Browsing articles in "Debt Market Commentary"
ManyPeopleAreSaying Geo-Political Storm on The Horizon, Debt Market View
August 2016      Debt Market Commentary   

Quigley’s Corner 08.11.16 : ManyPeopleAreSaying  “Its Always Calm Before The Storm”

 

Investment Grade Corporate Debt New Issue Re-Cap – A Day of Broken Records

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

You know the adage – records are meant to be broken.  Well, we broke several today beginning with the DOW, the S&P and Nasdaq all which ended the session at their all-time highs.  The last time all three established new record highs on the same day was 17 years ago back in 1999.  As for our IG dollar primary credit markets, we set a new August monthly record for IG Corporate-only issuance $86.455b vs. $71.565b (2007) and another record for all-in or IG Corps plus SSA new issuance $95.505b vs. $90.356b (2007).

What’s scary about all this is our little focused world of credit and equities just seems so hunky dory doesn’t it?  However, there calm-before-storm-mischler-debt-market-viewremains a whole lot of pain out there though.  Things are heating up again in Crimea between Ukraine and Russia and the South China Sea Islands are turning into a fiasco for the Pacific side of things. The EU seems intent on dividing between a Southern and Northern Euro Zone harkening back to my forecast for  a Northern and Southern Euro made years ago right here in the “QC.” I might have to re-run that edition soon enough!

 

Anyway, here’s the global market re-cap:

 

Global Market Recap

 

  • S. Treasuries – Terrible day for USTs.
  • Stocks – S&P & Dow traded at all-time highs. NASDAQ is knocking on the door.
  • Record Closes – S&P, Dow & NASDAQ closed at record highs. Last time this happened was 1999.
  • Overseas Stocks – Europe rallied & has recovered all Brexit losses. China down.
  • Economic – Claims remained solid, Import price index less negative y/y & mortgage data better.
  • Currencies – USD outperformed Euro, Pound & Yen but lost vs. CAD (crude rally).
  • Commodities – Big rally in crude oil sent the CRB higher. Gold closed down.
  • CDX IG: -1.03 to 71.11
  • CDX HY: -4.37 to 387.01
  • CDX EM: -1.89 to 237.60

*CDX levels are as of the 3PM ET UST close.

-Tony Farren


IG Primary & Secondary Market Talking Points

 

  • A rarity: Fidelity National Information Services Inc. added a new 30-year tranche to today’s earlier announced two-part 5s/10s.
  • Qwest Corp. upsized today’s 40NC5 $25 par Senior Notes to $850mm from $200mm and at the tightest side of guidance range.
  • The average spread compression through price evolution of today’s 11 IG Corporate new issues was 19.77 bps.
  • Including today’s IG-rated Entergy Louisiana LLC $25 par CTMBs, spread compression from IPTs thru the launch/final pricing of today’s 12 new issues was 18.65 bps.
  • BAML’s IG Master Index tightened 1 bp to +146 versus +147.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +199 versus +200.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.6b on Wednesday versus $16.2b Tuesday and $17.8b the previous Wednesday.
  • The 10-DMA stands at $15b.

 

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

 

IG Corporate New Issuance This Week
8/08-8/12
vs. Current
WTD – $37.505b
August 2016 vs. Current
MTD – $86.455b
Low-End Avg. $21.76b 172.36% $60.48b 142.95%
Midpoint Avg. $22.80b 164.50% $61.13b 141.43%
High-End Avg. $24.93b 150.44% $61.78b 139.94%
The Low $15b 250.03% $45b 192.12%
The High $30b 125.02% $75b 115.27%

 

 

Have a great evening!

Ron Quigley

Managing Director
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…)

This Week’s Investment Grade Corporate Debt Tone: Firm & Tight; Mischler Comment
August 2016      Debt Market Commentary   

Quigley’s Corner 08.05.16: Investment Grade Corporate Debt Tighter on The Bid Side

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points – Market Tone Very Firm; 86% of Week’s 50 New Issues Tighter on the Bid Side.

