Browsing articles in "Debt Market Commentary"
IG Debt Market Issuers Confounded By Dysfunction Junction; Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.23.17 –Dysfunction Junction

 

A Very Important Message

Investment Grade Corporate Debt New Issue Re-Cap – “Dysfunction Junction”

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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 March 22th      

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab –Courtesy of Jim Levenson

Tomorrow’s Calendar

 

 Important Message to all “QC” readers:  Before we dive into the session  details re: today’s corporate debt issuance, I’d like to call your attention to a very important message from one the Fixed Income Syndicate world’s truly good people, Greg Baker of Bank of America/Merrill Lynch.  Greg is going to be competing in his third 140.6 IRONMAN challenge to raise money for a critically important cause. Without further ado I will hand it over to Greg to tell you more about it. 

 

Dear Friends,

I will be participating in IRONMAN Lake Placid on July 23rd, 2017 as part of the Multiple Myeloma Research Foundation (MMRF) Team For Cures.

The Goal:
Raise $10,000 for the MMRF
Swim: 2.4 miles
Bike: 112 miles
Run: 26.2miles

Multiple myeloma is the second most common form of blood cancer and, sadly, has one of the lowest five-year relative survival rates of all cancers. But while there is no cure, great progress is being made.

In fact, thanks to the important work of the MMRF, the world’s leading private funder of myeloma research, the FDA has approved TEN new treatments, including FOUR in just the past 18 months – a track record that’s unparalleled in the world of oncology. These drugs have almost tripled the lifespan of myeloma patients. And now the MMRF is funding over 20 additional treatments in various stages of development, giving hope to tens of thousands of patients and their families.

All donations are GREATLY appreciated! Thank you very much.
Greg

To donate, please click on the link:  https://endurance.themmrf.org/2017IMLP/Member/MyPage/986791/Gregory-Baker

As Winston Churchill so eloquently put it, “We make a living by what we get, but we make a life by what we give.” Greg is giving of himself, and I ask that you please find it in yourselves to donate what you can to help this incredible cause.  In the name of social responsibility, a heartfelt thank you from the guy-in-the-corner who is always in your corner.
Good luck Greg! -RQ

 

Investment Grade New Issue Re-Cap – Zip, Zero, Zilch Thanks to Capitol Hill and “Dysfunction Junction”

quigleys-corner-Dysfunction-Junction
Why did nothing price in today’s rare non-Friday goose egg in our IG DCM?  Simple!  Market participants and issuers are wondering if the Trump rally will stop dead in its tracks if it cannot get an Obama Care replacement bill approved by Congress.  Fractional divides within the majority controlled Republican Party reminds us all of the “circus” that is our nation’s capital known as “The Beltway.”  If support is not achieved, this writer will forever refer to Washington, D.C. as “Dysfunction Junction.”

We are already living in a nation divided with the worst media wars being fought between left and right.  Congress made some “headway” this morning by throwing out the minimum benefits that insurers are required to provide.  The final iteration, however, may not reflect the many months that Trump and his campaign staff and advisors have had to work on a replacement plan promised to be better, stronger, more efficient and one that will save the average American lots of money, while upgrading their care and keeping their choice of doctors.  Anything less than that and it will be perceived as a failure.  The session expected an announcement from House Speaker Paul Ryan – it did not happen.  A vote was expected this evening – it will not happen. The vote on legislation has officially been delayed.  Discussions will be ongoing, beginning this evening in the House at 7:00 pm ET. Markets awaited today’s healthcare/legislative conundrum with the eagerness with which it typically saves for FOMC Press Conferences.  That’s the kind of impact this decision and how it is handled will have.

Unfortunately, and further underlying all the suspense, is the real story of political dysfunction within the GOP.  A new, improved Obama Care seems to be taking a back seat to the question “will the Freedom Caucus continue to agitate any progress within the party?” If so, it will mean a long and painful 4-year term for the Trump Administration, likley result in a loss of seats in the next election and potential control of his ability to effectively govern.  Without support from within his own party effectively means no control at all.  This is all about breaking the party’s House Freedom Caucus, comprised of 20+ Republicans who have been a thorn in the side of any Republican headway.  For now, however, just getting support for whatever bill is being rushed through is challenged to find the necessary 215 votes for its passage.  The legacy of Trump’s legendary negotiating ability – recall his book “The Art of the Deal” – is also being called into question as he faces off with the nation’s lawmakers.

For the more objective Trump supporters, this could be a major disappointment and usher in more toxic additives to the “swamp” that Trump has promised to drain.  The main issue here, however, is that as important as Trump’s first real litmus test is to keep his promises on a full repeal and replacement of Obama Care is that he and his Administration will not be able to focus on any other plans unless and until he overcomes this first major hurdle.  If it fails, President Trump’s ability to achieve his eagerly anticipated and market moving tax reduction plan will be questioned and a financial crisis of confidence could likely ensue.  Perhaps the ultimate deal maker is working on health care concessions in return with a sledge hammer of a tax reduction plan. We’ll have to wait and see. I do think we could see a CT10-year below 2.00% again in short order, after which issuers will gladly hop off the fence in unison and act on a more clear view of rate direction. Robust issuance will be the flavor of the day, but first, we could see a quiet period in our primary markets.  We’ll know more tomorrow when I send out the Friday “QC” featuring the syndicate world’s “Best and the Brightest” and their views and comments on next week’s IG Corporate issuance. So, stay tuned it will be a critically important read for all of you.  For today and in conclusion, “Dysfunction Junction” is why our IG DCM was stalemated today.

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index widened 1 bp to +123 vs. +122.  +106 represent the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. +117.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +165 vs. at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.2b on Wednesday versus $20.5b on Tuesday and $21.6b the previous Wednesday.
  • The 10-DMA stands at $17.9b.

 

Global Market Recap

 

  • U.S. Treasuries – 4-day winning streak was snapped.
  • Overseas Bonds – JGB’s closed better bid. European bonds traded poorly.
  • Stocks – U.S. stocks little changed with 45 minutes left in the session.
  • Overseas Stocks – Asia closed with small gains. Europe had a good day.
  • Economic – New home sales & KC Fed manufacturing were strong.
  • Overseas Economic – U.K. retail sales were strong.
  • Currencies – The USD was mixed vs. the Big 5. The DXY Index had a small gain.
  • Commodities – Crude oil & gold closed in the red.
  • CDX IG: -0.97 to 67.37
  • CDX HY: -3.17 to 330.27
  • CDX EM: -1.52 to 216.16

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/20-3/24
vs. Current
WTD – $19.375b
March 2017
Forecasts
vs. Current
MTD – $107.848b
Low-End Avg. $24.92b 77.75% $113.79b 94.78%
Midpoint Avg. $25.65b 75.54% $114.31b 94.35%
High-End Avg. $26.38b 73.45% $114.83b 93.92%
The Low $20b 96.87% $80b 134.81%
The High $35b 55.36% $140b 77.03%

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

Have a great evening!
Ron Quigley, Managing Director & Head of Fixed Income Syndicate

 

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 Thursday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
3/20
TUES.
3/21
WED.
3/22
TH.
3/24
AVERAGES
WEEK 3/13
AVERAGES
WEEK 3/06
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
AVERAGES
WEEK 2/06
New Issue Concessions 0.57 bps 0.11 bps 4.62 bps N/A 0.00 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps <3.44> bps
Oversubscription Rates 3.08x 3.68x 1.77x N/A 3.08x 2.73x 3.39x 3.26x 3.76x 3.92x
Tenors 15.35 yrs 10.83 yrs 8.82 yrs N/A 10.05 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs 12.04 yrs
Tranche Sizes $578mm $788mm $650mm N/A $859mm $671mm $738mm $695mm $744mm $735mm
Avg. Spd. Compression
IPTs to Launch
<17.69> bps <19.23> yrs <7.5> bps N/A <17.99> bps <20.00> bps <16.79> bps <18.47> bps <18.45> bps <19.60> bps

 

New Issue Pipeline (more…)

Cat’s Out of the Bag-Caterpillar 2-part Leads Day’s Deals; Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.20.17 – Debt Deal of the Day: Caterpillar Financial Services 

 

Investment Grade Corporate Debt New Issue Re-Cap The Cat’s Out of the Bag-Caterpillar Financial Srvs $900m 2-part

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 15th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline – $225.5 Billion in Cumulative Enterprise

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

4 IG Corporate issuers tapped the dollar DCM today pricing 8 tranches between them totaling $4.625b.  Caterpillar Financial Services, Heineken NV, Mass Mutual Life and Korea National Oil were the names of the day; the SSA space was quiet today.
The IG Corporate only WTD total is 18% of the syndicate midpoint average forecast or $4.625b vs. $25.65b.
MTD, we’ve now priced 81% of the IG Corporate mid-range projection for all of March or $93.098b vs. $114.31b.
The all-in MTD total (IG Corporates plus SSA) now stands at $123.508b.

