru noted we could see $40b next week and $150b for the month.  What your corner seer can tell you is that I wrote the following here in the “QC” on Friday April 28th, 2017:

“It’s a weary world folks! However, the good news is that U.S. Corporations are an anomaly. They’re doing just fine and foreign investment into the safe haven of” yieldier” investment grade rated products is immense and growing.  I expect a very robust May of $150-ish of all-in (IG Corporate plus SSA issuance).  Credit is grinding tighter and ……investor appetite is voracious……especially coming off such a noticeably slow April that ended on a high note. So, issuers line up!  Bankers man your stations and syndicate managers get ready because the best story in our world is Corporate America.”

The IG Corporate-only total for May is currently $72.638b and the all-in Corporate plus SSA total is $80.083b.  We have two solid weeks to go in May and if we repeat what we’ve done thus far – along with next week’s upside potential – I do think we hit $150b.  Now wouldn’t that be something…..AGAIN! But why listen to little ‘ole me when all those prestigious professionals manning their respective syndicate desks at the world’s biggest investment banks are patiently waiting for you to run through my recaps and move on to their numbers and thoughts for next week’s IG corporate issuance? They’re all there.  Hurry up and get to it because it’s Friday and people have places to go and people to see.

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.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

Today’s IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index tightened 1 bp to +118 vs. +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.12 versus 1.13.
  • 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 $17.9b on Thursday versus $19.8b on Wednesday and $17b the previous Thursday.
  • The 10-DMA stands at $16.9b.

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/08-5/12
vs. Current
WTD – $33.67b
May 2017
Forecasts
vs. Current
MTD – $72.638b
Low-End Avg. $30.54b 110.25% $122.27b 59.41%
Midpoint Avg. $31.37b 107.33% $123.42b 58.85%
High-End Avg. $32.21b 104.53% $124.56b 58.32%
The Low $25b 134.68% $100b 72.63%
The High $41b 82.12% $150b 48.43%

 

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!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  22 are in the top 25 of that same table. 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 81.91% 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…

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

 
Here are this week’s IG new issue volume talking points:

 

  • The IG Corporate WTD total is now over 10% above this week’s syndicate midpoint average forecast or $33.67b vs. $31.37b.
  • MTD we’ve priced more than 58% of the syndicate projection for May or $72.63b vs. $123.42b.
  • The all-in MTD total (IG Corporates plus SSA) currently stands at $80.038b.
  • This week we breached the half trillion dollar mark for YTD IG Corporate-only issuance.
  • The YTD IG Corporate only volume is now $515.42b which is 7.22% more than a year ago to date.
  • YTD we priced $687.656b of all-in IG Corporate and SSA issuance which is 2.84% more than last year’s total at this point.

Here are this week’s five key primary market driver averages from the 42 IG Corporate-only deals that priced: 

o   NICS:  <0.20> bps

o   Oversubscription Rates: 2.72x

o   Tenors:  8.66 years

o   Tranche Sizes: $802mm

o   Spread Compression from IPTs to the Launch: <19.51> bps


Here’s how this week’s performance data compares against last week’s: 

  • Average NICs widened 0.20 bps this week to <0.2). vs. <0.40>.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased 1.07x to 2.72x vs. 3.79x. 
  • Average tenors dramatically contracted by 3.28 years to 8.66 years vs. 11.94 years.
  • Tranche sizes decreased by $16mm to $802mm vs. $818mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 42 IG Corporate-only new issues tightened <1.87> bps to <19.51> bps vs. <17.64> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to +161 vs. +162.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 3 bps to 1.12 vs. 1.15. 
  • Week-on-week, BAML’s IG Master Index tightened by 3 bps to +118 vs. +121. 
  • Spreads across the four IG asset classes tightened 3.00 bps to 12.25 vs. 15.25 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened by 2.53 bps to 16.79 bps vs. 19.32 bps against their post-Crisis lows.
  • For the week ended May 10th, Lipper U.S. Fund Flows reported an inflow of $2.701b into Corporate Investment Grade Funds (2017 YTD net inflow of $51.877b) and a net outflow of $1.725m from High Yield Funds (2017 YTD net outflow of $6.091b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 46 deals that printed, 34 tightened versus NIP for a 74.00% improvement rate while 8 widened (17.50%) and 4 were flat (8.50%).

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

  • IG Corps: $33.67b
  • All-in IG (Corps + SSA): $39.42b

 

We’re in the midst of a Trump Slump. Former-FBI Chief Comey was fired by Trump despite the ongoing “From Russia With Love” investigation.  Russian Foreign Minister Lavrov is then invited into the Oval Office the next day while U.S. press is barred from the room. (Who will be sweeping the office for bugs and other devices?) You can’t make this stuff up folks.  There is a 100% chance of a June rate hike. North Korea continues to threaten its sixth nuclear test.  The French election is now behind us, but the new young President of Gaul has his hands full while Le Pen rebuilds, renames and rebrands her National Front Party with an eye on 2022.  The best story going, however, continues to be very strong U.S. corporate earnings as IG credit spreads grind tighter and tighter offering issuers great opportunities to print NOW!
 

The “Best and the Brightest” in Their Own Words

 

……..……and here are their formidable responses:

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Primary Debt Capital Markets-$10.5b Raised by 8 IG Issuers-Mischler Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.09.17 – Costco, Capital One, BNY & Entergy Arkansas Among 8 Issuers That Tap Day’s Primary Debt Capital Markets

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates This Week and May

Entergy Arkansas Establishes a New Curve

The ETR Deal Dashboard
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 3rd          

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

 

8 IG Corporate issuers announced deals today pricing 14 tranches between them totaling $10.52b.  The day’s highest volume deals came from Costco’s 4-part, Capital One’s 3-part and BNY Mellon’s 2-part but today’s Deal-of-the-Day belongs to Entergy Arkansas’ $220mm tap of its outstanding 3.50% FMBs due 4/01/2026.  You know what that means!  If I’m writing about it, Mischler was on it to the tune of a 4% active Co-Manager role

 

  • The IG Corporate WTD total is now more than 74.00% of this week’s syndicate midpoint average forecast or $23.32b vs. $31.37b.
  • MTD we’ve now priced just over 50.00% of the IG Corporate mid-range syndicate projection for May or $62.288b vs. $123.42b.
  • There are now 7 IG Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $63.938b.

 

The session’s Deal of the Day belongs to Entergy Arkansas that executed a $220mm tap of its outstanding 3.50% First Mortgage Bonds due 4/01/2026 thru active joint leads Bank of America/Merrill Lynch, J.P. Morgan and Wells Fargo and passive joint lead Stephens.  Co-Managers on the transaction along with Mischler Financial, the nation’s oldest Service Disabled Veteran broker dealer were BNY Mellon and Williams Capital.

