Browsing articles in "Debt Market Commentary"
Summer Avalanche New IG Debt Issuance Forecast-Mischler Comment
August 2017      Debt Market Commentary   

Quigley’s Corner-08.04.17- Summer Avalanche New IG Debt Issuance Forecast 

Below is the opening extract from Quigley’s Corner aka “QC”  Friday, Aug 4 2017  weekend edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade New Issue Re-Cap – Summer Avalanche of New IG Debt Issue Forecast for Next Week

Today’s IG New Debt Issuance & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

The Best and the Brightest: IG DCM Syndicate Forecasts and Sound Bites for Next Week 

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

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 August 2nd               

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Today’s Friday IG Corporate dollar DCM featured  2 issuers that priced 2 tranches between them totaling $650mm as of this writing. The SSA space was quiet today. Please note that I scribed the below Best & Brightest IG Corporate primary market data download piece early this morning, so the data does not include today’s Murphy Oil and TC Pipelines deals.

Thanks! –RQ (In case you left early en route to the beach, the DJIA reached yet another new intra-day high today!)

As for next week, well British American Tobacco’s $49bn purchase of Reynolds American looks like it will manifest itself as the Company announced fixed income investor meetings for an expected mega cross currency transaction across USD, Euro and Sterling.  The Senior Unsecured dollar-denominated portion will feature joint leads Bank of America/Merrill Lynch, Barclays, Citigroup, Deutsche Bank and HSBC. The three tranches could potentially raise $25b dollar equivalent. I am also hearing “chatter” of another big issuer lurking.  We all know that after next week, it begins the traditional summer slowdown period. . But before that, the big push is on, so rest up this weekend, as next week’s syndicate midpoint average forecast calls for $34.29b to price.  Factoring in that average amount to the $21b priced thus far in August would bring the MTD total to $55.29b. The forecast for August is $79.10bn so that would leave $23.81b to get done across the last three weeks of the month or an average of $7.93b.  This ASSUMES that next week will reach the midpoint average forecast. I happen to think we could see $40b next week, which would push the average of each of the last three weeks of August down to $6bn.

But, before we all go away with our families, re-energize this weekend because next week will be a big one.  Read all about it below from the pros who price all the deals in our IG dollar DCM.  We’ll first review today’s primary and secondary market talking points, the growing geopolitical risk factors in our world, take a glance at the weekly and monthly IG primary market volume tables and then it’s onto the masters, maestros and mavens of syndicate who price all the deals in our IG dollar DCM.
Ready?.SET?..R-E-A-D!

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

  • The IG Corporate WTD total is 110.84% of this week’s syndicate midpoint average forecast or $27.986b vs. $25.25b.
  • MTD we’ve priced 26.55% of the syndicate forecast for July or $21.00b vs. $79.10b.
  • There are now 5 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • The average spreads across 2 of the 19 major industry sectors tied their post-Crisis lows. That’s 10.53% of the sectors.
  • BAML’s IG Master Index widened 1 bp to +109 vs. +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.04 vs. 1.03.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +152 vs. +151.  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 Thursday versus $19.9b on Wednesday and $19.6b the previous Thursday.
  • The 10-DMA stands at $17.4b.

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·   N. Korea launches ICBM on 7/28. Jong-Un claims Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  Fear that NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. U.S. lofts Trident missile in Pacific Ocean in response. China insiders say PRC does not have the influence on NOKO that the U.S. thinks it does.
ELEVATED
BREXIT Fallout
·   U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.
CAUTION
“U.S. political gridlock”
·   Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump with federal grand jury issuing subpoenas.

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

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

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

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

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

·   Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

·   Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE ·   China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
·   Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and August

 

IG Corporate New Issuance This Week
7/31-8/04
vs. Current
WTD – $27.986b
August 2017 vs. Current
MTD – $21.00b
Low-End Avg. $24.21b 115.60% $78.37b 26.80%
Midpoint Avg. $25.25b 110.84% $79.10b 26.55%
High-End Avg. $26.29b 106.45% $79.83b 26.31%
The Low $15b 186.57% $60b 35.00%
The High $35b 79.96% $100b 21.00%

 

The “Best and the Brightest” Syndicate Forecasts and Sound Bites re New IG Debt Issuance 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!  Thank you to all of them. 21 of those participants are among 2017’s YTD top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.

*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 !!   