IG Primary & Secondary Market Talking Points

  • Mass Mutual Life Insurance Co. upsized today’s 144a/REGS 60-year Surplus Notes new issue to $475mm from $400mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only new issues was <17.69> bps.
  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp tp +117 vs. +116.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +163 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.2b on Friday versus $20.2b on Thursday and $15.6b the previous Friday.
  • The 10-DMA stands at $18.9b.

 

Global Market Recap

 

  • U.S. Treasuries – Positive start to the week. Seasonals favor a late March rally.
  • Overseas Bonds – Bunds & Gilts little changed. Peripheral bonds mostly better.
  • 3mth Libor – Set at the highest yield (1.15622%) since April 2009.
  • Stocks – U.S. was better in the morning but sold off in the afternoon.
  • Overseas Stocks – Asia closed with gains while Europe closed with losses.
  • Economic – Light calendar this week in the U.S. Germany PPI YoY at high since 2011.
  • Currencies  – USD mixed vs. Big 5 & the DXY Index closed with a very small gain.
  • Commodities – Crude oil, copper & wheat closed down while the CRB & gold were up.
  • CDX IG – closed at 68.43 (6mth roll was today).
  • CDX HY – closed at 326.39 (6mth roll was today).
  • CDX EM – closed at 214.78 (6mth roll was today).

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/20-3/24
vs. Current
WTD – $4.625b
March 2017
Forecasts
vs. Current
MTD – $93.098b
Low-End Avg. $24.92b 18.56% $113.79b 81.82%
Midpoint Avg. $25.65b 18.03% $114.31b 81.44%
High-End Avg. $26.38b 17.53% $114.83b 81.07%
The Low $20b 23.12% $80b 116.37%
The High $35b 13.21% $140b 66.50%

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

 

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

Nor’easter Stella In Front of Front-Loaded Week-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.13.17  Stella Won’t Stop The Show!; Saluting Women on Wall Street

 

Investment Grade Corporate Debt New Issue Re-Cap

Shout Out to Team Citigroup for Honoring IWD (International Women’s Day!)

IG Primary & Secondary Market Talking Points –Penske Widens; Everett Spinco Saves the Day

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 8th      

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

 

So what happens on a Monday ahead of the FOMC Rate Decision, the Bank of England, the Bank of Japan, Trump’s 2018 budget, the expiration of the U.S. debt ceiling suspension, BREXIT’s triggering via Article 50 and the eagerly watched Dutch elections and the chance of up to as much as two feet of snow in the Tri-State area tomorrow? Well I suppose one could call that a lot of things but I choose to call it a “front-loaded” week as a result………

…….and today’s IG dollar DCM agreed as 8 Corporate issuers priced 17 tranches between them totaling $18.30b with a major boost from The State of Kuwait’s $8b two-part 5s/10s that brought today’s impressive all-in IG day totals to 9 issuers, 19 tranches and $26.30b.

Here are some interesting volume talking points from today’s session:

  • The WTD total is now 73% of this week’s syndicate midpoint average forecast or $18.30b $24.83b.
  • MTD, we’ve now priced 67% of the IG Corporate mid-range projection for all of March or $77.425b $114.31b.
  • Today’s all-in IG day total (IG Corporates plus SSA) of $26.30b represents the 11th highest day of all-time.
  • The session’s $26.30b is the second highest volume day of 2017 – and we have had a lot of biggies YTD!
  • After only one day, this week’s $26.30b already ranks as the 9th busiest week of 2017.
  • Today’s $11b 5-part Verizon Communications transaction is the 4th largest issue of the year.

Shout Out to Team Citigroup for Honoring IWD

 

Today, our good friends at Citibank N.A. issued a 2yr FXD/FRN in honor of International Women’s Day (“IWD”), which was last Wednesday, March 8th. IWD is a global day celebrating the social, economic, cultural and political achievements of women among others. So, today it was a privilege and an honor to step aside and watch as Team Citi once again showed why they have been and continue to be a leading force for diversity in our IG dollar DCM.  Congratulations to the continued collective team efforts of everyone at Team Citi! The nation’s oldest Service Disabled Veteran broker dealer sends its five-star salute to each of you and as well as to all the women in our world and lives. The seven featured Women-Owned diversity broker dealer/investment banks on today’s Citibank N.A. “IWD” deal were:

  • L. King & Associates
  • CAPIS Institutional Services, Inc.
  • Lebenthal & Company LLC.
  • MFR Securities, Inc.
  • Siebert, Cisneros Shank & Cop., L.L.C.
  • Telsey Advisory Group
  • Tigress Financial Partners

Why would the financial industry’s oldest minority broker-dealer owned/operated by Service-Disabled Veterans  tout competing minority broker-dealers?  Well, I’d ask “why wouldn’t we?!”  Firstly, its the right thing to do! Second, it provides us the opportunity to showcase one of the global capital market’s leading and cutting edge D&I initiatives, while tipping our hat to the leading women in our diversity space.  So, congratulations for the glass ceilings raised and doors that Citigroup has helped open at their own financial institution through their own incredible procurement initiatives, as well as externally for all these leading women-owned firms. We extend a hardy congratulations to the respective women of D&I in our financial services industry. All for one, and one for all!

So, where do all these ideas originate?  A good place to start looking is from the top down at Citigroup.  Today I would suggest looking first in the office of one Suni Harford….

Who is Suni Harford?

suni-harford-citigroup

Suni Harford, Citigroup

Suni Harford is a Managing Director and Citigroup’s Regional Head of Markets for North America. In this capacity, Suni oversees the North American sales, trading and origination businesses of Citi’s securities and banking franchise. Citi maintains a premier position across all of its fixed income, currency, equity and commodities offerings. In addition to her current responsibilities, Suni is a member of Citi’s Pension Plan Investment Committee, and a Director on the Board of Citibank Canada. Suni is also the co-head of Citigroup’s global women’s initiative, Citi Women.

Prior to her current assignment, Suni was Citi’s Global Head of Fixed Income research, where she was responsible for Citigroup’s credit analytics, research strategy and fixed income quantitative analytics efforts globally. Suni also had oversight of Citi’s premier fixed-income analytics platform, The Yield Book. From 1995-2004, Suni served as the co-head of Citi’s Fixed Income Capital Markets origination business, where she managed relationships with financial institutions.

Not that she doesn’t have enough on her plate, Suni also serves on the Board of Directors of The Depository Trust & Clearing Corporation, the Board of Directors of The Forte Foundation, a national, non-profit organization dedicated to increasing the number of women leaders in business, the Board of the Friends of Hudson River Park, and the Board of Taproot Foundation, a national organization engaged in skills-based volunteerism and pro-bono philanthropy. Suni is also passionate about awareness and support for our veteran community, and she is involved in many organizations in this regard. In addition to serving on the U.S. Chamber of Commerce Veteran’s Employment Advisory Council, Suni has worked with First Lady Michele Obama’s Joining Forces initiative. Suni also represents Citi as a founding member of Veterans on Wall Street, a coalition of major financial services firms established in 2010 to engage the broader industry in efforts to support our transitioning veterans. Having helped formalize Citi’s very successful Veterans Initiative, CitiSalutes, in 2009, Suni remains the senior business sponsor for the initiative.

For those not already aware of her pedigree, Suni joined Salomon Brothers in January 1993, after five years with Merrill Lynch & Co. where she was a Vice President in Investment Banking. Suni joined Merrill upon graduation from the Amos Tuck School of Business at Dartmouth College, where she received her M.B.A. Suni received her Bachelor of Science degree from Denison University, where she majored in physics and math.

