Browsing articles in "Debt Market Commentary"
BAML Leads $11.8b Day for Investment Grade Issuance-Mischler DCM Comment
July 2017      Debt Market Commentary   

Quigley’s Corner 07.18.17  -Today’s Investment Grade Issuance: BAML Takes Top Spot in Day’s $11.8b Investment Grade New Issue Activity

Below is the opening extract from Quigley’s Corner aka “QC”  Tuesday July 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

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 12th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today’s IG Corporate dollar DCM finished with 4 issuers pricing 9 tranches between them totaling $11.80b.  The SSA space added 1 well-telegraphed issue in the form of the Kingdom of Sweden’s $2.75b 2-year thereby bringing the all-in IG day totals to 5 issuers, 10 tranches and $62.89b.  CDX IG reached another new tight today closing at 57.349 contracting  <0.128>.

Bank of America posted Q2 earnings early this morning beating on EPS ($0.46 vs. $0.43) and revenues ($22.829b vs. $21.781b) and fixed income trading ($2.254b vs. $2.22b) although net interest income was off ($11b vs. $11.34b).  Our nation’s second largest bank as measured by AUM, wasted no time in capitalizing on the overall positive earnings by announcing a mega $7.00b 4-part.  As I wrote here in last Thursday’s “QC” in reviewing Bank of America’s Q3 Outlook call as told by Kevin Barthelmes of BAC Syndicate, “2-, 3- and 5-year FRN issuance is up 40% to 45% YTD with lots of that volume originating from Asia. Notably, we are also expecting more callable structures, for example, 2NC1 and 3NC2 issuance.” Lo and behold mid-morning today BAC announced a 4nc3 FRN, a 4nc3 fixed-to-FRN, a 6nc5 and 11nc10.  So, there really is good stuff here in the “QC” folks.

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

  • The IG Corporate WTD total is 105.68% of this week’s syndicate midpoint average forecast or $30.35b vs. $28.72b.
  • MTD we’ve priced 74.51% of the syndicate forecast for July or $62.89b vs. $84.40b.
  • There are now 8 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • DBS Group Holdings Ltd., dropped the 5yr fixed rate tranche from today’s earlier announced two-part 5yr FXD/FRN securing sufficient 5yr funding in the FRN tranche.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 9 IG Corporate-only new issues, excluding HIS, was <16.44> bps.
  • BAML’s IG Master Index tightened 1 bp to +110 vs. +111.  +106 represents the post-Crisis low dating back to July 2007.
  • The average spreads across 5 of the 19 major industry sectors tied post-Crisis lows today with a sixth setting a new low. That’s 31.5% of the sectors.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.05.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +153 vs. +154.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.8b on Monday versus $11.2b on Friday and $14.0b the previous Monday.
  • The 10-DMA stands at $14.1b. 

Global Market Recap 

  • U.S. Treasuries – Rally led by the 10yr on low inflation & political chaos in the U.S.
  • Overseas Bonds – JGB’s improved except the 2yr. Back-to-back rallies in Europe.
  • 3mth Libor – Set at the highest yield since March 2009 (1.30694%).
  • Stocks – Mixed heading into the close.
  • Overseas Stocks – China & HK higher. Japan lower. Poor session in Europe.
  • Economic – Import price index MoM was negative for the 3rd time in 4 months.
  • Overseas Economic – China good & Japan bad. EU ZEW’s down. U.K. CPI lower.
  • Currencies – A BAD & I mean B-A-D day for the USD. FX’s markets were on the move.
  • Commodities – took advantage of the weaker USD.
  • CDX IG: -0.10 to 57.38
  • CDX HY: +0.68 to 323.09
  • CDX EM: -0.13 to 195.13

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·          N. Korea launches ICBM on July 4th. Continues development, improving accuracy & distance in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S. sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.
ELEVATED
BREXIT Fallout
·          U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
·          Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned

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

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base,severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

·          Italian debt-to-GDP ratio is 133% – world’s 3rd highest.

·          Despite destroying the Caliphate, ISIS will be scattered across a wider MENA region and Europe.

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

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

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

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

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/17-7/21
vs. Current
WTD – $30.35b
July 2017
Forecasts
vs. Current
MTD – $62.89b
Low-End Avg. $27.78b 109.25% $83.87b 74.99%
Midpoint Avg. $28.72b 105.68% $84.40b 74.51%
High-End Avg. $29.66b 102.33% $84.92b 74.06%
The Low $20b 151.75% $70b 89.84%
The High $36b 84.30% $111b 56.66%

 

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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…)

BAML Q3 Debt Market Issuance View-Expectation Management 101
July 2017      Debt Market Commentary   

Quigley’s Corner 07.13.17– Day’s IG DCM Activity + Dialed In to BAML Q3  Debt Market Issuance Outlook 


Investment Grade New Issue Re-Cap

The BAML Q3 Outlook Call- A View Courtesy of Mother Merrill Top Guns

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today’s IG Corporate dollar primary market featured only one domestic issuer – Marathon Oil – among two other Yankee issuers.  3 issuers priced 4 tranches between them totaling $2.30b.  The SSA space contributed 1 deal, the well-telegraphed $5.00b 4-part for JBIC that boosted the session’s all-in IG Corporate and SSA day total to 4 issuers, 8 tranches and $7.30b.

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

  • The IG Corporate WTD total is 146.79% of this week’s syndicate midpoint average forecast or $26.79b vs. $18.25b.
  • MTD we’ve priced 38.55% of the syndicate forecast for June or $32.54b vs. $84.40b.
  • There are now 5 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

So, tomorrow we finally kick off six-pack U.S. bank earnings with Citigroup, J.P. Morgan and Wells Fargo reporting.  Next Tuesday is BAML and Goldman Sachs followed by Morgan Stanley on Wednesday.  Hopefully these market leaders break open the issuance drought in short order and subsequently lead the way for all the issuance universe who they bank up to the traditional mid-August thru Labor Day slow-down.

The BAML Q3 Outlook Call
*Please note that this sub section is discerned from my own note taking. I own any/all discrepancies or inaccuracies vs. the call although I represent there should be none.  Thanks! -RQ

Today was also BAML’s always meaningful Quarterly Outlook Call. Here’s a brief run-down:


High Yield Issuance

High Yield issuance is up 20% YoY but all related to Q1 volume. Looking at Q2 business, issuance is down $10b YoY.  From a sector perspective HY saw big pick-ups in the Industrial, Healthcare and Energy sectors.  There was a notable fall-off in the TMT sector. The remaining sectors have been fairly consistent YTD.  Two-thirds of high yield issuance has been motivated by re-financings. M&A volumes continue to represent about 20% of HY issuance volume. Pick-ups were seen in triple-“CCC” rated issuance to $17b from $4b.  Euro issuance represented about €32b and a hefty £10b. Euro and Sterling issuance continues to illustrate overall growth for HY issuance.

BAML holds strong convictions for re-financing trades as issuers can lock in highly favorable long-term rates in here and looking forward. $50b is committed to M&A financings for the remainder of the year predominantly focused on longer tenors with $10b of that in new HY issuance.

……and now for the High Grade Issuance Outlook

BAML Syndicate’s Kevin Barthelmes did a great job pinch hitting for Dan Mead today in reviewing YTD new issuance as well as the 2H 2017 Outlook.