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

 New Issues Priced

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

Lipper Report/Fund Flows – Week ending August 3rd     

Investment Grade Credit Spreads (by Rating/Issuer)

IG Secondary Market Trade Lab

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

We wrap up a resounding week for IG new issuance.  The climate is ripe for continued success for companies looking to print now.  Sure, we’ll have the late August vacations to slow things down a bit before the ramp up to what should be a VERY busy run from September through Thanksgiving but August is NOT yet over.  This week we saw a total of 47 IG Corporate and 3 SSA issues price.  86% of them trended tighter versus their final pricing spread levels in this afternoon’s secondary trading market. That is what syndicate desks mean when they say, “the market is firm!” The syndicate midpoint average forecast for next week’s IG Corporate supply is $22.80b.  They ARE the best.  However, I will say that the trend in here is – without a doubt – to the upside. So would I be surprised to see $30b price?…..Not at all.  But what the heck, when I give YOU access every Friday to those 23 professionals who price your deals and who sit in the most highly pressurized job on Wall Street, why listen to just little ole me?  The Best & Brightest have spoken.  See their projections and read their words in their below weekly section.  And thank you to all 23 of them for accommodating my request for early responses.  At 54 years of age I am wrapping up a tough 66 hour work week are tough BUT it was well worth it.  The Quigley family thanks all 23 syndicate participants for letting me out a bit early today to travel with my family up to Vermont. The guy in the corner needs some R&R in the Green Mountain State this weekend.  We appreciate the patronage of all the issuers who offered us such meaningful roles in the past couple of weeks and ditto that to those lead managers who really gave new meaning to getting us involved on the distribution front. You all know who you are. Thanks to each and every one of you.

……………..I tell ya, the oldest Service Disabled Veteran broker-dealer keeps breaking new ground.  When you give us a chance  to prove our capital market capabilities, we are the Little Engine That Could.  Thanks for entrusting Mischler Financial, the financial industry’s oldest minority broker-dealer owned/operated by Service-Disabled Veterans on your deals.


IG Primary & Secondary Market Talking Points – Market Tone Very Firm with 86% of This Week’s 50 New Issues Tighter on the Bid Side.

firm-tight-tone-investment-grade-debt

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate new issue was 15.00 bps.
  • BAML’s IG Master Index was unchanged at +151.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 4 bps to +203 versus +199.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.4b on Wednesday versus $17.8b Thursday and $14.5b the previous Thursday.
  • Taking a look at the secondary trading performance of this week’s IG Corporate and SSA issues, of the 50 deals that printed, 43 tightened versus NIP for a 00% improvement rate while only 6 widened (12.00%) and 1 was not available or N/A (2.00%).
  • For the week ended August 3rd, Lipper U.S. Fund Flows reported an inflow of $2.472b into Corporate Investment Grade Funds (2016 YTD net inflow of $23.27b) and a net outflow of $2.464b into High Yield Funds (2016 YTD net inflow of $7.232b).

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $48.95b
August 2016 vs. Current
MTD – $48.95b
Low-End Avg. $25.13b 194.79% $60.48b 80.94%
Midpoint Avg. $26.22b 186.69% $61.13b 80.07%
High-End Avg. $27.30b 179.30% $61.78b 79.23%
The Low $15b 326.33% $45b 108.78%
The High $45b 108.78% $75b 65.27%

 

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

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  21 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  Today’s cumulative underwriting percentage of the participating desks was 80.95% 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 Corporate Debt 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 the third consecutive year! That’s 2014, 2015 and 2016 !!  More importantly, however, you’re helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

 

The question posed to the “Best and the Brightest” early this morning was:

 

“Good morning and TGIF!  So, payrolls bounced, wages soared and the domestic labor market seems to be improving.  The BOE yesterday cut its benchmark rate 0.25%. But there’s “chatter” out there that the BOE might extend its sterling bond purchases to include “other currencies.”  This in lieu of Carney’s statement that he is “adverse to negative rates” and “helicopter money.” Could USD denominated bonds be on the BOE’s shopping list?  Today’s U.S. numbers were really good but in the grand scheme of things, as they saying goes, the world is “going deeper into the rabbit hole.”