Pretty impressive stuff right there folks. Now you know why Suni was named one of  2016’s Top 20 Most Powerful Women on Wall Street!

So, in light of International Women’s Day and today’s honorable $2b Citibank N.A. “IWD” two-part new issue a “thank you”– not only to Suni, but to all the women in our investment grade debt capital markets and in our lives in addition to those who help perpetuate a more inclusive financial services industry.

Before I conclude, a bit of Women-on-Wall Street trivia for you from the guy-in-the-corner’s personal treasure trove – 

Did you know the first ever Euro-denominated transaction ever priced in history was for the European Investment Bank?  Did you know who priced it?  It was a woman. Her name was Natalie Armentero of Banque Paribas Syndicate. You may not have heard her name in a while because, back in 1998 – over 19 years ago – she became the wife of the guy-in-the-corner and she now goes by the name of Natalie Quigley!  Yet another smart and talented lady right there who graced our investment grade GCM opening doors and setting the bar high for many other women to follow.  She also makes me one very proud and lucky guy!  Her sister Marie-Therese Armentero represented Switzerland in the 1984 and 1988 Summer Olympics while currently holding numerous world swimming records for women over 40 years of age. Good stuff right there folks. Here’s to supporting strong women the world over.

Thank you also to Morgan Forester at team Citigroup for making herself accessible for me today on this.

 

IG Primary & Secondary Market Talking Points – Uh oh! What Gives? Penske Widens!……But Then Everett Spinco Saves the Day?!

 

  • Today’s Penske Truck Leasing Co., L.P. and PTL Finance Corporation’s 10-year 144a/REGS Senior Notes new issue opened some eyes today when it launched at +160 or 5 bps wider than +155 “area” guidance despite the fact that “area” was defined as +/-5 bps.
  • However, where there is bad there is good.  Today’s Everett Spinco Inc. 3-year 144a/REGS Senior Notes tranche was guided in the  +140 “area” with the latter defined as
    +/-5 bps but launched at +130 or a nickel tighter than the tightest side of guidance!
  • The average spread from IPTs thru the launch/final pricing of today’s 17 IG Corporate-only new issues was <17.36> bps.
  • BAML’s IG Master Index was unchanged at +121.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.16 vs. 1.15.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +163.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.6b on Friday versus $20.8b on Thursday and $21.3b the previous Friday.
  • The 10-DMA stands at $20.2b.

Global Market Recap

 

  • Massive blizzard headed towards the Northeast tonight/tomorrow.
  • S. Treasuries – lost ground due to heavy corporate supply.
  • Overseas Bonds – JGB’s had small losses. Europe was all over the place.
  • 3mth Libor – Set at the highest yield (1.13122%) since April 2009.
  • Stocks – U.S. stocks were mixed and little changed.
  • Overseas stocks – Europe more green than red. Asia closed higher.
  • Economic – Not a real factor today in the U.S. or across the globe but will be this week.
  • Currencies – USD better vs. the Euro, weaker vs. the Pound, CAD and AUD and little changed vs. Yen.
  • Commodities – Crude oil small loss, gold up, copper good day and wheat had a bad day.
  • CDX IG: +0.53 to 65.08
  • CDX HY: +3.85 to 336.70
  • CDX EM: -0.28 to 216.74

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/13-3/17
vs. Current
WTD – $18.30b
March 2017
Forecasts
vs. Current
MTD – $77.425b
Low-End Avg. $24.00b 76.25% $113.79b 68.04%
Midpoint Avg. $24.83b 73.70% $114.31b 67.73%
High-End Avg. $25.67b 71.29% $114.83b 67.43%
The Low $15b 122.00% $80b 96.78%
The High $35b 52.29% $140b 55.30%

 

In Honor of Tropical Storm “Stella”

My bet is that Tropical Storm Stella renders Tuesday an inactive day which, in turn, means Thursday now becomes a massive day for issuance.   
noreaster-stella

 

 

 

 

 

 

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

 

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

 

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.
3/06
TUES.
3/07
WED.
3/08
TH.
3/09
FRI.
3/10
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
AVERAGES
WEEK 2/06
AVERAGES
WEEK 1/30
New Issue Concessions <0.56> bps <0.47> bps 5.5 bps 3.94 bps 3.33 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps <3.44> bps <0.87> bps
Oversubscription Rates 3.19x 2.54x 2.22x 2.37x 1.92x 2.73x 3.39x 3.26x 3.76x 3.92x 3.12x
Tenors 9.93 yrs 8.68 yrs 17.99 yrs 6.58 yrs 5.21 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs 12.04 yrs 11.60 yrs
Tranche Sizes $843mm $638mm $443mm $583mm $275mm $671mm $738mm $695mm $744mm $735mm $1,311 yrs
Avg. Spd. Compression
IPTs to Launch
<21.31> bps <18.56> yrs <17> bps <25.06> bps <13.50> bps <20.00> bps <16.79> bps <18.47> bps <18.45> bps <19.60> bps <19.77> 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.

 

IG          

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Citibank N.A. A1/A+ FRN 3/20/2019 1,000 3mL+equiv 3mL+34 the # 3mL+34 3mL+34 CITI-sole
Citibank N.A. A1/A+ 2.00% 3/20/2019 1,500 +low 70s/+72.5a +67 the # +67 +67 CITI-sole
DCT Industrial Oper. Part.
(tap) New Total: $325mm
Baa2/BBB 4.50% 10/15/2023 50 +185a +175a (+/-5) +170 +170 CITI/JPM/WFS
Everett Spinco Inc. Baa2/BBB+ 2.875% 3/27/2020 500 +175a +140a (+/-5) +130 +130 BAML/MUFG/RBC
Everett Spinco Inc. Baa2/BBB+ 4.25% 4/15/2024 500 +225a +195a (+/-5) +190 +190 BAML/MUFG/RBC
Everett Spinco Inc. Baa2/BBB+ 4.75% 4/15/2027 500 +237.5-250
+243.75a
+220a (+/-5) +215 +215 BAML/MUFG/RBC
Humana Inc. Baa3/BBB+ 3.95% 3/15/2027 600 +150-155 +140a (+/-5) +135 +135 BAML/JPM/MS/USB
Humana Inc. Baa3/BBB+ 4.80% 3/15/2047 400 +180a +165a (+/-5) +160 +160 BAML/JPM/MS/USB
Ontario Teachers A1/AA 3.125% 3/20/2022 500 +112.5a +100-105 +100 +100 GS/TD
Ontario Teachers A1/AA 3.875% 3/20/2027 500 +137.5a +130-135 +130 +130 GS/TD
Penske Truck Leasing Baa2/BBB+ 4.20% 4/01/2027 500 +160a +155a (+/-5) +160 +160 BAML/JPM/PNC/WFS (a)  +1 (p)
Verizon Communications Inc. Baa1/A- FRN 3/16/2022 1,400 3mL+equiv 3mL+equiv 3mL+100 3mL+100 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 3.125% 3/16/2022 1,850 +125-130 +115a (+/-5) +110 +110 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 4.124% 3/16/2027 3,250 +175-180 +165a (+/-5) +160 +160 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 5.25% 3/16/2036 3,000 +230-235 +215a (+/-5) +210 +210 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 5.50% 3/16/2046 1,500 +245-250 +235a (+/-5) +230 +230 BAML/BARC/MS/RBC (a) +5 (p)
Virginia Electric & Power Co. A2/A 3.50% 3/15/2027 750 +105a +90-95 +90 +90 DB/JPM/WFS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
State of Kuwait AA/AA 2.75% 3/20/2022 3,500 +100a +85a +75 +75 CITI/DB/HSBC/JPM/NBK/SCB
State of Kuwait AA/AA 3.50% 3/20/2027 4,500 +120a +110a +100 +100 CITI/DB/HSBC/JPM/NBK/SCB

 

Indexes and New Issue Volume

 

Index Open Current Change
IG27 64.547 64.853 0.306
HV27 131.025 131.490 0.465
VIX 11.66 11.35 <0.31>
S&P 2,372 2,373 1
DOW 20,902 20,881 <21>
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $18.30 bn DAY: $26.30 bn
WTD: $18.30 bn WTD: $26.30 bn
MTD: $77.425 bn MTD: $100.475 bn
YTD: $340.508 bn YTD: $440.458 bn

 

Lipper Report/Fund Flows – Week ending March 8th      

     

  • For the week ended March 8th, Lipper U.S. Fund Flows reported an inflow of $3.482b into Corporate Investment Grade Funds (2017 YTD net inflow of $29.433b) and a net outflow of $2.119b from High Yield Funds (2017 YTD net outflow of $743m).
  • Over the same period, Lipper reported a net inflow of $1.208b into Loan Participation Funds (2017 YTD net inflow of $9.308b).
  • Emerging Market debt funds reported a net inflow of $154.368m (2017 YTD inflow of $1.387b).