The preface to the weekly canvass of the top fixed income syndicate desk teams begins with the following background-
Entering this morning’s Friday session, here are this week’s IG new issue volume talking points:   

  • The IG Corporate WTD total outperformed once again with issuance 108.26% of the syndicate midpoint average forecast or $27.336b vs. $25.25b.
  • MTD we have now priced 25.73% of the syndicate projection for August IG Corporates or $20.35b vs. $79.10b.
  • Entering today’s session, the YTD IG Corporate-only volume is $862.833b vs. $843.591b on August 3rd, 2016 or 2.28% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,054.568b vs. $1,077.377b on August 3rd, 2016 or 2.16% less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages from the 42 IG Corporate-only deals that priced this week: 

  • NICS:  0.06 bps
  • Oversubscription Rates: 3.34x
  • Tenors: 11.96 years
  • Tranche Sizes: $651mm
  • Spread Compression from IPTs to the Launch: <18.56> bps

Here’s how this week’s critical primary market data compares against last week’s entering this morning’s session: 

  • Average NICs tightened 1.62 bps to an average 0.06 bps vs. 1.68 bps across this week’s 42 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, slightly increased by 0.04-times to 3.34x vs. 3.30x. 
  • Average tenors contracted by 1.07 years to an average 11.96 years vs. 13.03.
  • Tranche sizes decreased by $861mm to $651mm vs. 1,512mm. Last week featured the $22.5bn 7-part transaction for AT&T which boosted the average tranche size.  
  • Spread compression from IPTs to the launch/final pricing of this week’s 42 IG Corporate-only new issues widened by 2.59 bps to <18.56> bps vs. <21.15>.
  • Standard and Poor’s Investment Grade Composite Spreads widened 2 bps to +152 vs. +150 bps.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 2 bps to 1.04 vs. 1.02 bps. 
  • Week-on-week, BAML’s IG Master Index widened 1 bp to +109 vs. +108. 
  • Spreads across the four IG asset classes widened 2 bps bps to 6.00 bps vs. 4.00 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also widened 2.36 bps to 9.89 vs. 7.53 bps also as measured against their post-Crisis lows.
  • For the week ended August 2nd, Lipper U.S. Fund Flows reported an inflow of $1.485b into Corporate Investment Grade Funds (2017 YTD net inflow of $79.114b) and a net inflow of $20.818m into High Yield Funds (2017 YTD net outflow of $6.663b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 50 deals that printed, 26 tightened versus NIP for a 00% improvement rate,  13 widened (26.00%), 9 were flat (18.00%) and 2 were not available (4.00%) or N/A.

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

  • IG Corps: $27.336b
  • All-in IG (Corps + SSA): $31.986b

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

Thank you in advance for your time and contribution!

The “Best and the Brightest” in Their Own Words

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Corporate Bond Day Belongs to Comcast & Verizon – Mischler DCM Comment
August 2017      Debt Market Commentary   

Quigley’s Corner 08.01.17- Investment Grade Corporate Bond Day Belongs to Comcast & Verizon 

Below is the opening extract from Quigley’s Corner aka “QC”  Tuesday, Aug 1 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

Comcast Corporation’s $2.5bn 2-part 10.5- and 30-year Deal Dashboard

Comcast Corporation’s Commitment to Honoring the Military, Veterans and Their Families

  • The Comcast Corp. Promise
  • Comcast’s Military and Veteran Affairs Office
  • Q&A with Carol Eggert, SVP, Military and Veteran Affairs for Comcast Cable Brigadier General (Retired), U.S. Army

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

New Issues Priced (Comcast, Verizon Communications, Celgene Corp, Kimco Realty, Ryder System, Axis Bank)

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 26th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Investment Grade New Issue Re-Cap

 

Today’s IG Corporate dollar DCM finished with 7 issuers pricing 9 tranches between them totaling $8.40b.  The SSA space boosted the total adding 3 issuers across 4 tranches for $2.75b and thereby bringing the all-in IG day total to 10 issuers, 13 tranches and $11.15b.   But, today was all about Comcast Corporation (NASDAQ:CMCSA) and their $2.50b two-part 10.5- and 30-year.  Comcast is consistently acknowledged by Military Friendly as a Top Military Friendly Employer. Since 2012, the cable giant has been recognized for its commitment to increasing opportunities for the Military Community. This year Comcast is happy to highlight its recognition as the #1 Military Spouse Friendly Employer and the #4-ranked Military Friendly Employer in the nation.