This week we priced $50.65b of all-in IG Corporate and SSA issuance. IG Corps were $48.65b which eclipsed this week’s syndicate midpoint average forecast of $26.22b by 85.55%. We also beat the high estimate of $45b this week by 8%.

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

 

  • NICS:  3.17 bps
  • Oversubscription Rates: 2.86x
  • Tenors:  11.57 years
  • Tranche Sizes: $1,020mm

 

Week-on-week demand for IG corporate credit primary paper was off against last week but remained strong posting an average bid-to-cover rate of 2.86x vs. 3.63x. Average NICs widened by 1.94 bps to an average 3.17 bps versus last week’s 1.23 bps.  Average tranche sizes increased thanks to the large multi-tranche deal from MSFT, to $1,020mm versus $875mm last week.  Average tenors decreased to 11.57 years versus last week’s 13.95 years but still over the 10.  For the week ended August 3rd, Lipper U.S. Fund Flows reported an inflow of $2.472b into Corporate Investment Grade Funds (2016 YTD net inflow of $23.27b) and a net outflow of $2.464b into High Yield Funds (2016 YTD net inflow of $7.232b).

Week-on-week, BAML’s IG Master Index is 1 bps wider or +151 vs. last Friday’s +150 close.  Spreads across the four IG asset classes widened 1.75 bps to 37.75 vs. 36.00. Looking at the 19 major industry sectors, spreads widened 1.63 bps to an average 46.84 bps off their post-Crisis lows versus 45.21 bps versus last Friday’s close.               

Finally, what are your thoughts and number or range for next week’s IG Corporate issuance?  Thoughts mean a lot and are always welcome and appreciated!

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

Mischler Muni Market Update; GO New York & Pending Deals Week of Aug 1 2016
August 2016      Debt Market Commentary, Muni Market   

Mischler Muni Market Update for the week commencing 08.01.16 provides public finance investment managers and municipal bond market participants a snapshot of last week’s muni bond activity, including credit spreads, and a look at selected pending municipal finance offerings for this week’s pending issuance.

This week, the negotiated market is led by $855.6 million GOs for The City of New York. The competitive market is led by $780.4 million for the State of Minnesota on Tuesday with 3 bids.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

mischler-muni-market-aug-1

Mischler Financial Group debt capital market expertise, inclusive of Debt Origination, Distribution, Primary Market Access and Secondary Market trading across the full spectrum of fixed income markets is courtesy of our 18-member team of debt market veterans is what makes MFG’s Fixed Income Group a compelling partner to Fortune issuers, corporate treasurers and the world’s leading institutional investors.

To illustrate our presence within the Debt Capital Markets space: since 2014 alone,  Mischler has led, co-managed and/or served as selling group member for more than $500 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, new companies via IPO, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE) and a recognized minority broker-dealer

US GDP-Big Miss; Rates: Lower For Longer; Mischler Weekend Update
July 2016      Debt Market Commentary   

Quigley’s Corner 07.29.16- U.S. GDP: A Big Miss; Rates: Lower for Longer

 

Investment Grade Corporate Debt New Issue Re-Cap – U.S. Misses GDP Big Time.  You Know What That Means..

Global Market Recap

IG Primary Market Talking Points

Lipper Fund Flows

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

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

Decades’ Worth of August IG Corporate and SSA Issuance-“Knowing the Past for the Future”

Investment Grade Credit Spreads (by Rating/Industry)

IG Secondary Market Trade Lab

Economic Data Releases

Rates Trading Lab-“Buy Dips; Rinse. Repeat. Rinse. Repeat.”