Here is all the stuff you WANT and NEED to know:

YTD IG ex-SSA supply volume for the first half of 2017 is up 1.8% YoY.  (The “QC” IG Corporate-only count is $754b YTD). BAML had called for a 5-7% decline in IG issuance for 2017 at the end of last year.  The YTD split is as follows: $430b (Corporates) down <3.5%> YoY and $300b (Financials) up 10% versus 2016.  Issuance pressure was seen mostly from the M&A space that was markedly down year-over-year.  YTD M&A driven issuance is expected to be $140b-145b or 10% of IG overall supply. In 2016 we saw $290b which represented 20% of issuance in 2016.

In terms of the back half of 2017, the themes are similar to Q2 2017. Expectations are for corporate supply to be down on the year given the decline in M&A. This July, we expect issuance to be down about 12% versus last year. We also experienced a robust August and September in 2016 which is not expected this year. Keep in mind that Q1 2017 was a record breaking quarter in terms of new issuance. Additionally, Q4 2016 saw companies motivated to price deals ahead of last November’s Presidential election that boosted volumes. BAML does not expect a repeat of July through September again this year.

FRNS and Callable Structures En Vogue

2-, 3- and 5-year FRN issuance is up 40% to 45% YTD with lots of that volume originating from Asia. Notably, we are also expecting more callable structures, for example, 2NC1 and 3NC2 issuance. Expect to see a continuance of that in the second half of the year. It does not feel as though issuers are getting worried about rates at all. Dialogue outside of M&A has been primarily on liability management issuance of which we’ve had roughly $40b YTD.  Expect another $40b in LM issuance in the second half as well which would represent a 10-15% increase versus 2016.

So, to recap, here are the issuance outlook themes for the second half of 2017:

  • Lack of supply
  • Continued FRN demand and callable structures
  • Liability Management issuance
  • Strong Capital/Low Growth

Thank you to all those a who contributed on today’s BAML Outlook Call and in particular I’d like to send shout-outs to the always differentiating intel and commentaries from those who spoke from the sectors I cover here at Mischler – namely Hima Inguva (Banks) and Peter Quinn (Electric Utilities & Power). Listening is always the most informative form of communication.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • For the week ended July 5th, Lipper U.S. Fund Flows reported an inflow of $2.299b into Corporate Investment Grade Funds (2017 YTD net inflow of $71.493b) and a net outflow of $1.144b from High Yield Funds (2017 YTD net outflow of $8.865b).
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 4 IG Corporate-only new issues, excluding HIS, was <25.625> bps.
  • BAML’s IG Master Index was unchanged at +112.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +155.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.7b on Wednesday versus $17.5b on Tuesday and $13.7b the previous Wednesday.
  • The 10-DMA stands at $14.7b.

 

Global Market Recap

 

  • U.S. Treasuries – Draghi, Yellen & supply hurt USTs today.
  • Overseas Bonds – 30yr JGB rallied 2.6 bps. EU lost ground with Peripherals leading the way.
  • Stocks – U.S. stocks closed with gains.
  • Overseas Stocks –  Another rally for Hang Seng. Europe closed with gains.
  • Economic – PPI was tame. Yellen sounded more hawkish today vs. yesterday.
  • Overseas Economic – China data was very good. There is no inflation in Europe
  • Currencies: USD closed mixed vs the Big 5. DXY Index hit low since Sept
  • Commodities: Good day for cruder oil. Metal closed red & wheat was hammered
  • CDX IG: -1.08 to 58.83
  • CDX HY: -4.06 to 328.42
  • CDX EM: -1.21 to 196.92

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

· GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism; Land, air and sea blockade.

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

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

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

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

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

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

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

MARGINAL
2018 U.S. Recession
Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak; sights  on one more rate hike in 2017; concerns over lack of inflation and unwinding $4.5 trillion b/c.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/10-7/14
vs. Current
WTD – $26.79b
July 2017
Forecasts
vs. Current
MTD – $32.54b
Low-End Avg. $17.83b 150.25% $83.87b 38.80%
Midpoint Avg. $18.25b 146.79% $84.40b 38.55%
High-End Avg. $18.67b 143.49% $84.92b 38.32%
The Low $15b 178.60% $70b 46.49%
The High $28b 95.68% $111b 29.32%

 

 

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…)

Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank
July 2017      Debt Market Commentary   

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

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

Investment Grade New Issue Re-Cap

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

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

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

 

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

(more…)

Calling All US Corporate Bond Issuers-Are You There?
July 2017      Debt Market Commentary   

Quigley’s Corner 07.07.17 – IG Fixed Income Syndicate Suffers from a Summer Slowdown…Calling All US Corporate Bond Issuers…Are You There?

Wall Street Syndicate desks Face Groundhog Day Dilemma as Investment Grade Corporate Debt Issuers Stand Down..For the Moment..

Investment Grade Corporate Bond New Issue Re-Cap
Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

The Best and the Brightest:  Fixed Income Syndicate Forecasts and Sound Bites for Next Week & July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Upcoming Calendar

Nothing priced today in our IG dollar DCM wrapping up what is the slowest week of 2017. In fact, the primary markets are in the doldrums. Over the past four weeks, issuance represents the #1, #3, #4 and #6-ranked slowest weeks YTD. I think I’d have to go all the way back to the throes of the EU sovereign debt crisis to recall a less active period.  It’s all about the big FIGs that begin releasing their Q2 earnings next Friday, July 14th with Citigroup, J.P. Morgan and Wells Fargo followed by Tuesday, July 14th when BAML and GS are up concluding with MS on Wednesday, the 19th.  Until then there are currently 11 items in the IG new issue pipeline, 10 of which are Yankees.

So, without further ado, please skim thru the uneventful market wraps below prior to reading what the “Best and the Brightest” have to say about next week’s IG Corporate issuance expectations.  The respondents to today’s “QC” survey posted a midpoint average estimate of $18.25b in new IG Corporate supply for next week. The following week we should start to see things pick up a bit.

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

  • The IG Corporate WTD total is 89.29% of this week’s syndicate midpoint average forecast or $5.75b vs. $6.44b.
  • MTD we’ve priced 84.40% of the syndicate forecast for June or $7.25b vs. $84.40b.
  • There are now 11 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index tightened 1 bp to +113 vs. +114.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.07 vs. 1.08.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +155 vs. +156.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.5b on Thursday versus $13.7b on Wednesday and $17.6b the previous Thursday.
  • The 10-DMA stands at $14.5b.

 

The “QC” Geopolitical Risk Monitor

 

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

·          U.S. shoots down Syrian SU-22 that bombed SDF backed-forces; Russia warns that it suspended   cooperation & will track down and shoot coalition planes west of Euphrates. Potential for  escalation between the U.S. & Russia is real. Turkey, Iran, Israel loom large in this scenario.

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

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

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

·          Closing in on ISIS has also scattered it across wider MENA region and Europe.

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

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

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

·          Venezuela – tumbling oil prices could impact ability to repay debt; civil unrest.

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/03-7/07
vs. Current
WTD – $5.75b
July 2017
Forecasts
vs. Current
MTD – $7.25b
Low-End Avg. $5.71b 100.70% $83.87b 8.64%
Midpoint Avg. $6.44b 89.29% $84.40b 8.59%
High-End Avg. $7.17b 80.20% $84.92b 8.54%
The Low $0.0b N/A $70b 10.36%
The High $15b 38.22% $111b 6.53%

 

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

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!  21 of those participants are among 2017’s YTD top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  22 are in the top 26 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 81.49% 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. 