 

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield: (more…)

Draghi Says Euro is Irrevocable-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.09.17 –Draghi Says Euro is Irrevocable

 

Investment Grade New Issue Re-Cap

Buy-Side Feedback—“Its Amazing!”

IG Primary & Secondary Market Talking Points

Global Market Recap

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

Draghi’s ECB Key Talking Points

ECB Forecasts

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 8th      

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

6 IG Corporate issuers tapped the dollar DCM today pricing 9 tranches between them totaling $5.25b.  The SSA space featured 2 issuers and 2 tranches totaling $1.30b for an all-in IG day total of 8 issuers, 11 tranches and $6.55b.
The WTD total is now 34% more than this week’s syndicate midpoint average forecast or $44.50b vs. $33.15b. MTD, we’ve now priced 50% of the IG Corporate mid-range projection for all of March or $58.025b vs. $114.31b.

Note: In last Friday’s “QC” Best and Brightest edition I wrote at the top, “Personally one should err to the upside in markets like this wherein new issue volume forecasts are concerned.  I’ll start by saying I have a strong feeling we see another $50b week of all-in IG Corporate and SSA new issuance next week.  IG Corporates alone could easily eclipse the $40b mark.  However, that’s my take on things. Across the 24 syndicate desks that I surveyed today, next week’s IG Corporate-only midpoint average estimate calls for $33.15b to price characterized by MANY new issuers.”

The WTD tally for IG Corporate new issuance thru today is $44.50b and all-in IG Corporate and SSA issuance is $52.80b ……not too shabby eh?

Buy-Side Feedback

Late this afternoon a buy-side account pointed out the following, “It’s amazing Ron! I was looking at your “QC” from last Friday and recall how staggered I was that almost 90% of last weeks’ new issues tightened versus pricing spread levels especially considering the negative concession environment.  I don’t think I’ve ever seen that before.  But this week is an entirely different story. In fact, it’s completely the opposite.  I’ll bet that a new record number of this week’s new issues widened out vs. their pricing levels given yields.  I haven’t seen more apathy in the market than this week in a VERY long time.”

We’ll see tomorrow folks when I check  the secondary trading levels of this week’s


IG Primary & Secondary Market Talking Points

 

  • Host Hotels & Resorts LP bumped up its 7yr Senior Notes new issue to $400mm from $350m at the launch and at the tightest side of guidance.
  • Neuberger and Berman upped today’s 144a/REGS 10yr Senior Notes new issue to $300mm from $250mm at the launch. The deal skipped guidance.
  • The Asian Development Bank increased today’s 4yr FRN new issue to $1b from $750mm at the launch.
  • Swedish Export Credit Corp. upsized today’s tap of its FRNs due 10/04/2018 to $300mm from $250mm at the launch.
  • The average spread from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues, that displayed price evolution, was <25.06> bps.
  • BAML’s IG Master Index was unchanged at +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 1.14 vs. 1.12.
  • 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 $20.2b on Wednesday versus $20.9b on Tuesday and $21.6b the previous Wednesday.
  • The 10-DMA stands at $20.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Terrible price action. Supply, Draghi and healthcare the main culprits.
  • Overseas Bonds – Europe sold off on Draghi’s political correctness.. JGB’s red except 30yr.
  • 3mth Libor – Set at 1.11956% the highest since April 2009.
  • Stocks – Basically unchanged with 40 minutes left in the session.
  • Overseas Stocks – Japan up, China & Hang Seng down & Europe more green than red.
  • Economic – Claims higher from low since 1973. Import prices YoY high since 2012.
  • Overseas Economic – China inflation data mixed & credit down. Ireland GDP was strong.
  • Currencies – U.S. weaker vs. Euro & Pound but stronger vs. the Yen, CAD & AUD.
  • Commodities – CRB, crude oil, gold, copper, silver, etc., all got hit.
  • CDX IG: +0.85 to 64.75
  • CDX HY: +4.14 to 333.37 (wider by 26.15 bps this week)
  • CDX EM: +4.48 to 221.56

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

-Tony Farren

 

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

mischler-draghi-euro-irrevocable 

 

Today the ECB left the Euro Zone’s  main refinancing rate unchanged at 0%, the marginal lending facility unchanged at 0.25% and the deposit facility rate also unchanged at <0.4%>.  Asset purchases remained €80b a month until the end of March after which they will be reduced by 25% to €60b per month from April thru December. Currency traders, however, reacted to the hawkish news that the ECB dropped its pledge to use “all available instruments” to achieve its mandate, and is now less worried about deflation. On the one hand, ECB President Mario Draghi talked up the prospects for the Euro Zone economy while saying there is no longer a deflation risk however, he also warned that there are “downside risks” that could derail the recovery. Clearly the ECB monetary chief has a firm eye on upcoming elections, particularly in France. Draghi sighted domestic risks are now more contained but subsequently took several minutes explaining how elections actually make everything uncertain. Among notable moments in his speech, he ducked the question: Could the ECB raise interest rates before it has ended its QE program?“  That was interesting, as he previously insisted that the rate would not rise until the asset-purchase program concludes.  The takeaway is that risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors.

Draghi’s ECB Key Talking Points

 

  • ECB leaves the main refinancing rate unchanged at 0.00%.
  • Leaves the marginal lending facility unchanged at 0.25%.
  • Leaves the deposit facility rate unchanged at -0.4%.
  • Keeps asset purchases at €80b a month until the end of March.
  • Says asset purchases will be €60b a month from April to December – a 25% reduction.
  • Reiterates that rates will stay at present or lower levels for an extended period of time.
  • Net purchases will be made alongside reinvestments.
  • QE can be increased in size and/or duration if the outlook worsens.
  • Draghi sees rates at present or a lower level well past the end of QE.
  • QE will run until the ECB sees a sustained inflation pick-up.
  • Sees no convincing upward trend in underlying inflation.
  • Inflation is likely to remain close to 2% in the coming months.
  • Core inflation set to rise gradually over the medium-term.
  • ECB measures preserve favorable conditions needed.
  • Sentiment indicators point to a pick-up in momentum.
  • Inflation increased due to energy effects.
  • Underlying inflation pressures remain subdued.
  • The ECB will look through transient inflation changes.
  • A very substantial degree of accommodation is needed.
  • Draghi omits pledge to use “all instruments” within the mandate.
  • Says economic risks are less pronounced, yet still to the downside.
  • Risks relate predominantly to global factors.
  • Survey results increase confidence in the recovery
  • Survey results suggest the recovery may broaden.
  • Rising employment bolsters private consumption.
  • Signs of a somewhat stronger global recovery.
  • Euro-area growth was damped by a sluggish reform pace.

 

ECB Forecasts

  • 2017 GDP growth at 1.8% vs 1.7%
  • 2018 GDP growth at 1.7% vs 1.6%
  • 2019 GDP growth at 1.6% vs 1.6%
  • 2017 inflation at 1.7% vs 1.3%
  • 2018 inflation at 1.6% vs 1.5%
  • 2019 inflation at 1.7% vs 1.7%

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

 

IG Corporate New Issuance This Week
3/06-3/10
vs. Current
WTD – $44.50b
March 2017
Forecasts
vs. Current
MTD – $58.025b
Low-End Avg. $31.79b 139.98% $113.79b 50.99%
Midpoint Avg. $33.15b 134.24% $114.31b 50.76%
High-End Avg. $34.50b 128.99% $114.83b 50.53%
The Low $25b 178.00% $80b 72.53%
The High $45b 98.89% $140b 41.45%

 

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

 

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

 

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

A Revised View of ADP Employment Data-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.08.17 -Debt Market View re Latest ADP Data

 

Investment Grade Corporate Debt New Issue Re-Cap – 7 IG Corporate Deals Felt Like a Vacation vs. Monday & Tuesday Sessions

ADP Number Becoming More Payroll Accurate

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced  (UNH, DTE Energy, Realty Income, Western Union, Princeton U Trustees)

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 27

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

 

5 IG Corporate issuers tapped the dollar DCM today pricing 7 tranches between them totaling $3.10b.  The SSA space featured 2 issuers and 2 tranches totaling $3.50b for an all-in IG day total of 7 issuers, 9 tranches and $6.60b.
The WTD total is now 18% more than this week’s syndicate midpoint average forecast or $39.25b vs. $33.15b.
MTD, we’ve now priced 46% of the IG Corporate mid-range projection for all of March or $52.775b vs. $114.31b.