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

  • The IG Corporate WTD total is 60.93% of this week’s syndicate midpoint average forecast or $15.386b vs. $25.25b.
  • MTD we’ve priced 10.62% of the syndicate forecast for July or $8.40b vs. $79.10b.
  • There are now 5 issuers in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • The Asian Development Bank upsized today’s 5-year Global Green Bond tranche of its 2-part 5s/10s new issue to $750mm from $500mm at the launch.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 6 IG Corporate-only new issues, was <15.33> bps.
  • The average spreads across 1 of the 19 major industry sectors set a new post-Crisis low while 3 of the 19 tied their post-Crisis lows. That’s 21.05% of the sectors.
  • BAML’s IG Master Index widened 1 bp to +109 vs. +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.02 vs. 1.03.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +151.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.7b on Monday versus $14.3b on Friday and $13.3b the previous Monday.
  • The 10-DMA stands at $17.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Started under pressure but turned it around with the 30yr leading the rally.
  • Overseas Bonds – JGB’s mixed & little changed. Strong rally in Europe.
  • Stocks – Dow (all-time high) leading U.S. stocks higher into the close.
  • Overseas Stocks – Global stock rally.
  • Economic – U.S. data was weak or weaker than last with tame inflation.
  • Overseas Economic – China better. Japan weaker. Europe solid-to-strong.
  • Currencies – USD was better bid vs. 3 of the Big 5 & unchanged vs. the other 2.
  • Commodities – Crude oil reached its high since May & then sold off hard.
  • CDX IG: -0.84 to 56.38
  • CDX HY: -1.89 to 318.54
  • CDX EM: +0.24 to 190.25

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
N. Korea launches ICBM on 7/28. Jong-Un claims Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  Fear that NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has obviously failed. Tensions are mounting.
ELEVATED
BREXIT Fallout
U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.
CAUTION
“U.S. political gridlock”
Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump. White House cleans house; New Chief of Staff.

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

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

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

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

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

·         Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

·         Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE ·         China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
·         Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and August

 

IG Corporate New Issuance This Week
7/31-8/04
vs. Current
WTD – $15.386b
August 2017 vs. Current
MTD – $8.40b
Low-End Avg. $24.21b 63.55% $78.37b 10.72%
Midpoint Avg. $25.25b 60.93% $79.10b 10.62%
High-End Avg. $26.29b 20.49% $79.83b 10.52%
The Low $15b 102.57% $60b 14.00%
The High $35b 43.96% $100b 8.40%

 

Comcast Corporation’s $2.5bn 2-part 10.5- and 30-year Deal Dashboard

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Investment Grade DCM Talking Points-Mischler Comment
August 2017      Debt Market Commentary   

Quigley’s Corner 07.31.17- Investment Grade DCM – American Airlines Floats and Flies Ahead of Day’s Debt Issuers 

Below is the opening extract from Quigley’s Corner aka “QC”  Monday July 31 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade DCM New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 26th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar


Investment Grade New Issue Re-Cap

Today’s IG Corporate dollar DCM finished with 11 issuers pricing 15 tranches between them totaling $6.986b.  The SSA space was quiet today. It seemed much busier than today’s final tally given the 15 tranches but if you’ll recall several syndicate desks did comment in last Friday’s “QC” survey for this week’s IG Corporate new issue volume that it would seem busier given the expectation for lots of smaller sized deals.

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

  • The IG Corporate WTD total is 27.67% of this week’s syndicate midpoint average forecast or $6.986b vs. $25.25b.
  • MTD we’ve priced 143.28% of the syndicate forecast for July or $120.926b vs. $84.40b.
  • There are now 6 issuers in the IG credit pipeline.

July 2017 finished as the second highest volume July on record for IG Corporates at $120.876b as well as for all-in IG supply (Corporates plus SSA) – $141.476b. 

