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

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

 

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

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

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for Next Week

Indexes and New Issue Volume

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 19th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

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

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

 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 22 are in the top 25 in that same table.  The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 82.36% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

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

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

“Good morning and Happy Friday!

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

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

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

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


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

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

 

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

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

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

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

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

 

Below please find the replies to this week’s QC canvass of fixed income syndicate bookrunners and my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

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

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

 MOAB-BAML-Mother-of-all-Bonds

 

 

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

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 12th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

 

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

 

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

 

IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

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

 

 

Have a great evening!
Ron Quigley

 

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

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

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

 

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

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

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 12th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

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

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

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

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

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

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

 

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

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

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

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

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

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

 

 

IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

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

 

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

 

Have a great evening!
Ron Quigley

 

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

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

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

 

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

IG Primary & Secondary Market Talking Points

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

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

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

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

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

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

IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

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

 

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

 

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

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

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

 

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

 

Have a great evening!
Ron Quigley

 

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

(more…)

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

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

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

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

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

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

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

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

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

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

IG Primary & Secondary Market Talking Points

 

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

 

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

 

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

 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  23 of those participants are among 2017’s YTD top 26 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 83.65% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.

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

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

 

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

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

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

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


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

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

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

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

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

And now the all-important “two-part” question (and answer(s) posed to the fixed income market’s top Syndicate desks, along with my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

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

(more…)

Best Quarter EVER- Investment Grade Corporate Debt Issuance; Mischler DCM Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.30.17 – Top Ranked Quarter Ever for US IG Corp Issuance

 

Investment Grade New Issue Re-Cap – Q1 2017 Finishes as the #1 Ranked Quarter for IG Corporate-only and All-In IG Issuance.

On This Week’s Hawkish Fed-Speak

Point Counter-Point

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 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

 

6 IG Corporate issuers tapped the IG dollar DCM today pricing 12 tranches between them totaling $6.00b.  There was no activity from the SSA space.

 

  • “CHTR” (Ba1/BBB-/BBB-) rated 144a/REGS 30-year Senior Secured Notes new issue due 5/01/2047.  The deal was upsized to $1.25b from $750mm at the launch and at the tightest side of guidance. (Mischler served as passive co-manager)
  • CCO Holdings LLC/Capital Corp. (Charter Communications) High Yield-rated (B1/BB+/BB+) 144a/REGS tap of its 5.125% 10-year Senior Notes due 5/01/2027.  We thank the issuer for our inclusion. (Mischler served as passive co-manager)
  • The IG Corporate only WTD total is now over 83% of the syndicate midpoint average forecast or $22.15b vs. $26.50b.
  • MTD, we are now more than 13% above the IG Corporate mid-range syndicate projection for all of March or $129.998b vs. $114.31b. (scroll to the table below).
  • The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).
  • The YTD IG Corporate only volume is now $393.085b. It is the highest quarterly volume total in history.
  • YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

 

On This Week’s Hawkish Fed-Speak

 

Today, crude oil hit a 3-week high, gold slipped, equity markets were all in the black and U.S. Treasury yields compressed while the dollar strengthened.  Most all of that reflects the fluctuations of our fluid daily market gyrations.  Net, net, though it was a good day.  However, what garnered all the attention today – as it did all week – was the sudden overwhelmingly hawkish Fed-speak from just about every Fed member.  Yesterday, Boston FRB President Eric Rosengren said a rate increase at every other FOMC meeting this year “could and should be the committee’s default unless data change.” There are eight meetings left this year implying four additional rate hikes. He also said, four hikes in 2017 would be gradual but “more regular.” The market, however, is expecting 2.5 at the most!  The Fed is a laggard; the market is always accelerated.  Europe, meanwhile is worrying that its recent tiny monetary adjustments have investors concerned of a rate rise for still suffering laggard peripheral EU member economy’s.  They are clearly not home free by any stretch of the imagination. ……..and we do live in an inextricably global-linked world economy.

So, now let’s link all that to today’s major talking points from statements made by the Fed’s William Dudley –

 

  • Dudley says, “growth and inflation risks may be shifting to the upside.”
  • He is more confident that inflation is settling near its goal, medium-term.
  • “Forward-looking data points to further job-market gains.”
  • Calls job gains “sturdy” and labor market slack “diminishing.”
  • Says the Federal Reserve is not “removing the punch bowl, yet.”
  • Comments that the “economic outlook abroad also appears brighter.”
  • The Fed shouldn’t overreact to every “wiggle” in markets.
  • Fed cares about financial condition effects on the economy.
  • Fiscal policy is likely to shift in time to more stimulus.
  • Favors tapering reinvestments instead of an abrupt end to them

 