Before I take the deep dive into Entergy Arkansas’ relative value study and Diversity and Inclusion story, let’s first re-cap today’s IG Primary Markets and briefly review the Global Re-Cap.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Sammons Financial Group Inc. upsized today’s 144a/REGS 10-year Senior Notes new issue to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 14 IG Corporate-only new issues was <19.57> bps.
  • BAML’s IG Master Index tightened 1 bp to +120 versus +121.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.15.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +162 versus +163.  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 $13.7b on Friday and $16.2b the previous Friday.
  • The 10-DMA stands at $16.7b.

 

Global Market Recap

 

  • U.S. Treasuries – Supply is putting pressure on USTs Weak 3yr auction today.
  • Overseas Bonds – Down day for bonds in Japan & Europe. Supply was a factor.
  • Stocks – Mixed & little changed. S&P’s and NASDAQ traded at all-time highs.
  • Overseas Stocks – Japan red, China green, Hang Seng strong & Europe green.
  • Economic – JOLTS data was solid.
  • Overseas Economic – Weak earnings data in Japan and Europe was mixed.
  • Currencies – USD outperformed all of the Big 5.
  • Commodities – Crude oil, gold & silver back to their losing ways.
  • CDX IG: -0.25 to 62.06
  • CDX HY: +0.30 to 328.80
  • CDX EM: +0.51 to 198.59

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/08-5/12
vs. Current
WTD – $23.32b
May 2017
Forecasts
vs. Current
MTD – $62.288b
Low-End Avg. $30.54b 73.36% $122.27b 50.94%
Midpoint Avg. $31.37b 74.34% $123.42b 50.47%
High-End Avg. $32.21b 72.40% $124.56b 50.01%
The Low $25b 93.28% $100b 62.288%
The High $41b 56.88% $150b 41.53%

 

Entergy Arkansas Establishes a New Curve with $220mm 3.50% tap due 4/01/2026 – The ETR Deal Dashboard
How Entergy Powers Life

Entergy does not merely stand alone in the way their wonderful Treasury/Funding Team evolves its new issuance for all of its subsidiaries and Holdco.  In terms of the power industry let’s take a look at how Entergy truly does live up to its corporate slogan when it says “We Power Life” –

  • Entergy employs nearly 13,000 people.
  • Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power.
  • Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas.
  • Entergy supplies natural gas to approximately 199,000 customers in Baton Rouge and New Orleans.
  • The Entergy transmission system is comprised of approximately 15,700 circuit miles of transmission lines operated at 69 kV to 500 kV and approximately 1,500 substations. The transmission system spans portions of Arkansas, Louisiana, Mississippi, Missouri and Texas, covering 114,000 square miles.
  • Entergy is a Fortune 500 company with revenues of approximately $10.8 billion.
  • Entergy celebrated its 100th birthday in 2013.

 

It doesn’t stop at those impressive data points rather it continues in the wonderful ways Entergy supports our service member men and women who are willing to make the ultimate sacrifice for our great nation. Hopefully you all read in last evening’s ”QC” my CEO’s message about how Team Mischler will once again commemorate Memorial Day by honoring those willing to make the ultimate sacrifice in our U.S. military.  As the nation’s oldest Service Disabled Veteran broker dealer we take our Co-Manager roles seriously as well as our commitment to giving back to of our men and women in uniform.  We give 10% of what we make to heavily vetted service focused foundations and other causes.  We really do folks! It’s part of our shred ethos here at Team Mischler.  So, too does Entergy Corp, the Holdco and its myriad Opcos. Entergy realizes the sacrifice our men and women in uniform make and as a result, Entergy is committed top/down to creating and enforcing other leading initiatives specifically for the military.

Let’s take a look:

Entergy is a Military-Friendly Employer

Entergy’s business is only as good as its people, and at Entergy, they are fortunate to work with some of the best in the business. This includes employing thousands of veterans and those currently serving in the U.S. Armed Forces across its businesses. These dedicated, disciplined and skilled employees provide a diverse perspective that is a strategic advantage for Entergy’s business, and the Company implements programs and initiatives to promote an inclusive culture for them.

Entergy’s executive leadership team and representatives of its Veterans Employee Resource Group recently accepted the 2016 Pro Patria Award from the U.S. Department of Defense’s Employer Support of the Guard and Reserve.

Engagement
In 2015 Entergy organized a Veterans Employee Resource Group, an employee-led group coordinated across the company, to help achieve its mission to create sustainable value for its stakeholders — owners, customers, employees and the communities in which the utility operates — by capturing veteran-employee input on programs such as recruiting, on-boarding, retention, work/life balance and leadership development. 14% of Entergy employees are veterans of the U.S. Armed Forces! That’s good stuff readers! You see! It’s not just about the deal.  It’s a much broader and even more meaningful initiative at the Company!

Veteran Compensation and Reemployment
Serving your country should never come at the expense of job security. Entergy’s military leave and pay policies comply with all federal and state laws regarding the rights of uniformed service members, and its uniformed service members are also eligible for differential payments under Entergy’s Military Leave Policy. This pay supplements an employee’s military pay so that he/she does not suffer a loss in pay while engaged in military service. And those called away for duty can rest assured regarding their reemployment with Entergy following military leave. For service that does not exceed five years, these employees are eligible to be reemployed in either the position they were in prior to service, or a position they would have attained of like seniority, status and pay.

Recognition
In 2016, Entergy won the 2016 Pro Patria Award from the U.S. Department of Defense’s Employer Support of the Guard and Reserve for promoting supportive work environments for members of the National Guard and Reserve. And among 2,400 nominees, Entergy was also named one of the 30 finalists for the 2016 Secretary of Defense Employer Support Freedom Award, the highest recognition given by the Department of Defense’s Employer Support of the Guard and Reserve.