New Issue Pipeline

M&A Pipeline

 

TGIF folks!  It was a no print Friday readers and it’s been a whale of a week for Team Mischler. We‘d just like to thank Apple (NASDAQ:AAPL), Verizon (NYSE:VZ) and Goldman Sachs (NYSE:GS) once again for working with us this week.  I’d also like to thank the MFG institutional accounts that were responsive to our capital market initiatives this week.  You all know who you are.  None of this would be possible without you.  Trusting, believing; loyal and faithful.  That says it all and with great appreciation for helping pull our program together, we thank you.
lower-for-longer-interest-rates-mischler-
As for next week negative rates in Europe and Japan, Abe announced doubling down on ETF purchases, sorely disappointing the market that knows there is a HUGE stimulus package hovering around Japan. Fear persists in the EU and the world’s engine – the U.S. of A.  missed GDP big time this morning by more than 50% or 1.20% vs. 2.50%! The Mantra became louder today. It’s ….LOWER-for-LONGER. USTs rallied as a result. CT10 is 1.45%. Issuers are blasting out of black-outs and will be ready, willing and able to blow out deals heading into what will be a nice first half of August issuance as we head to a traditionally slow second half of the month.

Look for $25-30b to price next week in IG Corporate-land and $78b in August.  But what the heck, why listen to the guy-in-the-corner when I bring you the top syndicate desks each and every Friday to share their own thoughts and numbers with you.  Stop by Tony’s Global Recap first for a snapshot of today’s global market news (hey there it is right below) and then scroll to the “Best and the Brightest.”  They all checked into the “QC” this morning and afternoon and they are all ready to share their thoughts.  So, read all about it. 

Global Market Recap

 

  • S. Treasuries – Strong session for USTs led by the belly on the weak GDP release.
  • 3mth Libor – Set at highest since May 2009 (0.75910%).
  • Stocks – U.S. stocks mixed (3:30pm). S&P traded at all-time high & NASDAQ YTD high.
  • Overseas Stocks – Bank stocks led Europe higher. Nikkei improved & Shanghai lost.
  • Economic – U.S. GDP laid another egg. Data weak in Japan & Europe.
  • Currencies – Terrible day for the USD. Lost ground vs. all of the Big 5.
  • Yen – Rallied over 3 handles and traded with 5 handles (-3.25 to 102.02).
  • Commodities – Good day for commodities with the weaker USD. Crude higher.
  • CDX IG: -1.22 to 73.08
  • CDX HY: -3.67 to 400.48
  • CDX EM: -5.95 to 259.66

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).

 

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

 

IG Corporate New Issuance This Week
7/25-7/29
vs. Current
WTD – $28.00b
July 2016 vs. Current
MTD – $96.75b
Low-End Avg. $19.39b 144.40% $90.09b 107.39%
Midpoint Avg. $20.48b 136.72% $91.17b 106.12%
High-End Avg. $21.57b 129.81% $92.26b 104.87%
The Low $10b 280.00% $60b 161.25%
The High $30b 93.33% $125b 77.40%

 

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

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  21 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  Today’s cumulative underwriting percentage of the participating desks was 80.99% which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

As always “thank you” to all the fixed income 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 the third consecutive year! That’s 2014, 2015 and 2016 !!  More importantly, however, you’re helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

The question posed to the “Best and the Brightest” early this morning was:

“Good morning!  Question:  The BoJ eased its policy by doubling its ETF purchases amidst its negative rate environment; oil is flirting with below $40 per barrel and this morning, U.S. GDP grew……at a dismal 1.20% less than half the 2.5% expectations.  Europe continues to be in a shambles and well,  what’s it all mean?  LOWER-for-LONGER is remains the market mantra!  We’re entering August on Monday and it’s typically one of the slowest months of the year.  Let’s take a look at what we accomplished this week in our IG rated Corporate primary market:


This week we priced $33.94b of all-in IG Corporate and SSA issuance. IG Corps were $28.00b which eclipsed this week’s syndicate midpoint average forecast of $20.48b by 36.72%.

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

 

  • NICS:  1.23 bps
  • Oversubscription Rates: 3.63x
  • Tenors:  13.45 years
  • Tranche Sizes: $875mm

 

Week-on-week demand for IG corporate credit primary paper was off last week but remained strong posting an average bid-to-cover rate of 3.63x vs. 3.42x. Average NICs compressed by 2.72 bps to an average 1.23 bps versus last week’s 3.95 bps.  Average tranche sizes decreased to $875mm versus $1.482b last week.  Average tenors increased to 13.95 years versus last week’s 7.95 years.  For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).