Today’s IG Primary & Secondary Market Talking Points 

  • Banco General, S.A. upsized today’s 10yr 144a/REGS Senior Unsecured Notes new issue to $550mm from its $500mm launch size.
  • International Paper Co. dropped the FRN tranche from today’s earlier announced two-part 3NC1 FGRN and 30yr Senior Notes offering.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 15 IG Corporate-only new issues, was <19.73> bps.
  • Excluding today’s IG-rated preferred for Public Storage, the average spread compression of today’s 14 IG Corporate-only new issues, was <20.61> bps.
  • The average spreads across 1 of the 19 major industry sectors set a new post-Crisis low while 6 of the 19 tied their post-Crisis lows. That’s 36.84% of the sectors.
  • BAML’s IG Master Index was unchanged at +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.03 vs. +102.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +151 vs. +150.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.3b on Friday versus $19.6b on Thursday and $12.8b the previous Friday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap 

  • U.S. Treasuries – Unchanged (2yr & 3yr) to +0.8 bps (30yr) in a very quiet day.
  • Overseas Bonds – JGB’s small loss. Bund small gain & Gilt weaker.
  • Stocks – U.S. stocks mixed heading into last hour. Dow traded closed at a new all-time high……again!
  • Overseas Stocks – HS & China rallied. Nikkei small loss. Europe mostly red.
  • Economic – U.S. data was mixed. Core PCE tomorrow.
  • Overseas Economic – China weaker. Japan stronger. Europe stronger with tame inflation.
  • Currencies – USD was better overnight but was hit hard during NY trading hours.
  • Commodities – Crude oil little changed but did trade over 50. Copper 2+ year high.
  • CDX IG: -0.28 to 57.37
  • CDX HY: -0.20 to 320.94
  • CDX EM: -0.53 to 190.66

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
N. Korea launches ICBM on 7/28. Jong-Un claims Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  Fear that NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has obviously failed. Tensions are mounting.  
ELEVATED
BREXIT Fallout
U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.  
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.  
CAUTION
“U.S. political gridlock”
Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump. White House cleans house; New Chief of Staff.

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

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

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

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

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

Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/31-8/04
vs. Current
WTD – $6.986b
July 2017
Forecasts
vs. Current
MTD – $120.926b
August 2017
Low-End Avg. $24.21b 28.86% $83.87b 144.18% $78.37b
Midpoint Avg. $25.25b 27.67% $84.40b 143.28% $79.10b
High-End Avg. $26.29b 26.57% $84.92b 142.40% $79.83b
The Low $15b 46.57% $70b 172.75% $60b
The High $35b 19.96% $111b 108.94% $100b

 

 

Have a great evening!

Ron Quigley

 

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

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

(more…)

ATT Mobilizes Investment Grade Corporate Debt Market w Mega Deal
July 2017      Debt Market Commentary   

Quigley’s Corner 07.27.17- AT&T Mobilizes Corporate Debt Market Issuance w $22.5bil 7-part deal

Below is the opening extract from Quigley’s Corner aka “QC”  Thursday July 27, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 19th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Investment Grade New Issue Re-Cap – AT&T Prints $22.5b 7-Part –  3rd Largest Deal in IG Dollar DCM History!

ATT-Investment Grade Corporate Debt

Today’s IG Corporate dollar DCM finished with 4 issuers pricing 11 tranches between them totaling $26.00b.  The SSA space wisely stood down. Clearly, the day was all about AT&T’s mega $22.5bn 7-part SEC registered Senior Global Notes new issue.  The transaction ranks as the third largest in history behind only Verizon Communication’s $49b deal on 9/11/2013 and Anheuser Busch InBev’s $46bn 1/13/2016.  The deal is also the largest of this very prolific year-to-date thus far.  What’s more, AT&T also pushed us over the $1 trillion mark for all-in IG Corporate and SSA issuance YTD.  AT&T (A-/BBB+) agreed to buy Time Warner (Baa2/BBB+) for $85.4b.  This follows Comcast’s purchase of NBCUniversal and Verizon’s acquisition of Yahoo. Both AT&T and Time Warner boards approved the deal that now has to overcome a few regulatory hurdles.  AT&T hopes to complete the transaction by the end of 2017.  To finance the half cash, half stock deal involved AT&T taking on $40b in bridge loans prior to today’s announced deal.

 

The DJIA closed at another all-time high at 21,796 up 85 points.

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

 

  • The IG Corporate WTD total is 151.38% of this week’s syndicate midpoint average forecast or $36.30b vs. $23.98b.
  • MTD we’ve priced 135.00% of the syndicate forecast for July or $113.94b vs. $84.40b.
  • There are now 4 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 11 IG Corporate-only new issues, excluding HIS, was <19.14> bps.
  • The average spreads across 3 of the 19 industry sectors tied their post-Crisis lows.
  • BAML’s IG Master Index was unchanged at +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +103.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +151 vs. +150.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.4b on Wednesday versus $19.2b on Tuesday and $19.6b the previous Wednesday.
  • The 10-DMA stands at $16.5b.