 

Below please find my synopsis of the Entergy Arkansas transaction, and 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

 

Entergy Arkansas Establishes a New Curve with $220mm 3.50% tap due 4/01/2026 – The ETR Deal Dashboard

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YTD USD Investment Grade Issuance=$500bil+; FOMC Talking Points; Mischler Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.03.17-YTD USD IG DCM-$500bil+ Issued; FOMC Talking Points: Rates Unchanged

 

Investment Grade New Issue Re-Cap – What FOMC Meeting? YTD IG Corporate Issuance Passes $500b Mark

Today’s IG Primary & Secondary Market Talking Points

IG Syndicate IG Corporate-only Volume Estimates This Week and April

Global Market Recap

FOMC Statement Key Talking Points – Unanimous Vote to Leave Rates Unchanged

Citigroup, Inc. $250mm (tap) 4.125% Sub Notes due 7/25/2028 Deal Dashboard

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 April 26th         

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

 

Oh my.  I have to admit that even I was surprised by the amount of IG Corporate new issues that priced in today’s FOMC Rate Decision Day session.  This might well have been the busiest (or one of the busiest) FOMC Rate Decision sessions for issuance as far back as I can remember.  The IG dollar DCM featured 8 issuers across 8 tranches (Citigroup, Inc. and Citigroup, N.A. are two separate issuing entities), totaling $6.864b.  KBN tapped a 3-year FRN bringing the all-in IG day totals to 9 issuers, 9 tranches and $7.364b.

50% of today’s IG Corporate deals upsized at the tightest side of guidance with one transaction, for ACWA Power, launching 5 bps tighter than the tightest side of guidance. So, all-in-all a very nice day that speaks volumes about what to expect in our IG dollar DCM in May, apparently motivated by strong corporate earnings.

As a result,

  • Today, we officially passed the $500b mark for YTD IG Corporate issuance. We currently stand at $504.804b.
  • The IG Corporate WTD total is now 97.58% of this week’s syndicate midpoint average forecast or $27.899b vs. $28.58b.
  • MTD we’ve now priced nearly 22.60% of the IG Corporate mid-range syndicate projection for April or $27.899b vs. $123.42b.
  • There are now 5 IG Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Guardian Life Global Funding upsized its 144a/REGS 5-year FA-backed Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
    AvalonBay Communities Inc.
    bumped up its 10-year Senior Notes new issue today to $400mm from $300mm at the launch and at the tightest side of guidance.
  • ACWA Power Management and Investments One Limited increased its 144a/REGS Senior Secured Bond new issue today to $814mm from a minimum of $600mm at the launch and 5bps tighter than the tightest side of guidance.
  • Kommunalbanken or “KBN” upsized today’s tap of its outstanding FRNs due 6/16/2020 to $500mm from $300mm at the launch and at the tightest side of guidance.  The new outstanding amount is $1.8b.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only new issues was <17.41> bps.
  • BAML’s IG Master Index tightened 1 bp tp +122 vs. +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.16.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.2b on Tuesday versus $12b on Monday and $19.9b the previous Tuesday.
  • The 10-DMA stands at $16.7b.

 

Global Market Recap

 

  • U.S. Treasuries – Closed down except the 30yr as the Ultra-Long Bonds got a poor review.
  • Overseas Bonds – Bunds & Gilts unchanged to small gains. Peripheral bonds rallied.
  • Stocks – NASDAQ running out of steam?
  • Overseas Stocks – China closed down. Europe had more green than red.
  • Economic – U.S. data was good across the board (ADP, ISM non-manufacturing, etc.)
  • Overseas Economic – Positive data released in Europe.
  • Currencies – USD better vs. the Yen, Euro & Pound. Big gain for the AUD.
  • Commodities – The metals were led lower by copper which was hit very hard.
  • CDX IG: -0.04 to 62.84
  • CDX HY: +1.30 to 324.76
  • CDX EM: +1.52 to 191.76

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and April

 

IG Corporate New Issuance This Week
5/01-5/05
vs. Current
WTD – $27.889b
May 2017
Forecasts
vs. Current
MTD – $27.889b
Low-End Avg. $27.96b 99.75% $122.27b 22.81%
Midpoint Avg. $28.58b 97.58% $123.42b 22.60%
High-End Avg. $29.21b 95.48% $124.56b 22.39%
The Low $20b 139.45% $100b 27.889%
The High $36b 77.47% $150b 18.59%

 

FOMC Statement Key Talking Points – Unanimous Vote to Leave Rates Unchanged

fed-interest-rate-decision

  • The Fed left rates unchanged and in the 0.75% to 1% target range.
  • Repeats it expects the economy to warrant gradual rate hikes.
  • Says the growth slowdown in Q1 ’17 is likely to be transitory.
  • Fed: “fundamentals underpinning consumption growth stayed solid.”
  • Reiterates that “risks to outlook appear roughly balanced.”
  • Core inflation continued to run somewhat below 2%.
  • 12-month inflation is running close to its 2% goal.
  • The labor market continued to strengthen despite slower growth.
  • The Fed noted that job gains were solid, while household spending rose only modestly.
  • Sighted that business investment firmed.
  • Repeated its maintaining balance-sheet reinvestment strategy.
  • The Fed said today’s FOMC vote was unanimous.

 

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.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

Citigroup, Inc. $250mm (tap) 4.125% Sub Notes due 7/25/2028 Deal Dashboard

…and the Citigroup Legend Who Wore a Propeller Beanie Cap
Today’s Citigroup tap comes exactly one week after Citigroup’s always formidable 13th Annual Diverse Broker Dealer breakfast, so, there was an extra feel good behind today’s opportunity.

My affiliation covering Citigroup began with the legendary Dr. Charles “Chuck” E. Wainhouse, Citigroup’s former long-time Global Head of Capital Markets and Treasury, when I scheduled a meeting with him when I was at BNP Paribas Syndicate back in 2000 and later again in 2004,  when I first entered diversity & inclusion space. In our meeting, Chuck wore a colorful propeller beanie cap while sitting at the head of a long intimidating conference room table.  If you find that a bit odd, so did I at first, until I quickly learned that as fun a guy as Chuck was, he knew how to take the edge off things, but first and foremost he was clearly a most formidable and brilliant mind.  There are a lot of takeaways there folks.  He was one of our industry legends for sure.

Years ago, as I familiarized myself with the D&I broker dealer space working toward a value-added proposition, I was simultaneously disappointed by limited commitments across-the-sell-side to build respective D&I platforms meaningfully and sustainably……words I often use here in the “QC.” It seemed many on Wall Street focused too much on merely a “check-the-box” mandate in exchange for a “check-in-the-mail.”  Those who advanced the proposition did so with an overwhelming lack of delivery and execution across myriad promises of a value-added proposition. But I persevered when given the opportunity, and I chipped away at delivering meaningful distribution, daily capital markets coverage (the “QC” in its various iterations over the years) conferences, panels, etcetera.  Then one day that experience all culminated when the stars aligned and I found Mischler and Mischler found me. An intensive four-month vetting process ensued.  I concluded that the executive leadership here at Team Mischler was aggressively committed to same ethos I was working to promote and deliver;  a relentlessly consistent value-added proposition each and every day.  That IS the way it IS here and it’s the only way to do it right.