Week-on-week, BAML’s IG Master Index is 2 bps wider or +149 vs. last Friday’s +147 close.  Spreads across the four IG asset classes widened 1.25 bps to 36.00 vs. 34.75. Looking at the 19 major industry sectors, spreads widened 0.47 bps to an average 45.21 bps off their post-Crisis lows versus 44.74 bps versus last Friday’s close.

               

Lastly, after all that, my two-part question is what are your thoughts and numbers for both next week’s and August’s IG Corporate issuance?  Thoughtful comments are always helpful and much appreciated especially by the issuers who YOU cover and who read this!

Many thanks in advance and best wishes for a great weekend! –Ron”

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

 

(more…)

Fixated on FOMC; Debt Markets Waiting On Latest Update-Mischler Comment
July 2016      Debt Market Commentary   

Quigley’s Corner 07.26.16: Managers Fixated on FOMC

 

Investment Grade New Issue Re-Cap

Global Market Recap

 IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Credit Spreads (by Rating/Industry)

IG Secondary Market Trading Lab

New Issue Pipeline

Economic Data Releases

Rates Trading Lab

M&A Pipeline

 

We had 5 IG Corporate issuers tap the dollar DCM today pricing 6 tranches between them totaling $5.1b.  Today’s big transaction was Citigroup’s $2.5b 2-part 5-year FXD/FRN that priced with no concession.  In the SSA space, NIB added its expected $1b 5-year boosting the all-in day totals to 6 issuers, 7 tranches and $6.1b.

The IG Corporate-only WTD total is now $12.2b or 63% of this week’s syndicate midpoint average forecast calling for $20.48b.

We expect a quiet Wednesday session ahead of tomorrow’s 2:00pm FOMC Rate Decision Statement only.  As our own rates guru, Tony Farren shared with me today, “I expect the FOMC Statement to lean dovish with a message that the Fed is data dependent with an eye on international developments (Brexit, Europe, Japan, China, etc). My call for the FOMC rate hikes in 2016 is zero to one hike. I think the FOMC wants to get in a least one rate hike this year but to do it, the stars really have to align.  Tomorrow is a Statement only meeting.  We’ll have to wait until the September 20/21st meeting for the next Projections and Press Conference.  Following tomorrow’s FOMC, focus will shift to the BOJ Meeting. The BOJ Statement is released Thursday night.”

 

Global Market Recap

 

  • S. Treasuries – Weak 5yr auction. Closed mixed & little changed but had a solid afternoon rally.
  • 3mth Libor – You guessed it another high yield since May 2009 (0.74300%).
  • Stocks – U.S. stocks are mixed & little changed but staged a solid rally off the lows of the day.
  • Overseas Stocks – Europe closed mixed. China had a solid rally & the Nikkei traded poorly.
  • Economic – U.S. economic data was mixed.
  • Currencies – Strong day for the Yen. The Euro & Pound closed little changed.
  • Commodities – Crude down but closed well above the day’s low price. Bad day for wheat.
  • CDX IG: +1.11 to 74.56
  • CDX HY: +5.84 to 401.32
  • CDX EM: +4.91 to 260.97

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate new issues only was 12.2 bps.
  • The spread compression from IPTs to the launch/final pricing across today’s 6 IG new issues – including the split-rated $25 PerpNC5 for Capital One – was 14.125 bps.

 

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

 

IG Corporate New Issuance This Week
7/25-7/29
vs. Current
WTD – $12.20b
July 2016 vs. Current
MTD – $80.95b
Low-End Avg. $19.39b 62.92% $90.09b 89.85%
Midpoint Avg. $20.48b 59.57% $91.17b 88.79%
High-End Avg. $21.57b 56.56% $92.26b 87.74%
The Low $10b 122.00% $60b 134.92%
The High $30b 40.67% $125b 64.76%

 

 

Have a great evening!
Ron

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…)

Mischler Muni Market Update Week of 07-25-16
July 2016      Debt Market Commentary, Muni Market   

Mischler Muni Market Update for the week commencing 07.25.16 provides public finance investment managers and municipal bond market participants a snapshot of last week’s muni bond activity, including credit spreads, and a look at selected pending municipal finance offerings for this week’s pending issuance.