 

Global Market Recap

 

  • S. Treasuries – 3rd losing session out of 4 this week. 30yr lagged on the curve again
  • Overseas Bonds – JGB’s, Bunds & Gilts closed with gains.
  • Stocks – In the morning reached all-time highs but then sold off in the afternoon.
  • Overseas Stocks – Asia closed with gains. Europe had more red than green.
  • Economic – U.S. data had more good than bad. First look at Q2 GDP tomorrow.
  • Overseas Economic – Light calendar today but that will not be the case tomorrow.
  • Currencies – USD started weak overnight but traded with a bid during NY hours.
  • Commodities – Another good day for the commodities market despite the better USD.
  • CDX IG: +0.94 to 57.45
  • CDX HY: +2.95 to 321.11
  • CDX EM: +0.79 to 192.70

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·    N. Korea launches ICBM on July 4th. Continues development, improving accuracy & distance in defiance of G-20 protests; Lack of Chinese mediation; U.S. sanctions select Chinese banks and  individuals to influence PRC pressure on North Korea; UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  Fear that NOKO may use nuclear intel/systems as barter for food w/”suspect” nations.
ELEVATED
BREXIT Fallout
·    U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.
CAUTION
“U.S. political gridlock”
·    Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump.

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

·    GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air

and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

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

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

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

·    Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

·    Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/24-7/28
vs. Current
WTD – $36.30b
July 2017
Forecasts
vs. Current
MTD – $113.94b
Low-End Avg. $23.52b 154.34% $83.87b 135.85%
Midpoint Avg. $23.98b 151.38% $84.40b 135.00%
High-End Avg. $24.71b 146.90% $84.92b 134.17%
The Low $15b 242.00% $70b 162.77%
The High $40b 90.75% $111b 102.65%

 

AT&T Corp. $22.5b 7-Part Deal Dashboard

Mischler was once again proud and honored to serve as an active Co-Manager on today’s behemoth AT&T 7-part.

 

Today’s 7 tranches posted a cumulative average spread contraction of <18.43> bps through price evolution or from IPTs to the launch and final pricing.

Here’s a look at how it all evolved:

 

ATT Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
5.5yr FRN 3mL+113a 3mL+94a (+/-5) 3mL+89 3mL+89 <24> bps 15
5.5 yr FXD +125a +105a (+/-5) +100 +100 <25> bps 15
7yr FXD +150a +135a (+/-5) +130 +130 <20> bps 12
10yr FXD +175a +165a (+/-5) +160 +160 <15> bps 9
20yr FXD +215a +205a (+/-5) +200 +200 <15> bps 1
32.5yr FXD +240a +230a (+/-5) +225 +225 <15> bps <7>
41yr FXD +255a +245a (+/-5) +240 +240 <15> bps <7>

 

..here’s a look at final book sizes and over-subscription rates that amounted to $58.5b for an overall bid-to-cover rate of 2.60x:

 

AT&T Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
5.5yr FRN $750mm $3.2bn 4.27x
5.5yr FXD $1.75bn $5.8bn 3.31x
7yr FXD $3bn $8.3bn 2.77x
10yr FXD $5bn $12.4bn 2.48x
20yr FXD $4.5b $10.4bn 2.31x
32.5yr FXD $5b $11.1bn 2.22x
41yr FXD $2.5b $7.3bn 2.92x

 

A Look at How AT&T Supports Our Veterans

 

First, let’s make it clear to everyone that AT&T understands that members of the military and their families make great sacrifices for our great nation and often confront unique challenges during periods of deployment and throughout their return to civilian life. AT&T understands that corporations have an important role to play in supporting our veterans.  So, for nearly 100 years – that’s right – a century – AT&T has remained dedicated to supporting military personnel, veterans and their families.  Our nation’s service men and women make sacrifices to protect our country and our freedoms. AT&T understands that is their honor to support them at home and abroad.  Moreover, military veterans possess the skills and experience it needs to succeed as a company and knows they are an invaluable part of its work force.  For that all of us here at Mischler Financial send out a five-star salute to AT&T from the top down and especially today to the entirety of its Treasury/Funding team that carved out another memorable place in our IG dollar Debt Capital Markets history with today’s $22.5 billion seven-part transaction.