For each rung that I climbed on the diversity broker dealer ladder, Chuck Wainhouse was always there to welcome me and the new team I was aligned with.  He’d say, “Quigley, you’re like your brother….. You guys never give up and you’re always stubborn about doing it right.  Good for you. I respect that. We need more people like you doing it right! It’s a great mandate!”  He placed me on speaker phone on one occasion and asked his Admin to “bring over my appointment book……. I’m scheduling Quigley to come in and see me with his new team. This guy does a great job!” The takeaway is simple – I have fond memories in my dealings with Citigroup over the years.  So started my single longest relationship in the Debt Capital Markets – Citigroup is a keystone to our platform and cornerstone to any serious and successful D&I broker dealer.

So, admittedly this is a bit of a reminiscence here today folks given the quick relative value study on today’s $250mm tap but I thought perhaps a story you might enjoy.

Ending today’s piece where it began, it’s great to know that every year the family that is known as Team Citi makes themselves available for a highly meaningful Annual Diverse Broker Dealer Breakfast, followed by a formidable fixed income, equity and municipal presentation with Q&A followed by great social time with some of the best talent in our business.  All for a wonderful cause – encouraging and rewarding a value-added all-inclusive proposition with the best firms in the business.

Congrats to everyone at team Citi Treasury/Funding, Origination and Syndicate.
Have a look at the Deal Dashboard:

 

CITI (tap) IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
4.125% ‘28 +low 190s
(+192.50a)
+186 the # +186 +186 <6.5> bps 0/flat 184/182 <2>

 

Investors showed up in a big way on FOMC Rate Decision day contributing to build a highly impressive $1.1 billion order book making today’s $250mm tap 4.4-times oversubscribed. It is not often one sees a big FIG bid-to-cover rate beginning with a “4” handle.  Well done!

 

………and here’s a look at final book sizes and oversubscription rates:

 

CITI (tap) Size Final Book
Size
Final
Bid-to-Cover
4.125% ‘28 $250mm $1,100mm 4.4x

 

Final Pricing – Citigroup, Inc.(tap) 4.125% Sub Notes due 7/25/2028
C $250mm 4.125% Sub. Notes due 7/25/2028 @ $99.559 to yield 4.174% or T+186
New Total Deal Size: $1.75b

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IG Corporate Debt Issuance Avalanche-Mischler Debt Market Commentary
May 2017      Debt Market Commentary   

Quigley’s Corner 05.02.17- IG Corporate Debt Issuance Avalanche; $16.6b Floated by 8 Issuers

 

Investment Grade New Issue Re-Cap – An Avalanche of Issuance

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates This Week and April

Barclays PLC $2b 11NC10 LT2 Subordinated Notes Deal Dashboard

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 April 26th         

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

 

I wrote this last Friday to close out my Best and Brightest commentary:

“Bankers man your stations and syndicate managers get ready because the best story in our wounded world is Corporate America. Next week, however, will feature a couple very congested days given that the U.K., EU, China and Australia are closed on Monday in observance of EU Labor Day; there’s FOMC Wednesday and an NFP Friday ahead.  So, not much on those days but it should make for a crowded Tuesday and Thursday.”

Today, Tuesday lived up to the billing.  The IG Corporate DCM hosted 8 issuers across 21 tranches totaling $16.675b in volume.  No help came the SSA space as it wisely stood down.

  • The IG Corporate WTD total is now 73.5% of this week’s syndicate midpoint average forecast or $21.025b vs. $28.58b.
  • MTD we’ve now priced nearly 17% of the IG Corporate mid-range syndicate projection for April or $21.025b vs. $123.42b.
  • Meanwhile the IG pipeline is building with 8 IG Yankee and SSA new issues lining up and either ready to go, road showing or conducting investor calls.
    (Please scroll way below for the New Issue Pipeline).

Of all those transactions the one nearest and dearest to our nation’s oldest Service Disabled Veteran broker dealer was Barclays PLC’s first subordinated callable issue.  That is my featured Deal-of-the-Day and you know what that means – Mischler served as an active Co-Manager on the transaction.  First let’s get to the re-caps – both primary and global – and then it’s onto BACR!

Thanks for tuning in and remember, Corporate America IS the defacto best story going in our inextricably linked global economy and new world order.

Today’s IG Primary & Secondary Market Talking Points

  • Mid-America Apartments LP upsized today’s 10-year Senior Unsecured Notes new issue to $600mm from $450mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 21 IG Corporate-only new issues was <18.31> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.16.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12b on Monday versus $16.2b on Friday and $16.1b the previous Monday.
  • The 10-DMA stands at $16.6b.

Global Market Recap

 

  • U.S. Treasuries – USTs traded with a bid today on Trump, crude oil & vehicle sales.
  • Overseas Bonds – JGB’s lost ground. Europe closed mixed with more red than green.
  • 3mth Libor – set at 1.17372% the highest since 4/1/09.
  • Stocks – Mixed heading into the last 15 minutes of trading.
  • Overseas Stocks – Asia closed with gains except China. Europe had a good day.
  • Economic – Vehicle sales were weak. ADP & FOMC Statement tomorrow.
  • Overseas Economic – PMI’s in China & Japan were weaker. Europe PMI’s were strong.
  • Currencies – USD better vs. Yen & CAD, weaker vs. the Euro & Pound and unchanged vs. the AUD.
  • Commodities – Terrible day for crude oil.
  • CDX IG: -0.17 to 63.21
  • CDX HY: +0.50 to 324.17
  • CDX EM: -4.41 to 190.71

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and April

 

IG Corporate New Issuance This Week
5/01-5/05
vs. Current
WTD – $21.025b
May 2017
Forecasts
vs. Current
MTD – $21.025b
Low-End Avg. $27.96b 75.20% $122.27b 17.20%
Midpoint Avg. $28.58b 73.57% $123.42b 17.04%
High-End Avg. $29.21b 71.98% $124.56b 16.88%
The Low $20b 105.12% $100b 21.02%
The High $36b 58.40% $150b 14.02%

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, Managing Director, Head of Fixed Income Syndicate

Barclays PLC $2b 11NC10 LT2 Subordinated Notes Deal Dashboard

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Week’s IG Corporate Bond Issuance: Cooling Off Period; April Showers Bring May Flowers
April 2017      Debt Market Commentary   

Quigley’s Corner 04.21.17; This Week: A Cooling-Off for New IG Corporate Bond Issuance; April Showers Bring May Flowers!