My weekly technical data re-cap and question posed to the “Best and the Brightest” yesterday morning and updated to reflect this morning’s levels, was framed as follows: 

Entering this morning’s session, here are this week’s IG new issue volume talking points:  

  • The IG Corporate WTD total fell over 10% shy of this week’s syndicate midpoint average forecast or $5.75b vs. $6.44b.
  • MTD we priced only 8.5% of the syndicate projection for June IG Corporates or $7.25b vs. $84.40b.
  • As of today, the YTD IG Corporate-only volume is $727.307b vs. $722.141b on July 6th, 2016 or 0.71% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $895.292b vs $932.44b on July 6th, 2016 or 4.15% more than the year ago total.

 Entering this morning’s Thursday session, here are this week’s five key primary market driver averages from the 4 IG Corporate-only deals that priced: 

o   NICS:  2.25 bps

o   Oversubscription Rates: 2.38x

o   Tenors: 12.50 years

o   Tranche Sizes: $1,437mm

o   Spread Compression from IPTs to the Launch: <20.50> bps


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

  • Average NICs widened 2.49 bps to an average 2.25 bps vs. <0.24> bps across this week’s 4 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased 0.91 x to 2.38x vs. 3.29x. 
  • Average tenors extended 3.07 years to 12.50 years vs. 9.43 years.
  • Tranche sizes blew way out by $910mm to $1,437mm vs.$527mm thanks to this week’s skewed numbers based on only two IG corporate transactions.
  • Spread compression from IPTs to the launch/final pricing of this week’s 4 IG Corporate-only new issues tightened by <3.15> bps to <20.50> vs. <17.35> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 2 bps to +155 vs. +157.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 2 bps to 1.07 vs. 1.09. 
  • Week-on-week, BAML’s IG Master Index tightened 2 bps to +113 vs. +115. 
  • Spreads across the four IG asset classes tightened <2.00> bps to 7.50 bps vs. 9.50 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened <1.48> bps to 11.63 vs. 13.11 bps also as measured against their post-Crisis lows.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the scant 5 deals that printed yesterday and this entire week for that matter, all tightened versus NIP for a 100.00% improvement rate.
  • For the week ended July 5th, Lipper U.S. Fund Flows reported an inflow of $2.535b into Corporate Investment Grade Funds (2017 YTD net inflow of $69.194b) and a net outflow of $1.155b from High Yield Funds (2017 YTD net outflow of $7.721b).

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

  • IG Corps: $5.75b
  • All-in IG (Corps + SSA): $7.25b 

The G-20 kicked off.  Trump attempted to sound Reagan-esque yesterday in Poland.  The big showdown between Trump and Putin takes place later today.  Our First Lady remains stuck in her Hamburg hotel due to security risks as over 100 German police are injured in rioting by protestors. North Korea brings an ICBM to its take-off pad aboard a Chinese military transport carrier and subsequently successfully launches it.  NOKO’s range missiles can now reach Anchorage Alaska and Honolulu.  An EMP or electromagnetic pulse (explosion from over 8,000 feet in the air) would knock out all power in Seoul and its 10 million people. Accuracy not applicable.  China has done nothing to help the situation.  NFP, this morning, came in 44k above forecasts (222k vs. 178k) yet wage growth missed again. Both the Employment and Underemployment Rates edged up 1/10 and 2/20 of 1% to 4.4% and 8.6% respectively. The CT10-year is currently yielding 2.377% and the 5s/30s differential is +98.9 bps. We posted the slowest week for issuance of the year and the past four weeks of IG dollar issuance rank as #1, #3, #4 and #6 YTD – a terrible run in what I’ve extolled here would be a long…..hot…..summer.  Next Friday Citigroup, J.P. Morgan and Wells Fargo announce Q2 earnings. BAML and GS follow on Tuesday July 18th and Morgan Stanley is on Wednesday July 19th.  They can’t come soon enough to lead a new charge for our IG DCM.

And now it’s time to ask the question, “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

The “Best and the Brightest” in Their Own Words

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

 

 

(more…)

Mischler Debt Market Comment Independence Day 2017 Special Edition
July 2017      Debt Market Commentary   

Quigley’s Corner Independence Day 2017 Special Edition-Investment Grade Debt Market Insight 

 

Fourth of July Special Edition- Mischler Debt Market Commentary

Americans Don’t Understand What It Means to Serve–by Nick Palmisciano

A Salute to Mischler’s Debt Capital Markets/Investment Banking Team | Military Veterans (SDV)

Independence Day Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending June 28th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Independence Day Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

mischler-independence-day-dcm-comment 

 

 

 

I have written here over and over that the United States is the best story out of a lot of otherwise bad stories throughout our inextricably global-linked world economy.  Make no mistake about it, however, we are the best and the greatest nation on the face of the earth.  We should all take pause to recall that tomorrow as we take in the scents of our barbecues, the tastes of our beers and the fun in the sun of Independence Day.  The United States IS the engine that the world looks to when there are wildfires all around as there are now.  At the foot of Mt. Rushmore are bronze plaques featuring prominent quotes from each of the four Presidents whose faces are carved into granite.  My favorite is that of Theodore “Teddy” Roosevelt.

“We, here in America, hold in our hands the hopes of the worlds, the fate of the coming years; and shame and disgrace will be ours if in our eyes the light of high resolve is dimmed, if we trail in the dust the golden hopes of men.”

We have an early close today ahead of the Fourth of July.  We celebrate it once annually but we should all appreciate it 365 days a year.  As we labor in freedom, and breath freedom – the oxygen for our souls – let’s all remember the words of Elmer Davis who said, “the United States of America will forever remain the land of the free so long as it is the home of the brave.” The following very prescient letter came to me on July 3rd of 2013, It is a moving tribute to those who serve our great nation, past, present and future.  Please take a moment to read it.

 

Americans Don’t Understand What It Means to Serve by Nick Palmisciano

 

Nic Palmisciano spent six years as an infantry officer in the United States Army.  He will tell you that he’ll never hold a more important job in his lifetime than platoon leader.  He wrote this letter:

I remember the day I found out I got into West Point. My mom actually showed up in the hallway of my high school and waited for me to get out of class. She was bawling her eyes out and apologizing that she had opened up my admission letter. She wasn’t crying because it had been her dream for me to go there. She was crying because she knew how hard I’d worked to get in, how much I wanted to attend, and how much I wanted to be an infantry officer. I was going to get that opportunity.

That same day, two of my teachers took me aside and essentially told me the following: Nick, you’re a smart guy. You don’t have to join the military. You should go to college, instead.

I could easily write a tome defending West Point and the military as I did that day, explaining that USMA is an elite institution, that separate from that it is actually statistically much harder to enlist in the military than it is to get admitted to college, that serving the nation is a challenge that all able-bodied men should at least consider for a host of reasons, but I won’t.  What I will say is that when a 16-year-old kid is being told that attending West Point is going to be bad for his future then there is a dangerous disconnect in America , and entirely too many Americans have no idea what kind of burdens our military is bearing.

-In World War II, 11.2% of the nation served in its four years.

-In Vietnam, 4.3% served in its 12 years.

-Since 2001, only 0.45% of our population has served in the Global War on Terror.

These are unbelievable statistics.

Over time, fewer and fewer people have shouldered more and more of the burden and it is only getting worse.

Our troops were sent to war in Iraq by a Congress consisting of 10% veterans with only one person having a child in the military. Taxes did not increase to pay for the war.  War bonds were not sold.   Gas was not regulated. In fact, the average citizen was asked to sacrifice nothing, and has sacrificed nothing unless he has chosen to out of the goodness of his heart.  The only people who have sacrificed are the veterans and their families. The volunteers. The people who swore an oath to defend this nation.