ADP Number Becoming More Payroll Accurate

How often have you heard this, “If I told you once, I told you a million times.” Or this –  “If it’s not one thing, it’s another.”  Well, if it’s not employment and jobs numbers it’s geopolitical event risks.  No one seems to be able to get it right. Surprises lurk around the globe as well as in the economic data.  Today the ADP Employment Change number surprised BIG TIME to the upside posting 298k against 187k estimates. It was the highest ADP number in three years! The prior was upward revised to by 15k to 261k vs. 246k  The CT10 responded by popping 5 bps in yield. By 9:00am the Treasury 10yr was at 2.56% or 26 bps wider over the last 9 sessions.

As BNP Paribas’ Sean Stevens wrote today:

The ADP number is clearly getting better at predicting Payrolls.  Let’s look at the average miss over the last 6 months including the average overshoot and undershoot.

Using the January 2017 report back to August 2016 and including the upward revision:

 

Aug. 2016 thru
Jan. 2017
ADP Employment
Avg. Miss 18.2k
Avg. ADP Undershoot 15.5k
Avg. ADP Overshoot 19.5k

Using the January 2016 report back to August 2015:

Aug. 2015 thru
Jan. 2016
ADP Employment
Avg. Miss 58.8k
Avg. ADP Undershoot 112.0k
Avg. ADP Overshoot 43.0k


Economic Data Releases

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
MBA Mortgage Applications March 3 —- 3.3% 5.8% —-
ADP Employment Change February 298k 246k 246k 261k
Nonfarm Productivity Q4 1.5% 1.3% 1.3% —-
Unit Labor Costs Q4 1.6% 1.7% 1.7% —-
Wholesale Inventories MoM January <0.1%> <0.2%> <0.1%> —-
Wholesale Trade Sales MoM January 0.5% <0.1%> 2.6% 2.4%

 

IG Primary & Secondary Market Talking Points

 

  • Realty Income Corp. upsized today’s two-part Senior Notes new issue to $700mm from $650mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 6 IG Corporate-only new issues, that displayed price evolution, was <17.00> bps.
  • BAML’s IG Master Index widened 1 bp to +119 vs. +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.12 vs. 1.11.
  • 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 $20.9b on Tuesday versus $22.7b on Wednesday and $22.7b the previous Tuesday.
  • The 10-DMA stands at $20.4b.

 

Global Market Recap

 

  • U.S. Treasuries – 10yr supply & ADP employment did USTs in today.
  • Overseas Bonds – JGB’s and bonds in Europe had a losing day.
  • 3mth Libor – Set at the highest yield (1.10900%) since April 2009.
  • Stocks – U.S. mixed heading into the close.
  • Overseas Stocks – Japan & China red while Hang Seng & Europe closed higher.
  • Economic – ADP employment was very strong for the second month in a row.
  • Overseas Economic – China trade data was whacky. Japan GDP up. German IP strong.
  • Currencies – USD outperformed all of the Big 5. DXY Index back over 102.
  • Commodities – Crude oil crushed on high inventory. Overall bad day for commodities.
  • CDX IG: +0.65 to 63.18
  • CDX HY: +3.18 to 325.51
  • CDX EM: +6.22 to 214.88

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/06-3/10
vs. Current
WTD – $39.25b
March 2017
Forecasts
vs. Current
MTD – $52.775b
Low-End Avg. $31.79b 123.47% $113.79b 46.38%
Midpoint Avg. $33.15b 118.40% $114.31b 46.17%
High-End Avg. $34.50b 113.77% $114.83b 45.96%
The Low $25b 157.00% $80b 65.97%
The High $45b 87.22% $140b 37.70%

 

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

 

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

 

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 Tuesday’s session followed by the averages over the prior six weeks: (more…)

Rate Hike Coming..Beige Book Talking Points-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.01.17-Rate Hike IS Coming; Fed Beige Book Talking Points

 

Investment Grade New Issue Re-Cap – Dow Breaks 21,000 – Odds of March Rate Hike Rise From 40% to 80% in 3 Sessions!

IG Primary & Secondary Market Talking Points

Global Market Recap

The Federal Reserve Beige Book Talking Points – All You Need to Know

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

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 February 22nd    

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

7 IG Corporate issuers tapped the dollar DCM today pricing 12 tranches between them totaling $9.275b.  The SSA space hosted 2 issuers across 4 tranches including a $5b 3-part from the Sultanate of Oman that pumped up the all-in IG day totals to 9 issuers, 16 tranches and $14.625b. March has certainly started off on the right foot.
The WTD total is now 52% more than this week’s syndicate midpoint average forecast or $38.825b vs. $25.44b.
The all-in (IG Corporate plus SSA WTD volume total is now $51.425b.

Deregulation, cutting corporate taxes, focusing on American manufacturing and jobs while negotiating with America’s interests first and building a strong national defense equates to GROWTH.  Growth will cause rates to rise, rising rates will swell the stock market and bank stocks should get back to a semblance of their true values among many other things.
IG Primary & Secondary Market Talking Points

 

  • Mercury General Corp. upped its 10-year Senior Notes new issue to $375mm from $350mm at the launch and at the tightest side of guidance.
  • Telus Corp. increased its 10-year Senior Notes new issue to $500mm from $350mm at the launch.
  • Brixmor Operating Partnership LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <19.00> bps.
  • BAML’s IG Master Index tightened 1 bp to +121 vs. +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.15 vs. 1.16 setting yet another new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $22.7b on Tuesday versus $15.8b on Monday and $17.8b the previous Tuesday.
  • The 10-DMA stands at $20b.

 

Global Market Recap

 

  • U.S. Treasuries – had a very difficult day thanks to the Fed Speak & President Trump.
  • Overseas Bonds – Europe hit hard with USTs and JGB’s also closed in the red.
  • 3mth Libor – Set at the highest yield (1.09278%) since April 2009.
  • Stocks – Big rally for U.S. stocks as S&P, Dow & NASDAQ traded at all-time highs.
  • Overseas Stocks – Very strong day for Europe & the Nikkei. China & HS with small gains.
  • Economic – Full U.S. calendar with some very good & not so good data.
  • Fed’s Beige Book at odds with the very hawkish Fed Speak this week.
  • Overseas Economic – The data in China, Japan & Europe overall was positive.
  • Currencies – Big rally for USD overnight & gave a little back during NY hours.
  • Commodities – CRB, copper & wheat were higher while crude oil & gold were lower.
  • CDX IG: -2.57 to 60.01 (trade at 59.856 the tightest since 2014)
  • CDX HY: -11.47 to 305.44
  • CDX EM: -7.51 to 213.30

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

-Tony Farren

 The Federal Reserve Beige Book Talking Points – All You Need to Know

 

  • Near-term business optimism eased since the last report.
  • Economy grew at a modest to moderate pace through mid-February.
  • Job market is tight amid little price pressure change.
  • There were a few districts that saw a pickup in wage growth.
  • Businesses expect prices to rise modestly in the months ahead.
  • Most Fed regions say prices were up modestly to moderately.
  • Some districts saw widening labor shortages.
  • Employment expanded moderately in most of the country.
  • Staffing firms saw a “brisk business for this time of year”.
  • Energy, home-building and house sales are all growing moderately.
  • Auto sales were up in most districts; tourism mostly stronger.
  • New York Fed prepared the Beige Book from early January to February 17th.