 

Investment Grade New Issue Re-Cap – Back-to-Back Blanks for the IG Dollar DCM

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

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for Next Week

Indexes and New Issue Volume

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 19th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

What with the French Election this Sunday combined with today being a Friday session there was no new issuance to speak of in the IG dollar DCM. That’s now two consecutive days without IG issuance.  I was out for two Fridays so, today is the first “Best & Brightest” edition since March 31st.  Next week looks to be a relatively subdued one given continued blackouts and the fact that most all the big FIGs have already issued.  As corporates exit and Treasuries rally with yields set to pull down further, all this leads up to what should be a VERY ROBUST May.  The average for next week across the top 24 syndicate desks surveyed is $19.46b.  The high was one desk that thinks we’ll see $30b and the low came from two desks that both said $10-15b or an average of $12.5b. But why let me tell you?  I’m here for them. Please allow me to introduce you to the people who price YOUR deals.  They’re all waiting below with their numbers and thoughts for next week’s IG Corporate issuance.  So, without further ado folks…..let’s get to it!

Please remember to read the bold italicized question I posed to the Best & the Brightest as it contains this week’s complete data download that should be helpful to you.

 

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!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 22 are in the top 25 in that same table.  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 82.36% 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 !!  More importantly, however, you are helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was prefaced as follows:

“Good morning and Happy Friday!

First, here are this week’s IG new issue volume talking points:

  • The U.S. six-pack banks posted overall positive earnings. This week five of those for banks – ex-GS who did not yet print – represented 59% of this week’s IG Corporate issuance or $14.75b vs. $25.04b.
  • MTD we’ve priced 63.6% of the syndicate IG Corporate mid-range projection for April or $58.192b vs. $91.50b.
  • The all-in MTD total (IG Corporates plus SSA) now stands at $69.092b.
  • The YTD IG Corporate only volume is now $451.277b.
  • YTD we have officially priced $575.243b in all-in IG Corporate and SSA issuance.

Here are this week’s five key primary market driver averages from the 21 IG Corporate-only deals that priced:

  • NICS:  3.57 bps
  • Oversubscription Rates: 2.00x
  • Tenors:  6.10 years
  • Tranche Sizes: $1,138mm
  • Spread Compression from IPTs to the Launch: <14.73> bps


Here’s how this week’s performance data compares against last week’s:

  • Average NICs widened 3.11 bps this week to 3.57 bps vs. 0.46 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, reduced by1.48x to 2.00x vs. 3.48x. 
  • Average tenors shortened by a meaningful 4.04 years to 6.10 years vs. 10.14 years.
  • Tranche sizes increased by $347mm to $1,138mm vs. $791mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 22 IG Corporate-only new issues widened 4.58 bps to <14.73> bps vs. <19.31> bps.
  • Standard and Poor’s Investment Grade Composite Spreads widened 2 bps to +165 vs. +163.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 1.19 vs. 1.17. 
  • Week-on-week, BAML’s IG Master Index widened by 3 bps to +125 vs. +122. 
  • Spreads across the four IG asset classes widened 2bps to 18.00 bps vs. 16.00 bps as measured against their post-Crisis lows.. 
  • The 19 major industry sectors also widened by 3.53 bps to 23.16 vs. 19.63 also against their post-Crisis lows.
  • For the week ended April 19th, Lipper U.S. Fund Flows reported an inflow of $1.446b into Corporate Investment Grade Funds (2017 YTD net inflow of $43.426b) and a net outflow of $362.223m from High Yield Funds (2017 YTD net outflow of $4.271b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 22 deals that printed, 14 tightened versus NIP for a 63.75% improvement rate while 6 widened (27.25%) and 2 were flat (9.00%).

 

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

  • IG Corps: $25.04b
  • All-in IG (Corps + SSA): $25.54b

This Sunday is the first round of the French presidential election.  Congress returns to work on Monday in the continuing saga of Dysfunction Junction to address the debt ceiling, another rumored stab at repealing and replacing Obama Care, and any signs of tax reform. According to a very high end military official, the Korean peninsula has now reached  its most intense point since the Korean War.  Syria, Turkey, Russia loom large and a terror event that took place last evening in Paris, resulting in the death of a police officer in the heart of the city, are some of the major global event risk factors playing out in our inextricably global-linked world economy. 

Please let me know your thoughts and numbers for next week’s IG Corporate new issue volume.  Thank you in advance for your time. 

Have a great weekend!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

Below please find the replies to this week’s QC canvass of fixed income syndicate bookrunners and 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.

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FIG Funding 5.0- Mother Merrill Launches a MOAB (Mother of All Bonds)
April 2017      Debt Market Commentary   

Quigley’s Corner 04.19.17 – Mother Merrill Launches A Mother of All Bonds aka MOAB

 MOAB-BAML-Mother-of-all-Bonds

 

 

Investment Grade New Issue Re-Cap – BAML Launches a $6.75b MOAB (“A “Mother-Of-All-Bonds”)

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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 April 12th

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

Both Bank of America/Merrill Lynch and Morgan Stanley issued today, wasting no time to capitalize on their recent strong earnings.  BAML launched and priced a proverbial MOAB of a deal – a $6.75b 4-tranche Global Senior Notes transaction comprised of a 6nc5 FRN, 6nc5 fixed-to-float, an 11nc10 f-t-f and a 21nc20 f-t-f.  Morgan Stanley printed a $1.75b 7nc6 FRN.  That represents the fourth and fifth of the U.S. six-pack banks leaving Goldman Sachs as the one that hasn’t yet issued.  Yesterday, Goldman missed analysts estimates as a result of its currency and commodity businesses.  However, it should be noted that GS doubled its YoY profits which points to the impact lofty estimates can have.  Goldman’s investment banking business revenues rose 16% thanks to its debt underwriting strength.

 

4 Corporate issuers tapped the IG dollar DCM today pricing 8 tranches between them totaling $12b.  The SSA space was inactive.

 

  • MTD we have now priced over 63% of the IG Corporate mid-range syndicate projection for April or $58.192b vs. $91.50b.

 

IG Primary & Secondary Market Talking Points

 

  • Basin Electric Power Cooperative upsized today’s 144a/REGS 30-year FMBs to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only (ex-Preferred) new issues was <13.72> bps.
  • BAML’s IG Master Index widened 1 bp to +125 vs. +124.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.19 vs. 1.18.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.5b on Tuesday versus $9.6b on Monday and $16.0b the previous Tuesday.
  • The 10-DMA stands at $14.0b.