You stand there, deployment after deployment and fight on. You’ve lost relationships, spent years of your lives in extreme conditions, years apart from kids you’ll never get back, and beaten your body in a way that even professional athletes don’t understand.

Then you come home to a nation that doesn’t understand.

They don’t understand suffering.

They don’t understand sacrifice.

They don’t understand why we fight for them.

They don’t understand that bad people exist.

They look at you like you’re a machine – like something is wrong with you. You are the misguided one — not them. When you get out, you sit in the college classrooms with political science teachers who discount your opinions on Iraq and Afghanistan because YOU WERE THERE and can’t understand the macro issues they gathered from books because of your bias. You watch TV shows where every vet has PTSD and the violent strain at that. Your Congress is debating your benefits, your retirement, and your pay, while they ask you to do more. But the amazing thing about you is that you all know this. You know your country will never pay back what you’ve given up. You know that the populace at large will never truly understand or appreciate what you have done for them. Hell, you know that in some circles, you will be thought of as less than normal for having worn the uniform. But you do it anyway.   You do what the greatest men and women of this country have done since 1775 – YOU SERVED!  Just that decision alone makes you part of an elite group.

As Winston Churchill said of World War II veterans: “Never in the field of human conflict has so much been owed by so many to so few.”

I’d like to thank the veterans who served our nation and who are an integral part of the family here at Mischler Financial Group, Inc.  Thanks in particular go out to Walt Mischler, our Founder and Chairman as well as Dean Chamberlain, CEO, who blessed this small efficient special operations fighting unit known as Mischler Financial with their Service Disabled Veteran certifications that I can safely say is the most formidable in our space.  Never have I met two more honorable, trustworthy and loyal men in this business.

A Salute to Mischler’s Debt Capital Markets Team ; Military Veterans | Wall Street Veterans

66% of our fixed income investment banking team are Service Disabled Veterans or Veterans. 

 

  • Walter Mischler, Founder and Chairman, SDV
  • Dean Chamberlain, CEO, Partner, SDV
  • Richard Tilghman, Managing Director, Public Finance
  • Jason Klinghoffer, CFA
  • Jonathan Herrick, DCM Analyst

mischler independence day 2017 debt market comment

Wishing you and your families a fabulous and safe Fourth of July!

God Bless America!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate


Investment Grade New Issue Re-Cap

As expected, more than 50% of market participants took off SIFMA’s early close Monday ahead of tomorrow’s Independence Day holiday and to no one’s surprise nothing priced in our IG dollar DCM and as a result, volume is 0.00% across the boards for the WTD and MTD totals.

 

  • The IG Corporate WTD total is 0.00% of this week’s syndicate midpoint average forecast or $0.00b vs. $6.44b.
  • MTD we’ve priced 0.00% of the syndicate forecast for June or $0.00b vs. $84.40b.
  • There are now 9 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index was unchanged at +115.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.09.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +157.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12.6b on Friday versus $17.6b on Thursday and $11.8b the previous Friday.
  • The 10-DMA stands at $16.0b.

 

Global Market Recap

 

  • S. Treasuries – Strong ISM manufacturing sent USTs reeling on the heels of hawkish Central Banks.
  • Overseas Bonds – JGB’s mostly red. EU core & semi core mixed. Peripherals bid.
  • 3mth Libor – Set at highest yield (1.30072%) since March 2009.
  • Stocks – DOW rallied (all-time high) & NASDAQ sold off.
  • Overseas Stocks – Asia had small gains while Europe had a very good day.
  • Economic – ISM manufacturing printed at high since Aug 2014.
  • Overseas Economic – China, Japan & Europe (not U.K.) with positive data.
  • Currencies – USD bounced back from a bad week last week in style.
  • Commodities – The CRB, crude oil & wheat rallies continued. Metals were hit.
  • CDX IG: -0.10 to 60.42
  • CDX HY: -2.69 to 336.19
  • CDX EM: -0.60 to 201.84

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·    N. Korea continues ballistic missile development, improving accuracy & distance in defiance of  G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S. sanctions certain  Chinese banks and individuals to influence PROC pressure on NOKO.
ELEVATED
BREXIT Fallout
·    U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian  domestic bank bail-out outside EU “rule of law” concern for EU stability.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
·    Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support  to pass legislation questioned/Dems lose 4 consecutive special elections

·    U.S. shoots down Syrian SU-22 that bombed SDF backed-forces; Russia warns that it suspended cooperation & will track down and shoot coalition planes west of Euphrates. Potential for escalation between the U.S. & Russia is real. Turkey, Iran, Israel loom large in this scenario.

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

·    GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

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

·    Closing in on ISIS has also scattered it across wider MENA region and Europe.

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

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

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

·    Venezuela – tumbling oil prices could impact ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
·    Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights

on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/03-7/07
vs. Current
WTD – $0.00b
July 2017
Forecasts
vs. Current
MTD – $0.00b
Low-End Avg. $5.71b 0.00% $83.87b 0.00%
Midpoint Avg. $6.44b 0.00% $84.40b 0.00%
High-End Avg. $7.17b 0.00% $84.92b 0.00%
The Low $0b 0.00% $70b 0.00%
The High $15b 0.00% $111b 0.00%

 

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…)

Investment Grade Corporate Bond DCM Scorecard 06-27-17- Mischler Debt Market Commentary
June 2017      Debt Market Commentary   

Quigley’s Corner 06.27.16    Investment Grade DCM Scorecard; AIG, American Tower, GM Financial, Charter Comm, Enbridge and Regency Centers LP

 

Investment Grade Corporate Bond  New Issue Re-Cap
Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and June

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

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Tomorrow’s Calendar

 

Today the IG Corporate dollar DCM hosted 6 issuers that priced 12 tranches between them totaling $6.75b.  The SSA space featured a $300mm 5-year Green Bond new issue from KDB bringing the combined IG Corporate and SSA day total to 7 issuers, 13 tranches and $7.05b.

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

  • The IG Corporate WTD total finished having priced only 64.84% of this week’s syndicate midpoint average forecast or $10.40b vs. $16.04b.
  • MTD we’ve now priced 91.42% of the syndicate forecast for June or $83.17b vs. $90.98b.
  • There are now 10 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <14.04> bps.
  • BAML’s IG Master Index tightened 1 bp to +117 versus +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.11 versus 1.12.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +160.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.0b on Monday versus $11.8b on Friday and $13.0b the previous Monday.
  • The 10-DMA stands at $15.8b. 

Global Market Recap 

U.S. Treasuries – followed European bonds south.

Overseas Bonds – 2yr JGB rallied 3 bps. Europe hit very hard on Draghi.

Stocks: NASDAQ having a bad day heading into the close

Overseas Stocks: Asia had small gains. Europe lost ground

Economic: US data took a back seat to the comments from ECB Pres. Draghi

Overseas Economic: Not really a factor

Currencies: USD lost ground vs 4 of Big 5. Great day for the Euro & bad for DX

Commodities: Crude oil had a good day

CDX IG: +1.85 to 61.45

CDX HY: +6.07 to 339.84

CDX EM: +3.46 to 199.55

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·          N. Korea continues missile tests with improving accuracy in defiance of protests in G-Zero world;

Lax China involvement; Recent Otto Warmbier death; Frictional hot spot of the world for “event.”

ELEVATED
BREXIT Fallout
·          U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian

domestic bank bail-out outside EU “rule of law” concern for EU stability.