 

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

 

Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate (more…)

Eurobond Investors Taste the Feeling-KO Recap; Good Mood for Moody’s
February 2017      Debt Market Commentary   

Quigley’s Corner 02.27.17 –KO’s Euro-Denominated €2.5b 3-part; Good Mood for Moody’s Issuance

12 IG Corporate issuers tapped the dollar DCM today pricing 18 tranches between them totaling $11.50b.  The SSA space featured an anticipated $2b 3-year from the Bank of England bringing the all-in IG day totals to 13 issuers, 19 tranches and $13.50b.  

Investment Grade New Issue Re-Cap – The Longest Day

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates for This Week

“Taste The Feeling” – The Coca Cola Company’s Euro-Denominated €2.5b 3-part 2yr FRN, 4s and 10s Deal Dashboard

Final Pricing – The Coca –Cola Company
Coca-Cola Recognized for Commitment to U.S. Service Members, Hits Veteran Hiring Goal Early

Moody’s Corp. $800mm two-part 18mo FRNs and short 5-year Deal Dashboard

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 22nd    

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

12 IG Corporate issuers tapped the dollar DCM today pricing 18 tranches between them totaling $11.50b.  The SSA space featured an anticipated $2b 3-year from the Bank of England bringing the all-in IG day totals to 13 issuers, 19 tranches and $13.50b.
We have started the week off on strong footing having already priced 46.61% of this week’s syndicate midpoint average forecast or $11.35b vs. $25.44b.

The S&P, and Dow once again finished at new all-time record highs.  CDX IG ended today’s session at a new tight as did CDX HV.
IG Primary & Secondary Market Talking Points – Mischler Active Co-Manager at Home and Abroad

 

  • Mischler Financial served as an active 1.50% active Co-Manager on today’s Coca-Cola Company (NYSE:KO) €2.5b 3-part 2yr FRN, 4- and 7-yr Fixed tranche Senior Unsecured Notes new issue.
  • Mischler Financial also served as a 2.143% active Co-Manager on the Moody’s Corp. $800mm two-part 18mo FRNs and short 5yr
  • Transcanada Trust bumped up today’s 60NC10 new issue to $1.5b from an earlier announced $1.25b at the launch and at the tightest side of guidance.
  • The Charles Schwab Corp. upsized today’s 10yr Senior Notes new issue to $650mm from $500mm at the launch and at the tightest side of guidance.
  • RPM International Inc. increased its two-part Senior Notes new issue to $450mm from $400mm at the launch with the new 10yr coming at 5 bps better than the tightest side of guidance and the tap of the 5.25% due 6/2045 coming at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 18 IG Corporate-only new issues was <16.92> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. 1.17, the latter represents a new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread widened 2 bps to +166 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.3b on Friday versus $21.2b on Thursday and $13.5b the previous Wednesday.
  • The 10-DMA stands at $19.7b.

 

Global Market Recap

  • U.S. Treasuries – President Trump’s comments send USTs south led by the front end.
  • Stocks – Small gains at 3:15pm. Dow trying to extend winning streak to 12 days.
  • Overseas Stocks – Europe closed with more green than red. Asia had a poor day.
  • Economic – U.S. data was mixed. Dallas Fed manufacturing at highest since 2006.
  • Overseas Economic – Solid confidence releases in EU. Tame CPI in Spain & Belgium.
  • Currencies – USD better bid vs. the Pound, Yen & CAD but weaker vs. the Euro.
  • Commodities – Down day for the CRB. Wheat hit hard. Crude oil & gold little changed.
  • CDX IG: -0.30 to 62.26
  • CDX HY: -2.28 to 316.42
  • CDX EM: -0.68 to 214.53

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/2
7-3/03
vs. Current
WTD – $11.35b
February 2017
Forecasts
vs. Current
MTD – $72.50b
March 2017
Low-End Avg. $24.29b 46.73% $90.65b 79.98% $113.79b
Midpoint Avg. $25.44b 44.61% $91.96b 78.84% $114.31b
High-End Avg. $26.58b 42.70% $93.26b 77.74% $114.83b
The Low $10b 113.50% $85b 85.29% $80b
The High $43b 26.40% $120b 60.42% $140b

 

Mischler “Tastes The Feeling” – The Coca Cola Company’s Euro-Denominated €2.5b 3-part 2yr FRN, 4s and 10s Deal Dashboard

Mischler served as an active 1.50% Co-Manager on Coca Cola Co’s. €2.50b 3-part transaction

Here’s a look at today’s Coca-Cola Deal Dashboard:

KO Issue IPTs GUIDANCE PRICED Spread
Compression
2yr FRN 3mE+25
€100.20
3m€+25 MS+25 flat
4yr FXD MS +25a MS+12/15 MS+10 <15>
7yr FXD MS +35a MS+25/28 MS+23 <12>

 

Today’s 3-part transaction attracted a €8.2b final cumulative book size for an overall 3.28x bid-to-cover rate.

………and here’s a look at today’s re-opening final book sizes and oversubscription rates.

 

KO  Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
2yr FRN €1.5b €2.6b 1.73x
4yr FXD €500m €2.2b 4.4x
7yr FXD €500m €1.4b 2.80x

 

Final Pricing – The Coca –Cola Company
KO €1.5b 3mE+25 FRNs due 3/08/2019 at 100.30 

KO 500b 0.00% due 3/09/2021 @ 99.641 to yield 0.090% or MS+10  MW+15 

KO 500b 0.50% due 3/08/2024 @ 99.617 to yield 0.556% or MS+23  MW+15

 

Coca-Cola Recognized for Commitment to U.S. Service Members, Hits Veteran Hiring Goal Early

 

In 1941, Robert W. Woodruff pledged to place Coca-Cola within arm’s reach of desire wherever U.S. troops were stationed around the world. This was the origin of the company’s longstanding support of the nation’s armed services.

Today, one of the primary ways the company showcases this enduring commitment to veterans is through recruiting. In the last 12 months alone, Coca-Cola has employed more than 1,000 veterans across the company. This is part of a recruitment initiative that began after hiring more than 800 veterans in 2012.

“The company established a mission to hire 5,000 veterans over the next five years, through the end of 2017,” said Brooke Camp, program manager, Strategic Recruitment Programs and Partnerships, Talent Acquisition.

The company hit its hiring goal last month – more than a year ahead of schedule.

coca-cola-veteran-friendly-mischler

 

During Coca-Cola’s 17th annual Veterans Day Ceremony, Sandy Douglas (right),

president of Coca-Cola North America, presents Dr. J.D. Crouch II, president and

CEO, United Service Organization (USO), with a $75,000 donation alongside

Mary Lou Austin, President and CEO, USO of Georgia. The event also featured

remarks from General Lloyd J, Austin, III, the 33rd Vice Chief of Staff of the U.S.

Army and 12th Commanding General of U.S. Central Command, and a

performance by the USO Show Troupe.

Thanks to this commitment, Coca-Cola has been recognized by U.S. Veterans Magazine as a 2016 Top Veteran-Friendly Company. Additionally, Victory Media has awarded the company the designation of Military Friendly Employer, and the company was highlighted as a featured employer in the fall issue of G.I. Jobs Magazine.

“We take great honor to be nationally recognized as one of America’s top corporate supporters of veterans and military families,” said Michael Farrell, director of Talent Acquisition, Strategic Programs and Partnerships, Military, Campus and Diversity Recruitment. “Veterans consider company recognition when establishing where they want to start a civilian career or make their next job move.  It enhances our employment and even our consumer brand experience very well.”

According to Camp, hiring veterans is a no-brainer, especially in the areas of supply chain and distribution. Many vets bring transferable logistics skills that enable quick training, and they are also accustomed to 24/7 work environments.

“Our military hires bring with them a wealth of uniquely rich qualities, including discipline, diversity, character and the ability to perform under pressure, all of which have made our company stronger,” said Camp. “The Coca-Cola Company has a huge commitment to diversity and inclusion and employing talent from all backgrounds and walks of life. It takes strong leadership, teamwork and dedication to serve in our armed forces, and we value the skills, leadership and capabilities that veterans bring to the table.”

Coca-Cola recruits transitioning veterans on a regular basis, both nationwide and locally, through career fairs and transition assistance workshops in partnership with organizations including Service Academy Conference Center (SACC), Military Spouse Employment Partnership (MSEP), Military Officer Job Opportunities (MOJO) and Fort Hood’s Transition Assistance Program (TAP).