Point Counter-Point

The takeaway is that Fed-speak is clearly very hawkish.  That pervasive sentiment among FOMC members gives reason to pause.  Here is the point counterpoint of all this –

Several times I re-printed the following comment from a six-pack bulge bracket U.S. bank Chairman.  I also pointed out the banker is either from BAML, CITI, GS, JPM, MS or WFS.  I will always preserve anonymity folks. To clarify, no one person has tomorrow’s news today, BUT this person has a firm grip on what IS going on in the world and a track record that’s perhaps second to none. Here’s a re-print of what the Chairman said in the “QC” dated Friday, March 3rd, 12 days in advance of the most recent FOMC Rate Decision,

“Everyone is thinking a rate hike is coming in March but, the FED needs to be somewhat worried about the yield curve.  When they raised rates in December 2015 the 10yr Treasury rallied 70 bps in yield, thus crushing banks’ net interest margin or “NIM” and, having the effect of dampening growth.  When they raised rates this past December 2016, that did not happen…..instead all rates moved up a bit.  But when Yellen talked about March being a “live meeting’’, the UST 10 year went from 2.56% to 2.31%……The Fed needs to talk a good game to dampen the “animal spirits” that have elevated equity markets but, I really don’t think the Fed wants to raise rates and see the 10 year Treasury move to 2.25%. As a result, it’s a very close call…..I err on the side of thinking that the rate hike comes in June.  But, it’s  close.  If the Fed is committed to 2 to 3 hikes this year and they feel the markets are fully prepared for a March hike…they may just take advantage of that window.”

It seems that this week the historically lagging Fed is clearly attempting to talk up U.S. Treasury yields because they KNOW the CT10-year yield is going to go down…..down…..down much like it did in 2015, though perhaps not as dramatically.  Therefore, take what you are hearing with a massive grain of salt.  The market is priming itself for issuance.  As yields fall, and deals are well-priced, investor appetite remains voracious for better rated IG corporate credits.  There should be a robust amount of issuance ahead of black-outs as we head toward the Easter break.  The opportunities are creating themselves in here and the Fed doesn’t like what it sees from their prior December 2015 experience.  That’s why they ARE talking up yields.  It’s also why yields WILL contract.  The inference is clear – the Fed talks the talk but they will not walk the walk. And that’s how it is folks.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <17.67> 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 was unchanged at 1.17.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.7b on Wednesday versus $18.4b on Tuesday and $19.2b the previous Wednesday.
  • The 10-DMA stands at $17.3b.

 

Global Market Recap

 

  • U.S. Treasuries – Down day for USTs led by the 30yr for a host of reasons.
  • Overseas Bonds – JGB’s closed down. Mixed session in Europe.
  • Stocks – Solid gains heading into the close.
  • Overseas Stocks – Weak session in Asia. Europe closed with gains.
  • Economic – Personal consumption moved higher. Inflation data inched higher.
  • Overseas Economic – German CPI lower than expected/last. Big global calendar tomorrow.
  • Currencies – USD mixed vs. the Big 5 but a solid rally for the DXY Index.
  • Commodities – Good day for crude oil (back over 50) & bad day for gold.
  • CDX IG: -0.92 to 66.86
  • CDX HY: -4.28 to 337.98
  • CDX EM: -2.73 to 209.24

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

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
3/27
TUES.
3/28
WED.
3/29
AVERAGES
WEEK 3/20
AVERAGES
WEEK 3/13
AVERAGES
WEEK 3/06
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
New Issue Concessions 0.00 bps/flat 2.60 bps 1.39 bps 1.75 bps 0.00 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps
Oversubscription Rates 2.00x 3.76x 3.53x 2.90x 3.08x 2.73x 3.39x 3.26x 3.76x
Tenors 3.00 yrs 11.65 yrs 8.10 yrs 11.55 yrs 10.05 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs
Tranche Sizes $500mm $727mm $475mm $692mm $859mm $671mm $738mm $695mm $744mm
Avg. Spd. Compression
IPTs to Launch
<17.50> bps <20.87> bps <19.12> bps <15.44> bps <17.99> bps <20.00> bps <16.79> bps <18.47> bps <18.45> 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…)

US Corporate Debt Issuers Return From Sidelines; USD 10b Floated
March 2017      Debt Market Commentary   

Quigley’s Corner 03.28.17   They’re Back! US Corporate Debt Issuers Return After Multi-Day No-Go Signal

 

Investment Grade Corporate Debt New Issue Re-Cap – What a Difference a Day Makes

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 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 IG dollar DCM today pricing 15 tranches between them totaling $10.90b.  1 SSA issuer, the Export Development of Canada, added a $500mm 2-year to the mix for an all-in IG day total of 8 issuers, 16 tranches and $11.40b.