The negotiated market is led by $972.6 million for Presence Health Network issued by Illinois Finance Authority.  The competitive market is led by $213.0 million of Special Obligation Bonds for MiamiDade County, Florida on Tuesday.

 

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

mischler-muni-market-update-072516

 

Mischler Capital Markets Engages USMA Plebes; Salute to IBM

On June 15 2016, Mischler Financial Group’s Stamford, CT-based capital markets group hosted a spit-and-polish platoon of plebes from the US Military Academy at West Point (USMA), courtesy of IBM Asst Treasurer Mark Hobbert, who served as chaperone for the USMA team. The day’s events included a drill-down into the corporate bond underwriting and distribution process, courtesy of Managing Director and Head of Fixed Income Syndicate Ron Quigley (seated at top/second from left).  Facing the class (seated from left): Mischler CEO Dean Chamberlain   Rob Karr, Head of Capital Markets, Analyst Jon Herrick and Head of Municipal Finance, Rick Tilghman.

mischler-ibm-us-military-academy-plebes

Super Mario Day-ECB To Buy IG Corporate Debt
March 2016      Debt Market Commentary   

Quigley’s Corner 03.10.16 Super Mario Day

 

Investment Grade New Issue Re-Cap

Super Mario Day! You Gotta Be Kiddin’ Me, Right?…No, its Wrong!

Global Market Recap

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week of March 10th

IG Secondary Trading Lab

Investment Grade Credit Spreads (by Industry/Rating)

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

 

It was a subdued day today for the IG dollar primary markets as eager anticipation surrounded ECB President Mario Draghi’s latest and greatest tool kit inventions and implementations. No multi-tranche transaction would price in the face of the predictably unpredictable ECB today.  More on that in a bit.  3 IG Corporate issuers printed 5 tranches between them totaling $2.7b assisted by the SSA’s lone Republic of Panama’s $1b 12-year bringing the all-in IG day total to 4 issuers, 6 tranches and $3.7b.

 

Super Mario Day! You Gotta Be Kiddin’ Me, Right?……….Wrong!

 super-mario-mischler-debt-market

 

Now before you think I’ve gone completely nuts, you need to read this.  It’s from the Mario Day website.  You know, the REAL Super Mario, as opposed to the impostor at the ECB. It reads, “In recognition of everyone’s favorite pizza-loving Nintendo character, today, Thursday, March 10th is “Mario Day.”  I kid you not.  It continues, “..with plenty of ideas, games and activities to choose from, such as fancy dress parties and mushroom stomping competitions, you can be sure to make “Mario Day” a day to remember.”  I repeat, this is NOT a joke.

 

“Back it up!  No wait…Get a Bigger Truck……..Draghi’s Doing the Driving!”

 

….However, I was thinking that perhaps in a frenzy of jealousy/envy the other Super Mario…. you know, this guy:
mario-draghi-mischler-debt-market

…I might have taken it all a bit too personally.  For today was all about the ECB’s Mario Draghi.  Here’s a nice sound bite from friend, former BNP Paribas colleague and Bloomberg’s First Word European Primary Market Strategist, Paul Cohen, who nicely sums up today’s Euro IG primary markets, “There were no syndicated primary deals in Europe today as the market awaited the ECB’s latest rates decision. It’s the first day without a deal since February 9th and ends 8 consecutive business days of non-financial corporate issuance.” As someone quipped post this morning’s ECB conference, “I think it’s time to back the truck up, or maybe even get a bigger truck.  Mr. Draghi is doing the driving.” And boy, did he do some driving today. Let’s take a look:

 

My Take on the EU?  Did Someone Say, “Nightmare?” E-Break?