 

Global Market Recap

 

  • U.S. Treasuries – closed down. Pressured by Japan selling and weak Bunds & Gilts.
  • Overseas Bonds – JGB’s were mixed & flatter. Bunds & Gilts were hit hard.
  • Stocks – U.S. stocks started the day bid but rolled over. Mixed heading into the close.
  • Overseas Stocks – Nikkei tiny gain. China red. Europe improved except the U.K.
  • Economic – Fed’s Beige Book: Modest or moderate is all you need to know.
  • Overseas Economic –  EU CPI YoY was unchanged (overall & core).
  • Currencies – Good day for the USD outperforming all of the Big 5.
  • Commodities – Very poor performance by crude oil & gold was also a loser today.
  • CDX IG: -0.03 to 68.77
  • CDX HY: +0.28 to 349.61
  • CDX EM: -0.88 to 211.87

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

IG Corporate New Issuance April 2017
Forecasts
vs. Current
MTD – $58.192b
Low-End Avg. $90.25b 64.48%
Midpoint Avg. $91.50b 63.60%
High-End Avg. $92.75b 62.74%
The Low $65b 89.53%
The High $111b 52.43%

 

 

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.  (more…)

FIGs 4.0; Investment Grade New Issue Re-Cap- Mischler Debt Market Comment
April 2017      Debt Market Commentary   

Quigley’s Corner 04.18.17 FIGs 4.0; Mischler Debt Market Comment

 

Investment Grade New Issue Re-Cap – CT10 Rallies; Yield Tumbles and Big FIGs Lead By Example

J.P. Morgan & Chase Co. –Veteran Diversity & Inclusion

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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 April 12th         

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

 

The big FIGs took advantage of recent strong Q1 earnings results to print deals and show why they are the uber-smart money.

Note, that I wrote the following on Wednesday April 5th here in the “QC”:

“T10 yield is coming down folks.  It’s happening at the right time too.  One week from tomorrow, the uber-smart money (think U.S. six-pack banks) release their Q1 2017 earnings with Citigroup, J.P. Morgan and Wells Fargo on tap Thursday, April 13th.  I don’t expect them to capitalize by printing that day because April 13th happens to be a SIFMA early bond market close as Good Friday, April 14th IS a bond market close.  Then on Tuesday, April 18th we’ll have both Bank of America and Goldman Sachs release their Q1 earnings followed by Morgan Stanley on Wednesday the 19thBy that time those six banks will show our IG dollar DCM just how smart “smart money” is. Be patient Treasury teams…..let the market come to you.”

Today the CT10-year closed at 2.168% and has tightened 45.9 bps versus 2.627% on March 13th the Monday before the Fed raised rates. It’s going tighter!

There’s good stuff here in the “QC” folks.

J.P. Morgan & Chase Co. –Veteran Diversity & Inclusion

 

Both J.P. Morgan and Citigroup issued three-part transactions today.  Mischler’s service disabled veteran certified investment bank was honored to be invited as an active Co-Manager on today’s largest transaction of the day –  J.P. Morgan & Chase Co’s. $5.25b 3-part Global Senior Holdco new issue comprised of 6NC5 FRNs, fixed-to-float due 4/25/2023 and 11NC10 fixed-to-float due 5/01/2028.  We thank Janeene Balmir and her staff in Treasury/Funding as well as Bob LoBue, Nick Balzano and Tom Monaghan for working so well with us today on the deal mechanics, book build and allocations.   As JPM’s Senior Diversity Advisor Pat David so eloquently put it, “We think of diversity here at JPMorgan Chase as synonymous with talent.  It’s how we achieve our business objectives. When you hear these words, “diversity,” “inclusion,” etc., try replacing them with the word “talent” – and you’ll understand what it means to us and what we’re trying to do.”

By selecting the nation’s oldest Service Disabled Veteran broker dealer as an active part of today’s mega-deal, not only was it an opportunity for us to access the primary markets for our accounts but it helped J.P. Morgan capture high quality new investors into their profile.  Today that two-way was open, productive and meaningful. For that we thank you all.

Like JPM, we here at Mischler Financial give back to our veteran community. Mischler donates 10% of its revenues to highly vetted veteran causes and organizations.  For our small tight close-knit special operations unit, that’s a lot.  We do, however, realize what the “big guns” do for our nation’s vets as well and so here’s a look at just a few of the major impacts that J.P. Morgan Chase has made in addressing its myriad veteran initiatives and its in their own words:
 mischler-debt-market-comment-041817-jpmorgan-veterans

Notice the number hired–11,000+. That’s a lot of veteran lives and families impacted.  Thank you J.P. Morgan from the top down. From Jamie Dimon to Janeene Balmir and Bob LoBue, to across the entire company, for realizing the vast potential of embracing and promoting an inclusive environment.  Many evaluate performance with money, especially in banking; but it’s all about the ideas generated by people and their successful application.  So, how about the facts?

J.P. Morgan has provided 880 mortgage-free homes valued at more than $160 million donated to military families through nonprofit partners.  They also issued 7,600 career certifications earned by 5,600 post-9/11 veterans and military spouses through the Veterans Career Transition Program while also committing $45 million to programs and initiatives that support veterans and military families.  Those are facts folks!

So, they’re not only still #1 in the IG underwriting league tables with a 10.32% market share but they’re doing great things as well for our nation’s veterans.  Another nice story that needs to get from Wall Street to Main Street! I am honored to help promote that here in the “QC.”

 

 

IG Primary & Secondary Market Talking Points

 

  • Qwest Corp. upsized today’s 40NC5 Notes new issue to $575mm from $250mm at the launch.
  • National Rural Utilities increased today’s 2-part 5s/10s Senior Unsecured Collateral Trust Bonds new issue to $800mm from $750mm at the launch and at the tightest side of guidance.
  • Wells Fargo & Co. exercised a $90mm Greenshoe (3.6mm shares) of its $25 par PerpNC5 non-cumulative Class A Preferred, Series “Y” bringing the new total to $690mm or 27.6mm shares.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 9 IG Corporate-only (ex-Preferred) new issues was <14.25> bps.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 10 IG Corporate-only – which includes today’s Qwest $25 par Preferred new issue – was <13.45> bps.
  • BAML’s IG Master Index tightened 1 bp to +124 vs. +125.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.18 vs. 1.19.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $9.6b on Monday versus $7.2b on Thursday – the lowest volume session since $2.5b on December 30th, 2016 – $13.1b the previous Thursday.
  • The 10-DMA stands at $13.7b.