  • The IG Corporate only WTD total is now 43% of the syndicate midpoint average forecast or $11.40b vs. $26.50b.
  • MTD, today we officially surpassed the high-, mid-point and low-end averages for March.  We are more than 4% above the IG Corporate mid-range syndicate projection for all of March or $119.248b vs. $114.31b. (scroll to the table below).
  • The all-in MTD total (IG Corporates plus SSA) now stands at $152.158b.
  • Both CDX IG and HV tightened, the VIX also pulled 1 point and the S&P and DOW gained ending an 8 day losing streak – the most since 20011.

IG Primary & Secondary Market Talking Points

 

  • Ford Motor Credit Corp. today dropped the 2yr FRN tranche from its 2- and 5-year FXD/FRN having found sufficient 2yr interest in the fixed rate tranche. The other 3 tranches all launched at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 15 IG Corporate-only new issues was <20.87> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.18.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +165 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 $13.9b on Monday versus $13.8b on Friday and $13.8b the previous Monday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap

 

  • U.S. Treasuries – Poor day for USTs because of stocks, supply, economic data, USD & Trump.
  • Overseas Bonds – JGB’s down except 30yr. Bunds little changed, Gilts red & peripherals bid.
  • Stocks –  Rally in U.S. stocks. The Dow snapped its 8-session losing streak.
  • Overseas Stocks – Japan rallied, China closed down & Europe had a good day.
  • Economic – Positive U.S. data with consumer confidence off the charts strong.
  • Overseas Economic – Light calendar overseas today.
  • Currencies – U.S. came roaring back today. The DXY Index improved 1/2 handle.
  • Commodities – Crude oil, copper & silver improved while gold sold off.
  • CDX IG: -0.63 to 67.17
  • CDX HY: -7.0 to 347.24
  • CDX EM: -0.23 to 213.16

*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
3/27-3/31
vs. Current
WTD – $11.40b
March 2017
Forecasts
vs. Current
MTD – $119.248b
Low-End Avg. $25.25b 45.15% $113.79b 104.80%
Midpoint Avg. $26.50b 43.02% $114.31b 104.32%
High-End Avg. $27.75b 41.08% $114.83b 103.85%
The Low $15b 76.00% $80b 149.06%
The High $31b 36.77% $140b 85.18%

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

(more…)

Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemate
March 2017      Debt Market Commentary   

Quigley’s Corner 03.27.17 -Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemates

 

Investment Grade Corporate Debt New Issue Re-Cap – IG Primary Markets Bogged Down by the Swamp

CT10 Year Yield Going Lower

IG Primary & Secondary Market Talking Points

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 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

 

Well it was a rare, highly inactive Monday for IG primary markets today. Only one well-telegraphed new issue priced that had been in the pipeline for KEB Hana Bank in the form of a $500mm 3-year FRN. I heard that as many as 10 issuers stood down today following Go/No Go calls.  So, what gives?

On Friday, I placed at the top of my edition, a comment from a widely respected Head of Syndicate.  It was an interesting comment in that it expressed an against-the-grain opinion that Friday’s healthcare bill issue might actually be good for the market in that it pulls forward focus and attention on the all-important and market impactful tax reform bill.  As we were getting ready to close shop on Friday my CEO asked me, “so do you think it’ll be busy next week?  I said, “I hate to go against 24 of the top syndicate desks, but I fear we could see a zero day on Monday and a slower week in store. A health care bill failure will send a horrible message to the market.” I added, “I hope I’m wrong and that we see lots of issuance, but I think I’m right.”  That’s how Friday ended as I left for the weekend.

First, let’s revisit my Friday syndicate voting brackets for this week’s IG new issue volume forecasts:

Next Week
3/27-3/31
1: 20b
1: 15-30b
2: 20-25b
8: 25b
6: 25-30b
5: 30b
1: 31b

 

Out of 24 desks surveyed, 19 of them, or 79%, were in a tight band of $25-$30b.  That is always a great sign.  It means a lot of joint leads verified that similar or consensus volume is expected. The comments were characterized by lots of smaller deals with the absence of any mega transaction. But, I cannot see how issuance gets done if the health care bill is pulled or doesn’t pass. Well it got pulled later on Friday as we now all know. The issue is that republicans made a mistake in prioritizing health care as the first item on their agenda. They did so because it was perceived internally as a “no brainer.” Their plan was to save a trillion dollars to justify a massive tax reform plan.  Guess what?  When it got pulled the message sent to Wall Street was that consensus will continue to be an issue within the GOP.  That’s a MAJOR problem. The historic election is now over. People no longer want to hear the same campaign rhetoric, rather they want action, as the power to legislate has been voted on and given to Trump and the GOP.  The first test was a failure. In fact, it is a massive failure.  So, the market will not be kind to an Administration that has now experienced it’s “Dysfunction Junction” wake-up call. (I refuse to call it Capitol Hill or The Beltway anymore). It’s all about action now. Failure to get a consensus on tax reform WILL lose House and Senate seats in the next elections. That would be a political disgrace after the 7 long years they had amongst themselves to one day ratify a revamped bill. That day came and went last Friday.