 

The ECB cut its three key interest rates and will buy investment-grade euro-denominated corporate bonds. The ECB’s main refi rate was lowered by 5 bps to 0%, its marginal lending rate was also cut by 5 bps to 0.25%; its deposit rate was cut by 10 bps to -0.4%. The ECB also said it will increase the pace of its monthly asset purchases by €20b to €80b from €60b starting in April, and will add investment-grade euro denominated bonds issued by non-bank corporations to the list of eligible assets.  The ECB CANNOT buy richer yields than the ECB’s deposit rate.  So, by moving their deposit rate to -0.4% from -0.3% and by increasing their monthly purchases to €80b from €60b it necessitates that they start to buy corporates.  Hence, the announcement of their new Euro-denominated corporate bond purchase tool.

It’s as if Draghi tore a page out Mario Day festivities because his ECB announcement certainly provided plenty of ideas, games and activities to choose from.  There were no fancy dress parties nor were there any mushroom stomping competitions but Draghi’s “tool kit” was introduced “on-the-fly” not after a long trial and error period as in R&D. What he unveiled to the world has never been done before…….for good reason – it’s a desperate move to salvage the unsalvageable. As you all know here, the EU is facing a terrible aging population dilemma, an immigration issue resulting in border controls and national demarcation lines being re-introduced, spreading Nationalism and a terrorist concern that resulted in today’s French travel advisory warning on the British government’s website:

“There is a high threat from terrorism. Due to ongoing threats to France by Islamist terrorist groups, and recent French military intervention against Daesh (formerly referred to as ISIL), the French government has warned the public to be especially vigilant and has reinforced its security measures.”

 

As one longtime trusted market relationship wrote to me this afternoon, “first off, I didn’t think there was that much “non-bank” corporate debt in the euro-universe! The Committee will decide if the asset (possibly a Financial, but not a BANK?) is eligible for purchase. I foresee corporate bond spreads tightening, but by how much and will they go negative?” Now, it seems however, that the ECB is a player in the market and companies are directing their fixed payments to them. In other words, they are being paid to hold specific companies’ debt — of their choosing. This comment sounds rather like “Sure, I’ll take that off your hands — for a price.” The role of the ECB seems even more questionably large – call it “outsized”  in that they’re setting rates, regulating banks (SSM) and now playing the market?

 

That’s not that far off folks.  Living for the moment is never a good plan.  Let’s think, however, about the likely resultant paths for the EU.  There is NO sign of inflation in the EU.  There are signs of DEFLATION.  History shows that the “D” word is a country killer and a war creator.  Draghi gets to be Super Mario for another day and rates/currencies traders who make a living moment by moment, have more movement to capitalize on but, in the end, this means the EU is more of a disaster than everyone thought.  (I am an exception as I’ve always maintained that it’s full speed ahead for them straight into a brick wall).  It’s desperation time.  As European banks suffer, today’s news should come as yet another major alarm as to just how bad the situation is over there.  Negative rates mean that the problem will persist perhaps forever.  Yes, I did say “forever.”  EU leadership began at the onset of the Financial Crisis playing “kick-the-can” with good old fashioned procrastination and government and bureaucratic delay tactics until that game became an embarrassment.  Now it’s a whole new ball-game.  They are changing many more rules of engagement to postpone the inevitable. It will end badly…..really badly.  The Schengen Agreement has already fallen to the wayside and that’s one the EU’s two legs that it stands on. The other leg being the single currency itself. EU problems are profoundly foundational.  They need to raise the house and re-do their foundation and then reset the broken home.  It’s THAT bad.  I still maintain that the EU crumbles into two-parts a Northern Euro and a Southern Euro.  Been saying that for over five years.

It’s a proverbial E-Break.

So, where’s that leave us?  Well, despite the comedic caucuses taking place in this election year, the Unites States of America is the world’s finest tuned engine.  It’s the best story and most stable of the myriad global event risk factors out there.  As for our IG primary markets, it’s very clear. Perhaps, clearer than ever before.  Your eyes should be focused on the 1.93% CT10 yield.  Digest the fact that across the 4 major IG asset classes spreads have tightened 22.25 bps in 3 ½ weeks since February 12th. Low UST rates plus tightening spreads equals one thing readers [treasurers, bankers and syndicate managers] and simply put: PRINT NOW.