CAUTION
“U.S. political gridlock”
Escalating war in Syria
·          Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support

to pass legislation questioned/Dems lose 4 consecutive special elections despite media bias.

·          U.S. shoots down Syrian SU-22 that bombed SDF backed-forces; Russia warns that it suspended

cooperation & will track down and shoot coalition planes west of Euphrates. Potential for

escalation between the U.S. & Russia is real. Turkey, Iran, Israel loom large in this scenario.

·          U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions

against Russia in 98-2 vote; Russia in expansion mode; meddling in international elections.

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

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

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

·          Closing in on ISIS has also scattered it across wider MENA region and Europe.

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

·          Venezuela – tumbling oil prices could impact ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights

on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

IG Corporate New Issuance This Week
6/26-6/30
vs. Current
WTD – $10.40b
June 2017
Forecasts
vs. Current
MTD – $83.17b
Low-End Avg. $15.46b 67.27% $90.04b 92.37%
Midpoint Avg. $16.04b 64.84% $90.98b 91.42%
High-End Avg. $16.62b 62.58% $91.92b 90.48%
The Low $10b 104.00% $75b 110.89%
The High $21b 49.52% $110b 75.61%

 

 

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.

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

 

Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
6/26
AVERAGES
WEEK 6/19
AVERAGES
WEEK 6/12
AVERAGES
WEEK 6/05
AVERAGES
WEEK 5/29
AVERAGES
WEEK 5/22
AVERAGES
WEEK 5/15
New Issue Concessions <3.83> bps <4.3> bps <2.14> bps <0.13> bps <0.15> bps <5.45> bps 1.24 bps
Oversubscription Rates 3.66x 2.85x 3.76x 3.10x 2.87x 3.74x 3.20x
Tenors 8.92 yrs 9.37 yrs 13.02 yrs 10.07 yrs 7.03 yrs 11.37 yrs 8.69 yrs
Tranche Sizes $406mm $820mm $646mm $543mm $798mm $817mm $931mm
Avg. Spd. Compression
IPTs to Launch
<17.50> bps <18.76> bps <19.74> bps <15.95> bps <17.51> bps <20.05> bps <17.81> bps

 

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

Please Note: for ratings I use the better two of Moody’s, S&P or Fitch.

  (more…)

Economic Data Misses Mark; CBS Corp. Upsizes Debt Offering-Mischler Comment
June 2017      Debt Market Commentary   

Quigley’s Corner 06.26.17 – Economic Data Misses Mark; America’s Most Watched Network Upsizes Debt Offering

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and June

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

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

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Tomorrow’s Calendar

 

Durable Goods, Cap Goods and Manufacturing economic data all missed estimates this morning and the Supreme Court reinstated a large part of President Trump’s travel bans from six Muslim countries for a period of 90 days and 120 days for all refugees.  The six countries in question are: Iran, Libya, Somalia, Sudan, Syria and Yemen. In international news, Italy bailed out two failed banks to the tune of €17b. In light of Macron’s victory in France and subsequent Parliamentary majority, it has been thought that a German-French alliance to motivate deeper EU integration would anchor the continental experiment.  Instead, Italy’s state bail out opened it to EU criticism.  In the end, each nation will watch over its own despite EU rules and regulations highlighting each member’s disparate individual histories, languages, borders and cultures. Germans are working to help support the quality of life in France.  Such exceptions to EU laws as Italy applied today, call into question just how integrated the EU can ever be.

Today the IG Corporate dollar DCM hosted 7 issuers that priced 9 tranches between them totaling $3.65b.  The SSA space was dormant today.

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

  • The IG Corporate WTD total finished having priced only 22.76% of this week’s syndicate midpoint average forecast or $3.65b vs. $16.04b.
  • MTD we’ve now priced 84.00% of the syndicate forecast for June or $76.42b vs. $90.98b.
  • There are now 8 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • CBS Corp. (NYSE:CBS) upsized today’s two-part 5s/10s Senior Notes new issue to $900mm from $700mm 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 9 IG Corporate-only new issues was <17.50> bps.
  • 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 was unchanged at +160.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $11.8b on Friday versus $16.4b on Thursday and $13.3b the previous Friday.
  • The 10-DMA stands at $15.6b.

 

Global Market Recap

 

  • U.S. Treasuries – 30yr continues to dominate in price & on the curve. Strong 2yr auction.
  • Overseas Bonds – JGB’s mixed. Europe had mostly green. Supply tonight/tomorrow.
  • Stocks – S&P and Dow higher and NASDAQ lower heading into the close.
  • Overseas Stocks – Stocks improved in Asia & Europe.
  • Economic – More disappointing/weaker data in the U.S.
  • Overseas Economic – German IFO (3) data was stronger. Weaker data in Japan.
  • Currencies – USD better bid vs. the Euro, Pound & Yen but weaker vs. CAD & AUD.
  • Commodities – CRB & crude oil with small gains. Gold & wheat headed south.
  • CDX IG: -0.78 to 59.57
  • CDX HY: -2.40 to 333.04
  • CDX EM: -1.98 to 196.30

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·           N. Korea continues missile tests with improving accuracy in defiance of protests in G-Zero world.
ELEVATED
BREXIT Fallout
·           U.K. PM May is on the hot seat but softer BREXIT talks are expected as a result. Macron-Merkel

coalition to squeeze U.K. for all it can. Italian bank bail-out outside EU rule of law, concern

CAUTION
“U.S. political gridlock”
Fed Balance Sheet
Escalating war in Syria
·           U.S. shoots down Syrian SU-22 that bombed SDF backed-forces as war escalates. Russia warns

it suspended cooperation & will track and shoot down coalition planes west of Euphrates.

·           FBI Chief Mueller investigating Trump for obstruction of justice. Pence & others secures lawyer.

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

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

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

·           U.S. partisan politics/gridlock/media bias.

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

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

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

·           U.K. terror alert remains on “Severe” vs. “Critical.” Attack “highly likely” vs. “imminent.”

MODERATE ·           Venezuelan civil unrest

·           U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions

against Russia in 98-2 vote.

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

·           China hard landing?

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

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

IG Corporate New Issuance This Week
6/26-6/30
vs. Current
WTD – $3.65b
June 2017
Forecasts
vs. Current
MTD – $76.42b
Low-End Avg. $15.46b 23.61% $90.04b 84.87%
Midpoint Avg. $16.04b 22.76% $90.98b 84.00%
High-End Avg. $16.62b 21.96% $91.92b 83.14%
The Low $10b 36.50% $75b 101.89%
The High $21b 17.38% $110b 69.47%

 

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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.

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

 

…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
6/19
TUES.
6/20
WED.
6/21
TH.
6/22
FRI.
6/23
AVERAGES
WEEK 6/19
AVERAGES
WEEK 6/12
AVERAGES
WEEK 6/05
AVERAGES
WEEK 5/29
AVERAGES
WEEK 5/22
AVERAGES
WEEK 5/15
New Issue Concessions 3.20 bps 0.60 bps <11.67> bps 0.00 bps/flat N/A <4.3> bps <2.14> bps <0.13> bps <0.15> bps <5.45> bps 1.24 bps
Oversubscription Rates 3.61x 2.27x 2.55x 2.40x N/A 2.85x 3.76x 3.10x 2.87x 3.74x 3.20x
Tenors 9.37 yrs 10.30 yrs 8.78 yrs 10 yrs N/A 9.37 yrs 13.02 yrs 10.07 yrs 7.03 yrs 11.37 yrs 8.69 yrs
Tranche Sizes $692mm $300mm $1,272mm $500mm N/A $820mm $646mm $543mm $798mm $817mm $931mm
Avg. Spd. Compression
IPTs to Launch
<21.44> bps <12.50> bps <19.28> bps <15.00> bps N/A <18.76> bps <19.74> bps <15.95> bps <17.51> bps <20.05> bps <17.81> bps

 

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

Please Note: for ratings I use the better two of Moody’s, S&P or Fitch. (more…)

Investment Grade New Issue Re-Cap 06.13.17 – Mischler Financial
June 2017      Debt Market Commentary   

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

 

Investment Grade Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Re-Cap

Syndicate IG Corporate-only Volume Estimates

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

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

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

 

 

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

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

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

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

MODERATE ·           Venezuelan civil unrest

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

·           China hard landing?