 

Global Market Recap

 

  • U.S. Treasuries – enjoyed a big rally with the 3yr thru the 30yr trading at their lowest yields YTD.
  • Overseas Bonds – 30yr JGB lost 5 bps. Europe rallied for the most part.
  • Stocks – U.S. stocks closed down but did have an afternoon bounce.
  • Overseas Stocks – Nikkei improved. China & HS struggled. Very bad day in Europe.
  • Economic – The U.S. data was a mixed bag.
  • Overseas Economic – Home prices in China improved.
  • Currencies – USD mixed vs. Big 5. Poor day for DXY Index & great day for the Pound.
  • Commodities – More red than green in commodity-land. Crude made a nice comeback.
  • CDX IG: +0.99 to 68.88
  • CDX HY: +4.82 to 349.15
  • CDX EM: +1.20 to 212.84

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

IG Corporate New Issuance April 2017
Forecasts
vs. Current
MTD – $46.152b
Low-End Avg. $90.25b 51.14%
Midpoint Avg. $91.50b 50.44%
High-End Avg. $92.75b 49.76%
The Low $65b 71.00%
The High $111b 41.58%

 

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

 

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

Knowing the Past for the Future; The Nuclear Option; Rates Rally, Yields Compress
April 2017      Debt Market Commentary   

Quigley’s Corner 04.03.17 Dysfunction Junction & the Nuclear Option; Mischler Debt Market Commentary

 

Investment Grade New Issue Re-Cap – Knowing the Past for the Future; The Nuclear Option; Rates Rally, Yields Compress

IG Primary & Secondary Market Talking Points

Global Market Recap

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 March 29th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

It was November 21st , 2013 when Democrats, frustrated at GOP efforts to stall its Congressional plans under former President Barack Obama, decided to take a vote to stop debate on executive and judicial branch nominees with a simple Senate majority vote rather than having to secure 60 Senate votes.  House Majority leader Harry Reid (D-Nevada), and his party won 52-48.  Reid & Co. set in motion a process that day that eased passage of several key Obama executive and judicial nominees by changing the rules of engagement. Politicians have LONG memories and it’s now payback time…..and guess which party doesn’t like it?  With the tables now turned, the so-called nuclear option –a simple majority – is likely to prevail under Senate Majority leader Mitch McConnell to avoid a Democratic filibuster of Judge Gorsuch’s nomination to the Supreme Court. It may also be used for legislation as well.  Remember everyone, Harry Reid set the precedent.  The “nuclear option” or simple majority vote will weaken the power of the filibuster but it is officially in play now.

As a result, Treasuries rallied and the CT10yr is yielding 2.34%. That’s down 28 bps since the Monday before the FOMC rate hike on Wednesday March 15th.  It’s on its way lower, much lower so, issuers be advised to watch that. Be patient. Let the market come to you.  All this thanks to “Dysfunction Junction.”  The great divide between Republicans and Democrats is getting deeper and more disparate as threats of filibusters are inviting the GOP to employ the aforementioned “nuclear option” to their arsenal.  Republicans remember all too well Democratic hardball strategies used against them in the recent past. Political campaign promises need to be kept and not danced around.  The Dems will NEVER forget (and vice versa) and as they say pay back is going to be………a well, uh…………an issue shall I say?  What goes around, comes around but in the here and now, the nuclear option will be deployed and used to pass legislation as well.  Political dislocation will continue to rally rates and compress Treasury yields lower.  @.00% is in sight folks.  I’ll remind you when we get there.

If you are a banker advising issuers when to print, if they wait, you’ll look smarter and more brilliant than ever! If you’re an issuer, well, when you do print, if you listen to the “QC” please give us an ACTIVE Co-Manager opportunity on your next deal so we can show you what a true distribution value is all about.  You WILL only look even better and brighter than you already are.  One doesn’t get what one doesn’t ask for in life right?

The Monday session featured a continuum of “quirky” issues with the exception of Met Life Global Funding’s 5-year FA-backed notes.  Investment Grade primary markets currently have 10 items in the pipeline all of which are Yankee transactions.

Today, the IG DCM hosted 5 issuers across 5 tranches totaling $2.75b or 12.85% of this week’s IG Corporate-only midpoint syndicate forecast calling for $21.40b.

IG Primary & Secondary Market Talking Points

 

  • Essex Portfolio LP upsized today’s 10-year Senior Notes new issue to $350mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 5 IG Corporate-only new issues was <20.30> bps.
  • BAML’s IG Master Index widened 2 bps to +124 vs. +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. 1.17.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.6b on Friday versus $19.3b on Thursday and $13.8b the previous Friday.
  • The 10-DMA stands at $17.7b.

 

Global Market Recap

 

  • U.S. Treasuries – USTs built on Friday’s rally.
  • Overseas Bonds – Front end JGB’s hit. Core & semi core EU bonds had a strong day.
  • Stocks – U.S. stocks closed in the red but had a nice afternoon comeback.
  • Overseas Stocks – Japan & HS closed higher. China was closed. Europe was red.
  • Economic – ISM manufacturing dipped 0.5 points but remained very strong. Vehicle sales were weak.
  • Overseas Economic – Good Tankan in Japan & positive unemployment rates in Europe.
  • Currencies – USD outperformed the Pound, CAD & AUD and lost ground vs. the Euro & Yen.
  • Commodities – Down day for CRB, crude oil & copper while gold closed with a gain.
  • CDX IG: +0.37 to 66.70
  • CDX HY: +0.47 to 339.04
  • CDX EM: +0.83 to 213.60

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates for This Week and April

 

IG Corporate New Issuance This Week
4/03-4/07
vs. Current
WTD – $2.75b
April 2017
Forecasts
vs. Current
MTD – $2.75b
Low-End Avg. $20.35b 13.51% $90.25b 3.05%
Midpoint Avg. $21.40b 12.85% $91.50b 3.01%
High-End Avg. $22.44b 12.25% $92.75b 2.96%
The Low $12b 22.92% $65b 4.23%
The High $31b 8.87% $111b 2.48%

 

It’s a Tough Job But Somebody’s Gotta Do It

It’s not always fun writing about politics but then again, politics is driving everything in our market more than ever before and it will continue to do that.  Given the myriad global risk factors playing out in our inextricably global-linked world economy, it’s safe to say we are living in dangerous times.  For my part, all I can do is try and tell you about what’s going on in a genuinely honest, insightful and hopefully, refreshing way.  Why?  Well, if you see that we “get it” i.e. understand the machinations of global markets, and appreciate that we work every day to get fresh and informative perspectives to you,  in turn you’ll notice the distinct added-value that we provide and ideally, you will conclude that we should be appointed to the list of other formidable syndicate desks you have chosen to distribute your offerings.