The company also leverages online recruiting tools to build visibility, awareness and promote the company’s open positions through resources like Hire Purpose, Getting Hired (for veterans with disabilities), and Military.com veteran talent portals. Additionally, Coca-Cola partners with Army PaYS, a program that helps pipeline and engage with veterans for employment after honorable discharge or completion of required active duty training, and with the Training with Industry program.

Coca-Cola’s Military Veterans Business Resource Group (MVBRG) is active with veterans in the community, too, partnering with nonprofit veterans’ organizations, including FourBlock and American Corporate Partners, to offer assistance to transitioning and unemployed veterans.

Furthermore, Patrick Haddock, president of the MVBRG, was one of VETLANTA’s originators and Coca-Cola was a founding partner. VETLANTA is a grass roots networking group that fosters the communication and collaboration of employers, veterans, and military nonprofits in the Atlanta area.

Coca-Cola’s Global Diversity and Inclusion

For more on Coca-Cola’s internal Diversity and Inclusion initiatives don’t just take my word for it please cut and paste the below link into your browser to access Coca-Cola’s 2015/2015 Sustainability Report.

http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2015/08/2014-2015-sustainability-report-gwr-pages-20-26.pdf

Today’s Moody’s Corp. $800mm two-part 18mo FRNs and short 5-year Deal Dashboard

 

MCO Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
Trading at
the Break
+/-
(bps)
18mo FRN 3mL+50a 3mL+40a (+/-5) 3mL+35 3mL+35 <15> bps 3mL+29/ <6>
short 5yr FXD +115a +100a (+/-5) +95 +95 <20> bps 94.5/ <0.5>

 

………and here’s a look at today’s re-opening final book sizes and oversubscription rates.

 

MCO  Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
18mo FRN $300mm $1b 3.33x
short 5yr FXD $500mm $2.6b 5.20x

A Mischler five-star salute to Moody’s Corp.; a longtime proponent of and partner for D&I transactions and a thank you for including Mischler in today’s $800mm two-part transaction.

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

 

Have a great evening!
Ron Quigley

 

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

US Corporate Debt New Issuance Market-What’s Next?
February 2017      Debt Market Commentary   

Quigley’s Corner 02.24.17 – Weekend Edition: Corporate Debt New Issuance- What’s Next?

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

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

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

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

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 22nd    

Investment Grade Credit Spreads by Rating

Investment Grade Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

We missed the midpoint syndicate forecast for IG Corporate volume this week by a lot. In fact, the very low estimate calling for only $19.4b was off by 42% with only $11.125b in new supply.  Next week, however, desks seemed focused on around $25b.

Yellen speaks next Friday, March 3rd and the Employment Report is the following Friday, March 10th. Those are really the only two bits of data that could move the market. Of course that’s notwithstanding any one of myriad global event risk factors playing out i.e. the Dutch election on Wed. 3/15 followed by round one of the French election on Sunday, April 23rd and round 2 on Sunday, May 7th. As we get closer and closer to each, polling will gyrate thru the markets.

Next week has been a huge one in each of the past three years for IG Corporate volume and overall IG issuance including SSA product.

Take a look:

2016 – IG Corps: $50.72b Corps + SSA: $61.22b

2015 – IG Corps: $59.03b Corps + SSA: $65.03b

2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 

Unfortunately no estimate for next week comes close to the $50m mark. The highest estimate is an out layer at $43b. The most dense groupings are focused on around $25b with the midpoint estimate being $25.46b. I am more optimistic for 30b+ in new IG Corporate issuance only because we’ve disappointed on recent weekly issuance projections in 3 of the past 4 weeks, the time is right, tone is formidable, concessions are skimpy, issuers cannot sit around forever, demand is very strong and so, I err to the upside. Overall issuance including SSA could top $40b.

IG Primary & Secondary Market Talking Points

  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.17 vs. 118 setting a new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +164 vs. +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $21.2b on Thursday versus $20.8b on Wednesday and $24b the previous Wednesday.
  • The 10-DMA stands at $19.9b.

 

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

 

IG Corporate New Issuance This Week
2/20-2/14
vs. Current
WTD – $11.125b
February 2017
Forecasts
vs. Current
MTD – $61.15b
Low-End Avg. $18.25b 60.96% $90.65b 67.46%
Midpoint Avg. $19.40b 57.35% $91.96b 66.50%
High-End Avg. $20.54b 54.16% $93.26b 65.57%
The Low $15b 74.17% $85b 71.94%
The High $26b 42.79% $120b 50.96%

 

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

 

I am happy to announce that I had 96% response to today’s “Best & Brightest” survey! That means 23 out of 24 desks.  21 of those participants are among 2017’s YTD top 25 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, 22 of today’s 23 participants finished in the top 25 of last year’s 2016 final IG Corporate Bloomberg league table.  The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 84.38% 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” early this morning was framed as follows:

Getting right to it today, here are this week’s numbers entering today’s morning session:

  • We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.
  • Thus far in February we priced 66.50% of the monthly syndicate projection or $61.15b vs. $91.96b.
  • All-in YTD IG Corporate and SSA issuance stands at $303.183b! 
  • Wednesday was the fastest pace ever to reach the $300mm mark for all-in IG Corporate and SSA issuance.

 Here are this week’s five key IG Corporate-only primary market driver averages:

  • NICS:  <0.16> bps
  • Oversubscription Rates: 3.26x
  • Tenors:  8.37 years
  • Tranche Sizes: $695mm
  • Spread Compression from IPTs to the Launch: <18.47> bps


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

  • NICs widened 0.70 bps to<0.16> bps vs.  <0.86> bps.
  • Over subscription or bid-to-cover rates, the measure of demand, reduced by 0.50x to 3.26x vs. 3.76x. 
  • Average tenors extended by 0.34 years to 8.37 years vs. 8.03 years.
  • Tranche sizes decreased by $49mm to $695mm vs. $744mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 16 IG Corporate-only new issues tightened fractionally by <0.02> bps to <18.47> bps vs. <18.45> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to+164 vs. +165.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +123 vs. +124. 
  • Spreads across the four IG asset classes tightened 0.25 bps to16.50 bps vs. 16.75 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors tightened 0.79 bps to 20.37 vs. 21.16 bps also against their post-Crisis lows.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).

It seems as if syndicate desks have said issuance would increase “the week after next” in each of the last two Friday’s.  Now, however, with Corporate America having posted earnings and with most issuers having exited blackouts, expectations are for a much more robust calendar next week. The two bits of potentially market moving data are: Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd and the Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST). After that there’s the FOMC meeting on Tuesday and Wednesday March 14th and 15th, which is associated with a Summary of Economic Projections and a press conference by Chair Yellen.  Blackouts then begin shortly thereafter. The point being – this time, next week really should see very strong issuance across all sectors. But why listen to me let’s go back to the same week in time over the past three years. The results are eye-opening:

  • 2016 – IG Corps: $50.72b Corps + SSA: $61.22b
  • 2015 – IG Corps: $59.03b Corps + SSA: $65.03b
  • 2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 We all understand that “past performance is no guarantee of future results” but those are pretty telling statistics right there folks!

The Big Question:  Next Wednesday begins the month of March, so today I ask a two-part question “what are your thoughts and numbers for BOTH next week AND March?

The “Best and the Brightest” in Their Own Words

……..……and here are their formidable responses: (more…)

Munching on Mnuchin Musings; Mischler Debt Market Comment
February 2017      Debt Market Commentary   

Quigley’s Corner 02.23.17- Munching on Mnuchin Musings

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary & Secondary Market Talking Points

Global Market Recap

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

Treasury Secretary Steve Mnuchin Speaks on Squawk

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 February 15th    

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

 

Danske Bank A/S was the lone corporate issuer to tap the IG dollar DCM today pricing 3 tranches totaling $1.75b.  The SSA space woke up featuring one well-telegraphed NWB 5-year that was $1b, bringing the all-in IG day totals to 2 issuers, 4 tranches and $2.75b.
We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.
CDX IG and HV closed today’s session at new tights and the S&P and Dow closed at new all-time highs.

Upcoming potential market moving events:

  • Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd.
  • The Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST).