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

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

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

 

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Have a great evening!

Ron Quigley

(more…)

Mischler Investment Grade Debt Market Commentary-Memorial Day 2017 Edition
May 2017      Debt Market Commentary   

“Quigley’s Corner” – Memorial Day 2017 Edition; Best & Brightest Sound Off re: Investment Grade Corporate Debt Forecast

mischler financial veteran-owned broker-dealer-memorial-day-2017

Investment Grade Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and May

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

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

About Memorial Day

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

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

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

 

A “thank you” goes out to all the 24 syndicate desk operatives who I polled this morning in the “QC” and who truly are the “Best and the Brightest” in our world of fixed income syndicate.  You see, SIFMA has declared today an early close ahead of Monday’s Memorial Day and as such we’re all looking to get out a bit ahead of the crowd so-to-speak.  They all complied and I have for your reading pleasure all 24 of those syndicate gurus patiently waiting below with their IG corporate new issue thoughts and forecasts not only for next week’s supply but for all of June as well.  So, sit back, relax and before your long weekend begins, get the data download as to what we expect for next week and month. After that enjoy this weekend with your families and please remember those sacrifices made by our nation’s men and women in uniform.  Please also take the time to read the Memorial Day piece above that says it all and the scroll below for General John A. Logan’s Memorial Day Order known as General Order No.11 May 5th, 1868 issued to honor our nation’s dead in the Civil War. It is the foundational starting point to our nation’s honoring our veterans on Memorial Day this Monday.

Thank you all! -RQ

 

Today’s IG Primary & Secondary Market Talking Points

 

  • 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 1.13.
  • 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 $17.2b on Thursday versus $19.7b on Wednesday and $15.2b the previous Thursday.
  • The 10-DMA stands at $16.9b.

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·     ISIS attack in Manchester, U.K. kills 22 wounds 59/U.K. on highest terror alert – “CRITICAL”

·     N. Korea “deployment and mass production” of ballistic missiles that could reach Japan & Guam.

·     Increasing tensions between North Korea (pop: 24mm) & South Korea (pop: 44mm).

·     Dictator Kim Jong-Un increasingly belligerent./Political disruption in Pacific Rim.

ELEVATED
BREXIT Fallout
·     Pres. Trump labels terrorists “Losers”; urges unity of all faiths to destroy radical factions.

·     Contentious U.K./EU negotiations over BREXIT. U.K. threatens to abandon talks.

·     2nd Scottish independence referendum Fall 2018 or Spring 2019. Also support for a vote in Ireland.

CAUTION
“Trump Factor”
Fed Balance Sheet
·     Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·     FBI Controversy over firing of Comey & Russia scandal.

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

·     U.S. partisan politics/gridlock/media war against Trump

·     China hard landing?/L-T Moody’s downgrade to A1 vs. Aa3; outlook to “stable” from “negative.”

·     Shrinking Fed balance sheet/weaker technicals/wider spreads/higher volatility 2H17.

MODERATE ·     Syria/Terrorism/Venezuelan civil unrest/Brazil’s scandal & new recession.

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

MARGINAL
2018 U.S. Recession
“QUITALY”
·    Highly fractious Italian political landscape. 64 governments in 72 Post WWII years.

·    Italy’s 5 Star Movement & EU skeptic parties have more influence than in other EU elections.

·    As Italian elections approach, EU risks increase significantly/Italian debt-to-GDP ratio is 133%.

·    A “QUITALY” referendum vote?

·    Chance of a 2018 U.S. recession.

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/22-5/26
vs. Current
WTD – $39.20b
May 2017
Forecasts
vs. Current
MTD – $148.138b
Low-End Avg. $29.69b 132.03% $122.27b 121.16%
Midpoint Avg. $30.48b 128.61% $123.42b 120.03%
High-End Avg. $31.27b 125.36% $124.56b 118.93%
The Low $20b 196.00% $100b 148.138%
The High $40b 98.00% $150b 98.76

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 21 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  23 are in the top 27 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 81.39% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.   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. My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was as follows:

To frame this week’s survey question, here are this week’s IG new issue volume talking points:

  • The IG Corporate WTD total finished over 128% above this week’s syndicate midpoint average forecast or $39.200b vs. $30.48b.
  • MTD we’ve now priced just over 120% of the syndicate projection for May or $148.138b vs. $123.42b.
  • The all-in MTD total (IG Corporates plus SSA) currently stands at $171.038b ranking this May as the 7th highest volume month of all-time and second largest of 2017 behind January’s #1 overall ranking at $227.283b.
  • As of today, the YTD IG Corporate-only volume is $624.514b vs. $602.869 on May 25th, 2016 or 3.59% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $778.656b vs $791.618 on May 25th, 2016 or <1.64%> less than last the year ago total.

Here are this week’s five key primary market driver averages from the 48 IG Corporate-only deals that priced:

  • NICS:  <5.45> bps
  • Oversubscription Rates: 3.74x
  • Tenors:  11.37 years
  • Tranche Sizes: $817mm
  • Spread Compression from IPTs to the Launch: <20.05> bps

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

  • Average NICs tightened dramatically by <6.69> bps to <5.45> bps vs. 1.24 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, increased 0.54x to 3.74x vs. 3.20x. 
  • Average tenors extended by 2.68 years to 11.37 vs. 8.69 years.
  • Tranche sizes decreased by $114mm to $817mm vs. $931mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 48 IG Corporate-only new issues tightened <2.24> bps to <20.05> bps vs. <17.81> 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 was unchanged at 1.13. 
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +118 vs. +119. 
  • Spreads across the four IG asset classes widened 0.25 bps to 13.25 bps vs. 13.00 as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened 0.68 bps to 16.58 vs. 17.26.
  • For the week ended May 24h, Lipper U.S. Fund Flows reported an inflow of $2.089b into Corporate Investment Grade Funds (2017 YTD net inflow of $57.067b) and a net outflow of $567.960m from High Yield Funds (2017 YTD net outflow of $6.008b).
  • The OIS forward market – the best measure of implied probability for a June rate hike – is 80%.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 54 deals that printed, 43 tightened versus NIP for a 79.50% improvement rate while 6 widened (11.00%) and 5 were flat (9.50%).