Some of the Ways that AT&T Supports Our Nation’s Veterans –

 

Recruiting and Hiring Military Veterans

AT&T integrated veteran recruitment into its business practices for years. The Company focuses on recruiting veterans not only because it’s the right thing to do, but also because it’s good for its business. In the past few years, AT&T enhanced its military recruitment programs by increasing their promotion of AT&T as an employer of choice within the veteran community. That includes maintaining a Military Talent Attraction Program Manager to inform the military about AT&T and educate AT&T managers about the military.

Online Tools and Resources

AT&T understands that the job search and application process at large companies can be challenging for anyone — and even more so for veterans. Therefore, it created online tools, resources and checkpoints to optimize success through its recruitment process, such as:

  • A military-focused career site: att.jobs/military
  • A Military Skills Translator Tool that allows veterans to use their current Military Occupation Code or Military Occupation Specialty to identify civilian jobs at AT&T that may be a good fit for them: http://att-veterans.jobs/
  • The Careers for Veterans program, which is designed to support veterans moving into civilian life by providing career advice and insight on AT&T jobs: http://veterans.att.jobs
  • An AT&T Military Timeline to help guide veterans step-by-step through their transition to the civilian/corporate workforce
  • A career page for military spouses highlighting work locations that provides portable, flexible jobs: att.jobs/milspouse

 

Stepping up AT&T’s Hiring Commitment

AT&T actively focuses on recruiting veterans into career paths because the experience and skills gained through military service are an invaluable contribution to its workforce.

In 2013, AT&T announced a commitment to hire 10,000 veterans over the course of the next 5 years. That’s a commitment that was reached in 2015 – well ahead of schedule. In May of 2016, AT&T announced that it would double its original commitment by hiring an additional 10,000 veterans – for a total of 20,000 – by 2020.

AT&T is also a founding member of the Veteran Jobs Mission, launched in 2011 by JPMorgan Chase & Co. and 10 other companies to commit to hiring 100,000 veterans by 2020. Since then, the coalition has grown to more than 230 private-sector companies that represent almost every industry in the U.S. economy. Collectively, members have hired more than 395,261 veterans since 2011.

Once veterans are hired, AT&T helps ensure they have the skills needed to grow their careers and succeed as employees in the ever-evolving technology landscape.

Veteran Employee Resource Group

The AT&T Veterans employee resource group (ERG) was founded in 1983 and now serves more than 10,200 members in 40 chapters across the U.S. It’s an independent organization of AT&T employees and retirees dedicated to serving the veteran and active military community.

The ERG creates an instant community for veterans joining the company and involves them in outreach, philanthropy and volunteer opportunities – including ways to refer fellow veterans for jobs at AT&T. Members of this ERG serve as career ambassadors and represent AT&T at veteran career events.

At AT&T’s 8th annual National ERG Conference in September 2016, the AT&T Veterans-Washington State chapter was recognized for its Operation Santa program, which supports homeless vets and those in VA hospitals and retirement homes during the holidays.

 

2016 AT&T Awards and Recognition’s Include:

 

  • Ranked No. 5 on Diversity Inc’s Top 10 Companies for Veterans list
  • Ranked No. 24 on G.I. Jobs/Victory Media’s Top 100 Military Friendly Employers list
  • Ranked No. 44 on G.I. Jobs/Victory Media’s Top 100 Military Spouse Friendly Employers list
  • Ranked No. 44 on Military Times’ Best for Veterans Employer list
  • Named to US Veterans magazine’s Best of the Best – Top 10 Veteran-Friendly Companies list
  • Named to US Veterans magazine’s Top 10 Supplier Diversity Programs list

 

AT&T’s Support for Organizations Include:

 

Blue Star Families

AT&T supports veterans and military families through many financial contributions, programs and collaborations with organizations dedicated to service men and women. AT&T supports Blue Star Families at their networking events for military spouses and in their mission to honor and empower military families through no-cost programs available to members nationwide.

Cell Phone for Soldiers
AT&T has a long-standing mission to connect members of our nation’s military with their loved ones back home. Initiated in 2004, and expanded through financial support from AT&T, Cell Phones for Soldiers is a non-profit that uses funds from recycled cell phones to buy prepaid phone cards for our service men and women, helping them connect with their families.