The result? ………..The CT10-year is going back to 2.00% to 2.10% or lower.  Here’s the challenge –  with as many as 10 Go/No Go calls this morning that wound up with issuers standing down, we risk building a congested pipeline.  That leads to creating additional congestion, sloppy deals, more concession and bankers could look bad advising clients to go now rather than wait for another 25-35 bps rally in yields. Let the market come to the issuer. The latter are in the driver’s seat.  The market is waiting for a sign of optimism. That optimism will come when positive sounders on SUBSTANTIALas in “historic” – tax reform emanates from the White House and Dysfunction Junction. When that happens, equities will rally, yields will climb quickly and we’ll be back to where the GOP wants to be. For now, the Republican Party IS part of the Swamp that desperately needs draining.  It’s a harsh but well-deserved wake-up call to get their act together.  Seven years to fix Obama Care and they come up holding nothing but a yanked deal.  Unbelievable folks!  When that happens in business people get fired fast! Trump needs to run things like a corporation and Dysfunction Junction needs a hard case of tough love. This is not what was voted for on election day. It’s all about well……….waste management………now.

 

CT10 Year Yield Going Lower

rates-going-down-mischler-debt-market

Sorry if I sound like a broken record, but I published this next piece 12 days in advance of the recent FOMC Rate Decision on Friday, March 3rd and re-printed it the day of Janet Yellen’s Press Conference on Wednesday, March 15th.  Here it is yet again:

………..I had an interesting and revealing conversation with a Chairman of a six-pack bank (That’s either BAML, CITI, GS, JPM, MS or WFS folks!) who shared thoughts on a potential March interest rate hike that the market has already built in.  I thought it would be helpful and informative to you all.  Here’s what that person said,

“Everyone is thinking a rate hike is coming in March but, the FED needs to be somewhat worried about the yield curve.  When they raised rates in December 2015 the 10yr Treasury rallied 70 bps in yield, thus crushing banks’ net interest margin or “NIM” and, having the effect of dampening growth.  When they raised rates this past December 2016, that did not happen…..instead all rates moved up a bit.  But when Yellen talked about March being a “live meeting’’, the UST 10 year went from 2.56% to 2.31%……The Fed needs to talk a good game to dampen the “animal spirits” that have elevated equity markets but, I really don’t think the Fed wants to raise rates and see the 10 year Treasury move to 2.25%. As a result, it’s a very close call…..I err on the side of thinking that the rate hike comes in June.  But, it’s  close.  If the Fed is committed to 2 to 3 hikes this year and they feel the markets are fully prepared for a March hike…they may just take advantage of that window.”

Today the CT10-year closed at 2.379% and has tightened 24.8 bps versus 2.627% on March 13th the Monday before the Fed raised rates. It’s going tighter. Issuers be patient!

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 1 IG Corporate-only new issues was <17.50> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.18.
  • 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 $13.8b on Friday versus $17.8b on Thursday and $15.2b the previous Friday.
  • The 10-DMA stands at $17.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Closed with gains except the 2yr but closed near the low prices of day.
  • Overseas Bonds – JGB’s better except the 30yr. Bunds red & Gilts green.
  • Stocks – U.S. stocks mixed heading into the close. Nice comeback in the afternoon.
  • Overseas Stocks – The Nikkei led Asia lower. Europe had more red than green.
  • Economic – Dallas Fed manufacturing was weaker than expected/last.
  • Overseas Economic – Positive IFO releases in Germany.
  • Currencies – The USD had a poor day vs. the Euro, Pound & Yen.
  • Commodities – Crude down, gold up & a 2% gain for silver.
  • CDX IG: +0.83 to 67.84
  • CDX HY: +29.80 to 354.58
  • CDX EM: +1.72 to 213.92

*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
3/27-3/31
vs. Current
WTD – $0.50b
March 2017
Forecasts
vs. Current
MTD – $108.348b
Low-End Avg. $25.25b 1.98% $113.79b 95.22%
Midpoint Avg. $26.50b 1.89% $114.31b 94.78%
High-End Avg. $27.75b 1.80% $114.83b 94.36%
The Low $15b 3.33% $80b 135.43%
The High $31b 1.61% $140b 77.39%

 
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…)

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…)

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