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

  • IG Corps: $39.20b
  • All-in IG (Corps + SSA): $49.70b

This week lived up to expectations and to within 3.50% of the highest estimate which was $40b.  The headliner was of course this week’s terrible suicide bombing in Manchester, U.K. targeting children at a concert leaving 22 killed, 59 wounded and the U.K. on its highest national terror alert – “CRITICAL.” Trump controversies (FBI/Russia) remained backstage as his first foreign tour took center stage. The takeaways were the Middle East trip with net positives in Saudi Arabia and Israel. Trump also challenged European leadership to pay their fair share as NATO members.  He was vocal about the war on terror, labeling terrorists “LOSERS” and emphasized the unity of all faiths particularly Christians, Jews and Muslims to “eradicate terrorists from our planet.” The OIS forward market – the best measure of implied probability for a June rate hike – is 80%. North Korea continued test firing missiles; China was downgraded to “A1” from Aa3” by Moody’s though placed on outlook “stable” from “negative”; Italian elections are the next big event coming to Europe with a possible “QUITALY” on tap as myriad political factions share one commonality – leaving the EU in a nation that has seen 72 post WWII governments in 72 years!; Italian debt to GDP is a staggering 133%; There are 5 IG Corporate or Yankee new issues in the pipeline that we know about.

Along those lines today’s once a month TWO-PART question is, “what are your thoughts and numbers for BOTH NEXT WEEK and JUNE IG Corporate new issue volume? Thank you in advance for your time and contribution! 

I hope my daily “QC” and these Friday data downloads are helpful and informative to you.  Without your input this “QC” survey can’t get done.  I truly appreciate your meaningful sound bites that bring your numbers and ranges to life. A LOT of issuers that your firm banks read this every day and they love it!  I consistently receive positive feedback about the “QC” from them directly.  So, you should know that you are personally contributing to a much bigger picture while also helping the nation’s oldest Service Disabled Veteran broker-dealer build in a more meaningful and sustainable way especially during this – our Memorial Day Monthly Pledge Drive in which we donate 10% of our firm’s profits to veteran and other worthy causes.

Thank you very much and have a great Memorial Day weekend! -Ron

 

The “Best and the Brightest” in Their Own Words

Responses from fixed income syndicate desks and bookrunners canvassed in this week’s poll is available exclusively to QC email distribution list members. To receive the QC, please contact Rob Karr, Managing Director, Head of Capital Markets via rkarr@mischlerfinancial.com

 

 

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

 

  • Across the past ten years, all-in dollar-denominated IG Corporate plus SSA June new issuance averaged $84.61b.
  • Over the past five years, all-in IG June new issuance averaged $93.03b.
  • Over the past three years, all-in IG June issuance has averaged $113.65b.
  • The past three years, June IG Corporate only issuance averaged $98.37b.
  • June SSA issuance has averaged $15.27b across the last three years.

 

June
(Year)
All-in IG Issuance ($bn) IG Corps
only ($bn)
SSA
only ($bn)
2016 98.422 87.922 10.50
2015 111.906 97.156 14.75
2014 130.61 110.04 20.57
2013 42.19 40.24 1.95
2012 82.01 67.95 14.06
2011 51.24 31.33 19.91
2010 67.13 43.52 23.61
2009 119.77 64.29 55.48
2008 59.88 42.43 17.45
2007 83.00 63.07 19.93

*Note: includes TARP/TALF & FDIC insured issuance

 

About Memorial Day
mischler financial service-disabled veteran-owned broker-dealer
Memorial Day was the result of the Civil War with a strong desire to honor our nation’s dead. It was proclaimed by General John Logan commander of our U.S. National Army on May 30th, 1868.  New York was the first state to recognize Memorial Day in 1873. By 1890, all northern states recognized the Day.  The South refused to do so until after World War I when it was not solely to commemorate those lost in the Civil War. Memorial Day officially became a national holiday in 1971 thru an Act of Congress.

Here is how it all got started:

HEADQUARTERS GRAND ARMY OF THE REPUBLIC

General Orders No.11, WASHINGTON, D.C., May 5, 1868

 

  1. The 30th day of May, 1868, is designated for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion, and whose bodies now lie in almost every city, village, and hamlet church-yard in the land. In this observance no form of ceremony is prescribed, but posts and comrades will in their own way arrange such fitting services and testimonials of respect as circumstances may permit.

We are organized, comrades, as our regulations tell us, for the purpose among other things, “of preserving and strengthening those kind and fraternal feelings which have bound together the soldiers, sailors, and marines who united to suppress the late rebellion.” What can aid more to assure this result than cherishing tenderly the memory of our heroic dead, who made their breasts a barricade between our country and its foes? Their soldier lives were the reveille of freedom to a race in chains, and their deaths the tattoo of rebellious tyranny in arms. We should guard their graves with sacred vigilance. All that the consecrated wealth and taste of the nation can add to their adornment and security is but a fitting tribute to the memory of her slain defenders. Let no wanton foot tread rudely on such hallowed grounds. Let pleasant paths invite the coming and going of reverent visitors and fond mourners. Let no vandalism of avarice or neglect, no ravages of time testify to the present or to the coming generations that we have forgotten as a people the cost of a free and undivided republic.

If other eyes grow dull, other hands slack, and other hearts cold in the solemn trust, ours shall keep it well as long as the light and warmth of life remain to us.

Let us, then, at the time appointed gather around their sacred remains and garland the passionless mounds above them with the choicest flowers of spring-time; let us raise above them the dear old flag they saved from hishonor; let us in this solemn presence renew our pledges to aid and assist those whom they have left among us a sacred charge upon a nation’s gratitude, the soldier’s and sailor’s widow and orphan.

  1. It is the purpose of the Commander-in-Chief to inaugurate this observance with the hope that it will be kept up from year to year, while a survivor of the war remains to honor the memory of his departed comrades. He earnestly desires the public press to lend its friendly aid in bringing to the notice of comrades in all parts of the country in time for simultaneous compliance therewith.
  2. Department commanders will use efforts to make this order effective.

By order of

JOHN A. LOGAN,
Commander-in-Chief

N.P. CHIPMAN,
Adjutant General

Official:
WM. T. COLLINS, A.A.G.

Remember our Veterans

mischler financial veteran-owned broker-dealer-memorial-day-2017

Never forget those who made the ultimate sacrifice so that we can all do what we do every day.

God Bless our nation’s veterans and their families; God Bless you and your families and God Bless America!

Have a safe and wonderful Memorial Day weekend everyone!
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.

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

(more…)

A Tribute to Roger Moore’s AAA-Rated Bond; Mischler Debt Market Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.23.17- Tribute to Roger Moore’s AAA-Rated Bond

Below is the opening extract from Quigley’s Corner aka “QC” Tuesday May 23, 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. The QC 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

Investment Grade New Issue Re-Cap:  Bonds, Bonds and Roger Moore’s AAA Rated Bond

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates

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 17th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline – $216.2 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

The vibrant IG primary DCM continued along its trajectory today with 9 IG Corporate issuers pricing 18 tranches between them totaling $13.325b.  The SSA space saw KfW boost the volume totals with a $5b 3-year for an all-in IG day total of 10 issuers, 19 tranches and $18.325b.