Supporting Veteran-Owned Business

Since 1968, the AT&T Global Supplier Diversity organization has connected certified diverse service-disabled veteran-, minority-, women-owned business enterprises with opportunities to provide products and services to AT&T around the world. AT&T is committed to working with veteran-owned suppliers through its mentoring programs.

 

AT&T Scholarship Programs
In 2016, AT&T continued to offer executive-level scholarships to diverse suppliers, including veterans, as part of its commitment to provide educational support to diverse-owned businesses. Five scholarships were awarded nationally to diverse-owned business representatives to attend an executive training class.  Classes were offered through the following programs:

  • The Advance Management Education Program (provided by National Minority Supplier Development Council)
  • Building a High Performing Minority Business Program (provided by Tuck School of Business at Dartmouth
  • Tuck-WBENC Executive Program (provided by Women’s Business Enterprise National Council)

 

The AT&T Business Growth Acceleration Program
The AT&T Business Growth Acceleration Program provides mentorship to a select group of qualified business leaders, including veterans. The program focuses on improving participants’ business operations and enhancing their abilities to win corporate contracts. The practical, hands-on learning approach enables each participant to immediately apply concepts learned to their individual business challenges. During 2016, the program was led by the John F. Kennedy Institute of Entrepreneurial Leadership and there were 12 graduates from this AT&T-sponsored JFK University Business Growth Acceleration Program.

Additionally,

  • Through the full year ending 2016, AT&T’s spend with service disabled veteran-, veteran-, minority and women-owned business enterprises firms, among others, was $14.2bn.
  • AT&T’s percent of total spend with service disabled veteran-, veteran-, minority and women-owned business enterprises is 83%.

That is a great story about some of the wonderful things Corporate America’s AT&T is doing for our veterans. It’s a story that needs to be told to Main Street U.S.A. I’ll always do my part to get Corporate America’s story out there.  The next deal could by YOUR deal and YOUR story. Today, however, belonged to AT&T. Thank you AT&T from the top down. Thank you also to JPM, BAML, GS, Mizuho and MUFG Syndicate for working with us today.

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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

(more…)

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

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

Below is the opening extract from Quigley’s Corner aka “QC”  Tuesday July 18, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 12th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

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

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

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

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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

(more…)

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

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


Investment Grade New Issue Re-Cap

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

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

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

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

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

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

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


High Yield Issuance

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

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

……and now for the High Grade Issuance Outlook

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

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

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

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

FRNS and Callable Structures En Vogue

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

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

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

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

 

Have a great evening!

Ron Quigley

 

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

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

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

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

Investment Grade New Issue Re-Cap

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

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

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

 

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

(more…)

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

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

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

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

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Upcoming Calendar

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

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

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

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

Today’s IG Primary & Secondary Market Talking Points

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

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  21 of those participants are among 2017’s YTD top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  22 are in the top 26 of that same table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 81.49% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

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

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

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

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

o   NICS:  2.25 bps

o   Oversubscription Rates: 2.38x

o   Tenors: 12.50 years

o   Tranche Sizes: $1,437mm

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


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

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

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

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

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

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

The “Best and the Brightest” in Their Own Words

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

 

 

(more…)

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

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

 

Fourth of July Special Edition- Mischler Debt Market Commentary

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

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

Independence Day Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending June 28th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Independence Day Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

mischler-independence-day-dcm-comment 

 

 

 

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

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

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

 

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

 

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

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

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

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

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

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

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

These are unbelievable statistics.

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

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

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

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

They don’t understand suffering.

They don’t understand sacrifice.

They don’t understand why we fight for them.

They don’t understand that bad people exist.

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

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

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

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

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

 

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

mischler independence day 2017 debt market comment

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

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


Investment Grade New Issue Re-Cap

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

 

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

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

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

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

 

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

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and June

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Tomorrow’s Calendar

 

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

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

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

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap 

U.S. Treasuries – followed European bonds south.

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

Stocks: NASDAQ having a bad day heading into the close

Overseas Stocks: Asia had small gains. Europe lost ground

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

Overseas Economic: Not really a factor

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

Commodities: Crude oil had a good day

CDX IG: +1.85 to 61.45

CDX HY: +6.07 to 339.84

CDX EM: +3.46 to 199.55

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

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

 

 

Have a great evening!

Ron Quigley

 

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

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

 

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

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

 

New Issues Priced

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

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

  (more…)