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs thru the launch/final pricing of today’s 3 IG Corporate-only new issues was <11> bps.
  • BAML’s IG Master Index tightened 1 bp to +123 vs. +124.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.18 vs. 119 matching its tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.8b on Wednesday versus $17.8b on Tuesday and $24.6b the previous Wednesday.
  • The 10-DMA stands at $20.0b.

 

Global Market Recap

 

  • U.S. Treasuries – rallied into the $28 bn 7yr auction & then the market stood still.
  • Overseas Bonds – 30yr JGB rallied 5 bps. Strong session for France & Belgium.
  • Stocks – Dow heading for its 10th winning session in a row.
  • Overseas Stocks – Asia with small losses. Europe closed mostly red.
  • Economic – Jobless claims 4-week moving average at lowest level since 1973.
  • Overseas Economic – China data better & Japan weaker. Good data in Germany & U.K.
  • Currencies – USD was weaker vs. all of the Big 5.
  • Commodities – Good day for crude oil, gold & silver and very bad day for copper.
  • CDX IG: -0.75 to 61.83
  • CDX HY: -1.53 to 314.93
  • CDX EM: -8.77 to 213.16

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/20-2/14
vs. Current
WTD – $11.125b
February 2017
Forecasts
vs. Current
MTD – $61.15b
Low-End Avg. $18.25b 60.96% $90.65b 67.46%
Midpoint Avg. $19.40b 57.35% $91.96b 66.50%
High-End Avg. $20.54b 54.16% $93.26b 65.57%
The Low $15b 74.17% $85b 71.94%
The High $26b 42.79% $120b 50.96%

 

Treasury Secretary Steve Mnuchin Speaks on Squawk Box

US Treasury Secretary Steve Mnuchin offered his views this morning while appearing with Becky Quick of CNBC in his first interview since becoming the 77th U.S. Secretary of State. He spoke on various topics ranging from policy and regulation to immigration tax and growth.  Here are the key takeaways.  Thank you to one of our own Treasury gurus, Mr. Tony Farren, for the summary..

  • Most important thing for growth is tax plan.
  • We’re mostly focused on middle-class tax cut.
  • We believe in dynamic scoring for tax plan.
  • High-income tax cuts should be offset.
  • Could be late 2018 to get to 3% growth.
  • We’re looking closely at border adjustment tax.
  • Some issues with border adjustment tax.
  • Tax reform to be significant.
  • Tax reform goal is by August Congress recess.
  • Not ready to announced a longer-term U.S. Bond.
  • Should seriously look at longer-term bond issues (50- and 100-year).
  • Have had terrific talks with China so far.
  • Not making judgments on China FX.
  • Treasury has a process for reviewing FX policies.
  • We will probably have low rates for a long period.
  • Administration’s growth projections are likely higher versus Congress.
  • 3% GDP growth is very achievable.
  • Regulatory relief is also important boost to growth.
  • We’re looking at significant economic changes.
  • We’re reaching out to businesses.
  • Need to ensure banks put liquidity to work.
  • USD, stocks reflecting confidence in U.S. economy.
  • Not focused on day-to-day market moves.
  • Looking forward to regular meetings with Yellen
  • Looking forward to G-20 talks in March.
  • Has his team looking at EXIM Bank loan expansion.
  • He’s committed to housing finance reform.
  • We need bipartisan solution so that GSEs are not left as is.

 

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

 

Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate (more…)

Philip Morris Smokes DCM with 5-part Debt Deal-Mischler Comment
February 2017      Debt Market Commentary   

Quigley’s Corner 02.15.17-Philip Morris Deal “Smokes” Primary DCM with $2.5bil 5-part

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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 February 8th    

IG Credit Spreads by Rating     

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

4 IG Corporate issuers priced 9 tranches between them totaling $5.65b.  The SSA space, however, remained quiet.

The WTD IG Corporate total is now $22.25b or 4% more than this week’s syndicate midpoint average estimate calling for $21.33b. In fact, WTD we priced 85.50% of the highest projection in my survey which was $26b.

 

The S&P, Dow and Nasdaq all reached new all-time highs again today!

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs thru the launch/final pricing of today’s 9 IG Corporate-only new issues was <20.78> bps.
  • BAML’s IG Master Index tightened 2 bps to +124 vs. +126.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.19 vs. +120 marking a new tight..  The “LUACOAS” wide since 2012 is +215.  +120 is the new tight.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +166 vs. +167.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $23.8b on Tuesday versus $16.7b on Monday and $22.1b the previous Tuesday.
  • The 10-DMA stands at $19.8b.

 

Global Market Recap

 

  • U.S. Treasuries – registered its 5th losing session in a row.
  • Overseas Bonds – JGB’s & Europe mixed & little changed except for Greece (weak).
  • Stocks – U.S. stocks traded at all-time highs for the 5th session in a row.
  • Overseas Stocks – Nikkei, Hang Seng & Europe rallied while China was red.
  • Economic – Full calendar was mixed. Data that counted most was negative for USTs.
  • Currencies – USD gave up overnight gains during the NY session.
  • Commodities – Gold & wheat were better. Crude oil small lose (bearish inventory).
  • CDX IG: +0.08 to 62.88
  • CDX HY: +0.41 to 317.36
  • CDX EM: +8.48 to 218.63

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/13-2/17
vs. Current
WTD – $22.25b
February 2017
Forecasts
vs. Current
MTD – $49.225b
Low-End Avg. $20.71b 107.44% $90.65b 54.30%
Midpoint Avg. $21.33b 104.31% $91.96b 53.53%
High-End Avg. $21.96b 101.32% $93.26b 52.78%
The Low $15b 148.33% $85b 57.91%
The High $26b 85.58% $120b 41.02%

 

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

Have a great evening!

Ron Quigley

 

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 Tuesday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

 

New Issues Priced

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

For ratings I use the better two of Moody’s, S&P or Fitch.

 

IG          

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Consumers Energy Co. A1/A+ 3.95% 7/15/2047 350 +110a +90a (+/-2.5) +87.5 +87.5 BAML/CITI/GS/SCOT/WFS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A FRN 2/22/2022 500 3mL+equiv 3mL +equiv 3mL+92 3mL +92 MUFG/MS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A 2.998% 2/22/2022 1,000 REV. GUID: +120a
+120-125
+100-105 +100 +100 MUFG/MS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A 3.677% 2/22/2027 1,000 REV. GUID: +135a
+135-140
+120a (+/-2) +118 +118 MUFG/MS
Philip Morris Int’l. Inc. A2/A 1.625% 2/21/2019 700 +70a +55a (+/-5) +50 +50 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A FRN 2/21/2020 300 3mL +57a 3mL +equiv 3mL+42 3mL+42 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A 2.00% 2/21/2020 1,000 +80a +70a (+/-5) +65 +65 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A 2.625% 2/18/2022 500 +90a +80a (+/-5) +75 +75 CITI/CS/DB (a) BNPP/ING (p)
Snap-On Incorporated A2/A 3.25% 3/01/2027 300 +110a +85a (+/-5) +75 +75 CITI/JPM

 

Indexes and New Issue Volume
*Denotes new tight or new record high.

 

Index Open Current Change  
IG27 *62.80 62.979 0.179
HV27 134.645 132.445 <2.20>
VIX 10.74 11.94 1.20  
S&P 2,337 *2,349 12
DOW 20,504 *20,611 107  
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $5.65 bn DAY: $5.65 bn
WTD: $22.25 bn WTD: $24.25 bn
MTD: $49.225 bn MTD: $61.475 bn
YTD: $221.608 bn YTD: $288.758 bn

 

Lipper Report/Fund Flows – Week ending February 8th    

     

  • For the week ended February 8th, Lipper U.S. Fund Flows reported an inflow of $4.932b into Corporate Investment Grade Funds (2016 YTD net inflow of $17.286b) and a net inflow of $441.718m into High Yield Funds (2016 YTD net inflow of $732.780m).
  • Over the same period, Lipper reported a net inflow of $854.782m into Loan Participation Funds (2016 YTD net inflow of $4.614b).
  • Emerging Market debt funds reported a net inflow of $358.189m (2016 YTD inflow of $502.693m).

 

IG Credit Spreads by Rating (more…)

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