 

  • The IG Corporate WTD total is over 109% of this week’s syndicate midpoint average forecast or $33.40b vs. $30.48b.
  • MTD we’ve now priced more than 115% just above the IG Corporate mid-range syndicate projection for May or $142.338b vs. $123.42b.
  • There are now 6 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $159.738b.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Great-West Lifeco upped its 30-year Senior Notes new issue to $700mm from $500mm at the launch and at the tightest side of guidance.
  • Public Storage increased its $25 PerpNC5 preferred new issue today to $250mm from $100mm.
  • Activision Blizzard Inc. its $1.2b 3-part 5-, 10- and 30-year Senior Notes new issue launch 5 bps tighter than the tightest side of guidance today on each of the three tranches.  A rarity among rarities and worth posting here..
  • DDR Corp. increased its 10-year Senior Notes new issue to $450mm from $300mm.
  • Ascension Health upsized the tap of its 3(a)(4) exempt 3.945% Senior Unsecured Notes due 11/15/2046 to $225mm vs. $220mm bringing the new total to $925mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 15 IG Corporate-only new issues, that displayed price evolution and excluding today’s $25 Perp NC5 Preferred was <21.73> bps.
  • The average spread compression including today’s $25 PerpNC5 Preferred was <21.00>.
  • 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 tightened 1 bp +112 versus +113.
  • 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 $16.4b on Monday versus $11.3b on Friday and $15.4b the previous Monday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap

 

  • U.S. Treasuries – 4th losing session in a row for the UST market.
  • Overseas Bonds – JGB’s better except the 5yr. Europe closed mixed.
  • Stocks – 4th winning session in a row for U.S. stocks
  • Overseas Stocks – Asia closed down while Europe rallied.
  • Economic – U.S. data was a mixed bag. FOMC Minutes tomorrow.
  • Overseas Economic – Japan data was mixed. Solid data in Europe except the U.K.
  • Currencies – USD traded very well during NY hours.
  • Commodities – CRB, natural gas, gold & wheat closed red while crude oil moved higher.
  • CDX IG: -0.29 to 61.91
  • CDX HY: -0.74 to 327.04
  • CDX EM: -3.89 to 193.37

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·           N. Korea “deployment and mass production” of ballistic missiles that could reach Japan & Guam.

·           Increasing tensions between North Korea (pop: 24mm) & South Korea (pop: 44mm).

·           Dictator Kim Jong-Un increasingly belligerent and irreverent to international community.

·           Disruption of political landscape in the Pacific Rim.

ELEVATED
BREXIT Fallout/
Terror Event in U.K.
·           Suicide bombing in Manchester kills 22 wounding over 50. ISIS claimed responsibility.

·           Pres. Trump lashes out at terrorists; urges unity of people of all faiths to destroy radical factions.

·           Contentious U.K./EU negotiations over BREXIT. U.K. threatens to abandon talks.

·           2nd Scottish independence referendum Fall 2018 or Spring 2019. Also support for a vote in Ireland.

CAUTION
“Trump Factor”
·          Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·          FBI Controversy over firing of Comey/Russia scandal?

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

·          U.S. partisan politics reach zenith combined with media war against Trump

·          Will the Donald be able to fulfill campaign promises & how long before his tax reform plan?

MODERATE
“Dysfunction Junction”
·          Syria/Terrorism/Venezuelan civil unrest/Brazil’s scandal & new recession.

·          Russia meddling in international elections/Russia in expansion mode

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

·         Highly fractious Italian political landscape. 64 governments in 72 Post WWII years.

·         Italy’s 5 Star Movement & EU skeptic parties have more influence than in other EU elections.

·         As Italian elections approach, EU risks increase significantly/Italian debt-to-GDP ratio is 133%.

·         A referendum vote could result in a “QUITALY”/Also, China hard landing

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/22-5/26
vs. Current
WTD – $33.40b
May 2017
Forecasts
vs. Current
MTD – $142.338b
Low-End Avg. $29.69b 112.50% $122.27b 116.41%
Midpoint Avg. $30.48b 109.58% $123.42b 115.33%
High-End Avg. $31.27b 106.81% $124.56b 114.27%
The Low $20b 167.00% $100b 142.338%
The High $40b 83.50% $150b 94.89%

 

……….and Roger Moore,  the AAA Rated Bond

bond tribute roger moore AAA rated

 

 

The 25 Bond films have grossed a total of $7.1 billion in global box office receipts. It is estimated that half of the world’s population has seen a James Bond film. Ian Fleming’s 14 Bond books have sold over 100 million copies.  (I have read all them……twice!) So, it’s no wonder this USC film school graduate, long ago TV commercial film producer and film buff was bummed out this morning upon hearing of the passing of Sir Roger Moore at the age of 89 in Switzerland.  A private funeral will be held in Monaco so Roger will be going out in true Bond style.

It was another act of violence, this time in Manchester, England last evening that kept many viewers transfixed to their televisions. Thoughts and prayers extended for the 22 killed, the 59 injured and their respective families, relatives and friends. What makes it so difficult to fathom such an act in our civilized society is that yesterday’s suicide bombing took the lives of so many young children who had just enjoyed a concert. Tragic. So, tragic.  What also gripped me last night was that as I watched, it became immediately noticeable how objective the news reporting was as I switched cable news channels during commercial breaks. The journalists and anchors did their job as live feeds came in and the story developed before our eyes.  It was a tragedy that took the lives of innocent people to get the media industry to report objectively (FINALLY!) and they each did a highly commendable job.  But it left me wanting more from them and not just in covering last evening’s story but in covering news – generally speaking – as it should be every single day.

Segue to this morning’s coverage of Israeli Prime Minister Benjamin Netanyahu’s speech and introduction of President Trump who then spoke eloquently about history, religion, and the war on terror.  The message was clear – Christians, Jews and Muslims alike should unite to aggressively confront threats to our civilization and to each of our religions so we can all enjoy living together in our increasingly diverse world.

 

In light of the harsh realities of our new world order and common fight against terror it’s no surprise then to realize that for 55 years dating back to Dr. No in 1962, people have found and embraced a universal James Bond, the super spy character created by Ian Fleming. We all need a ruthless hero in the form of a good guy who at times has to execute bad things for the greater good. When he empties a full revolver into his first onscreen kill in Doctor No, he quips, “That’s a Smith & Wesson, and you’ve had your six.”  In film we can appeal to our primordial instincts and Bond exits as hero each time the world traveler tracks down and kills society’s evil thugs.  One can get away with that in film.  Like relative value studies, it’s part art part science.  It’s film, but it’s portrayed by real living performers.  Bond is decisive and gets his job down each and every time. He kills people who deserve to die and, viewers all agree, they need to go.  Just like terrorists in today’s world. Roger Moore starred in a total of seven Bond epics and endeared himself throughout the world audience through his refreshing portrayal of the daring character he played.  Following on the heels of Sean Connery, Moore knew from his first Bond adventure, Live and Let Die, that he couldn’t be the former so he added amusing humor to the character in a very deadpan, witty and raffish way admired the around the world.

Bond does it with class, adventure, luxury and with the most gorgeous people by his side in the world’s most exotic locations.  He has taste, style, sophistication and oh that sense of humor. A good guy killer wrapped in a tuxedo. With his mission accomplished Bond always takes a sabbatical from work as a reward for saving society from domineering bad guys and terrorists. So, last night’s tragic evening segued into a somber and seriously Presidential speech this morning that then turned into the sad news of the passing of Sir Roger Moore who in his own right did so much in his retirement as UNICEF’s world Ambassador – which he always said was his life’s greatest achievement.  Even Bond gives back to society! We need Bond. We like when the good guy wins.  When we get the bad guy and do it with  style, with panache and in a raffish way, it’s feels even better.  That’s Illusion vs. reality unfortunately.  A lot of things coming together here at once.  The tragedy in Manchester, a President serious about eradicating terrorism and the wish that we had some savior to execute the mission, like James Bond – a fictitious character who was perhaps best portrayed by Roger Moore, who sadly passed away today.

Last Scene From The Spy Who Loved Me

Bond (Roger Moore) and Asamova (Barbara Bach) are discovered by their respective bosses making love in a life boat capsule at sea:

M: 007?
Russian General Gogol: Triple X!!
Minister of Defense: Bond! What do you think you’re doing?
Bond: Keeping the British end up, sir.

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…)

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