 

Global Market Recap

 

ECB Meeting/Draghi: ECB pulls out all stops & what was Draghi thinking?

USTs – Treasuries continue to struggle but strong 30yr auction helped the back end.

Stocks – U.S. small losses heading into the close.

Overseas Stocks – Poor day in Europe. Nikkei rallied & China closed down.

Economic – Claims data continues to impress but today belonged to the ECB/Draghi.

Currencies – Big day for Euro & bad day for DXY Index with wide trading ranges.

Commodities – Crude oil down and gold up.

CDX IG: -4.68 to 91.53

CDX HY: -15.97 to 462.32

CDX EM: -3.47 to 333.40

 

IG Primary Market Talking Points

 

KKR & Co. LP upsized today’s $25 par PerpNC5 to $300mm from $150mm.

For the week ended March 10th, Lipper U.S. Fund Flows reported an inflow of $2.176b from corporate investment grade funds (2016 YTD net outflow of $3.961b) and a net inflow of $1.796b from high yield funds (2016 YTD net inflow of $4.403b).

The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate-only new issues and one IG-rated Preferred was 25.90 bps.

 

Syndicate IG Corporate-only Volume Estimates for March

 

IG Corporate New Issuance March 2016 vs. Current
MTD – $61.12b
Low-End Avg. $115.59b 52.88%
Midpoint Avg. $116.13b 52.63%
High-End Avg. $116.67b 52.39%
The Low $100b 61.12%
The High $150b 40.75%

 

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…)

Muni Market Update-Week Of 03.07.2016
March 2016      Debt Market Commentary   

Mischler Muni Market Update for the week commencing 03.07.16 provides public finance investment managers and municipal bond market participants a snapshot of last week’s muni bond activity, including credit spreads, and a look at selected pending municipal finance offerings for this week’s pending issuance.

The negotiated market is led by $2.4 billion GO Bonds for the State of California and $1.3 billion for NYS Urban Development Corp.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

mischler-muni-market-update-03-07-16

BNY Mellon & Mischler: Re-Defining Our Bond

As a boutique investment bank with boot prints extending across the primary and secondary debt capital markets, including investment grade, ABS, MBS, Government agencies and Municipal/Public Finance sectors, Mischler’s capital markets team is proud to maintain long-standing relationships with counterparts at each of the industry’s primary investment banks and lead underwriting and syndicate groups. Today, we’re particularly proud of the close working relationship we maintain with BNY Mellon, the oldest banking corporation in the U.S and the largest deposit bank in the world with nearly $29 trillion of assets under custody and/or administration and $1.6 trillion AUM.

BNY Mellon is also one of the Fortune 200’s leading advocates of veteran support programs, and through VetNet, its Employee Resource Group, this dedicated unit exists to promote the professional development and advancement of veterans and members of the broader military family. Today, it has a membership of approximately 600 people across six regional chapters in the US and UK.

But, were it not for the perseverance of BNY Mellon’s UK-based Business Development Exec Charles Thompson, this story could not be told and the now international news media story below would not have crossed the air waves.

Towards providing ‘advance color’ re the clip below, BNY Mellon’s  Charlie Thompson is a former professional rugby player who, after migrating to the world of banking, has quickly become known across the BNY Mellon platform for bringing along the skills that rugby players are best known for, which are synonymous with the qualities that BNY Mellon is long-recognized for in the course of serving its constituents: integrity, unbridled determination and tenacity.  It is those qualities that led to a remarkable discovery on behalf of Mischler Financial Group Managing Director Rick Tilghman, a former US Marine who, while serving in Vietnam was awarded not one, but two Purple Hearts and a Bronze Star With Valor. Rick is now one of the municipal bond markets’ leading elder statesman who joined Mischler in 2014 to oversee our firm’s Public Finance Group.

The reel below tells the story. On behalf of Mischler family member Rick Tilghman and our entire firm, we extend our gratitude to Charlie Thompson and we offer a special salute to BNY Mellon’s Colleen Krieger, VP of Corporation Communications for bringing this story to the front page and further extending to the global financial community via this link. We thank you for your service and your camaraderie.

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