We might be a minority firm, but we are NOT a “one check shop.”  Mischler has a long history in which we have earned Fortune Issuers’ mandates by demonstrating best-in-class cap mkt capabilities via a proven process and recognized platform. As the nation’s oldest Service Disabled Veteran broker-dealer, our ethos is dedicated to serving not just clients with integrity, but also in-need veteran organizations. Towards that mission, we give back 10% of our firm’s profits to veteran causes year round. When hiring for roles within the organization, we prioritize hiring service-disabled veterans and recently-returning veterans who meet our criteria. Once hired, we mentor and coach up our veteran compatriots and we integrate them into becoming members of our team because they earned the opportunity. We grow our own capital month-to-month, quarter-to-quarter and year-to-year. Our operations staff is second to none; it’s not just about our getting underwriter roles for Issuer deals, more important to all, it’s about settling the trade on trade date to settlement date smoothly, each and every time.  We also take great pride in sharing with clients our daily fixed income “downloads”; content that has earned Mischler the Wall Street Letter Award for Best Broker Dealer/Research for three consecutive years – 2014, 2015  and 2016.  It’s all about a value-added proposition.

 

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

 

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

(more…)

Corporate Bond Issuers Close Books on Record Quarter; What’s Next for IG DCM?
March 2017      Debt Market Commentary   

Quigley’s Corner 03.31.17   QC’s Q1 Investment Grade Corporate Debt DCM Look-Back and Look Ahead

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

Syndicate IG Corporate-only Volume Estimates for Next Week and April

“Knowing the Past for the Future” – A Look at a Decade’s Worth of April IG Corporate and SSA Issuance

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

New Issues Priced

This Week’s IG New Issues and Where They’re Trading – Great Market Tone!

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Month end? Quarter end?  Lots of Global economic data? You know what that means. It was a signed, sealed and delivered no-print Friday today.  That’s always welcome as it gave me a head start on today’s more involved syndicate survey.  Forecasts today are for next week’s primary market supply as well as for the month of April.  I also have a snapshot of a decade’s worth of April IG supply across three categories: all-in (Corps + SSA), Corporate as well as just SSA volumes.  I call the section “Knowing the Past for the Future.” It will help put the Best and Brightest’s thoughts and numbers into a historical perspective for you.  You should take a look at that table.

To quickly re-cap their thoughts, all 24 syndicate desks responded to my “QC” survey  The midpoint average for next week’s IG Corporate only supply is $21.40b characterized by tight voting groups with 18 of the 24 participants projecting within $20 to $25b with a low of $12b and a high of $31b.  As for April, the average was $91.50b.  Voting brackets were all over the place ranging from a low of $65b to a high of $111b. But don’t just take my word for it.  All 24 syndicate operatives contributed responses with their numbers so, scroll down below and read their meaningful thoughts.

I hope you enjoy your read and that it helps you prepare for the week and month ahead.  Thanks again to the stellar 24 participating syndicate desks who are always there for me and for YOU each and every Friday edition of the “QC”.

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.17.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +163 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.3b on Thursday versus $20.7b on Wednesday and $17.8b the previous Thursday.
  • The 10-DMA stands at $17.3b.

 

Syndicate IG Corporate-only Volume Estimates for This Week and March

 

IG Corporate New Issuance This Week
3/27-3/31
vs. Current
WTD – $22.15b
March 2017
Forecasts
vs. Current
MTD – $129.998b
Low-End Avg. $25.25b 87.72% $113.79b 114.24%
Midpoint Avg. $26.50b 83.58% $114.31b 113.72%
High-End Avg. $27.75b 79.82% $114.83b 113.21%
The Low $15b 147.67% $80b 162.50%
The High $31b 71.45% $140b 92.86

 

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

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!  23 of those participants are among 2017’s YTD top 26 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  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 83.65% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.

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

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was prefaced as follows:

 

First up, here’s are this week’s IG new issue volume talking points:

  • We fell 17% shy of this week’s syndicate midpoint average forecast or $22.15b vs. $26.50b.
  • MTD we’ve priced 13% more than the IG Corporate mid-range projection for all of March or $129.998b vs. $114.31b.
  • The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).
  • The YTD IG Corporate only volume is now $393.085b. It is the highest IG Corporate-only quarterly volume total in history.
  • YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

Here are this week’s five key primary market driver averages from the 38 IG Corporate-only deals that priced:

  • NICS:  0.46 bps
  • Oversubscription Rates: 3.48x
  • Tenors:  10.14 years
  • Tranche Sizes: $791mm
  • Spread Compression from IPTs to the Launch: <19.31> bps


Here’s how this week’s performance data compares against last week’s:

  • Average NICs tightened 1.29 bps this week to 0.46 bps vs. 1.75 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, increased 0.58x to 3.48x vs. 2.90x.. 
  • Average tenors shortened by a meaningful 1.41 years to 10.14 years vs. 11.55 years.
  • Tranche sizes upsized by $99mm to $791mm vs. $692mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 38 IG Corporate-only new issues tightened 3.87 bps to <19.31> bps vs. <15.44>.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 2 bps to +163 vs. +165 week on week,
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.17 vs. 1.18 last Friday. 
  • Week-on-week, BAML’s IG Master Index tightened by 1 bp to +122 vs. +123. 
  • Spreads across the four IG asset classes tightened by 0.75 bps to 16.00 bps vs. 16.75 as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened by 0.74 bps to 19.63 vs. 20.37 also against their post-Crisis lows.
  • For the week ended March 29th, Lipper U.S. Fund Flows reported an inflow of $3.966b into Corporate Investment Grade Funds (2017 YTD net inflow of $39.089b) and a net outflow of $248.465m from High Yield Funds (2017 YTD net outflow of $5.937b).
  • Taking a look at the secondary trading performance of this week’s 38 IG and 3 SSA new issues, of the 41 deals that printed, 32 tightened versus NIP for a 78.00% improvement rate while 4 widened (9.75%) and 5 were flat (12.25%).

The numbers are in.  Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $22.15b
  • All-in IG (Corps + SSA): $25.90b

Is this week’s overwhelmingly hawkish Fed-speak justified? Or, is Fed leadership talking up yields?  The GOP seemed to have recovered from the health care fiasco.  Monday saw 10 issuers stand down, but the market quickly recouped lost ground with issuers printing the rest of the week.  Today marks month-end but more importantly quarter end. The Easter break is approaching all before we re-enter black-outs.

And now the all-important “two-part” question (and answer(s) posed to the fixed income market’s top Syndicate desks, along with 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, Managing Director and Head of Fixed Income Syndicate

(more…)

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