Browsing articles in "Debt Market Commentary"
Corporate Bond Market: Noisy Silence from…
October 2016      Debt Market Commentary   

Quigley’s Corner 10.18.16 : Corporate Bond Market Noisy Silence from A Really Big Bank; Halloween Scare for European Banks?

 

Investment Grade New Issue Re-Cap – “If there’s anything I can’t stand, it’s a lot of noisy silence!”

As Halloween Approaches, How “Scary” are European Banks?

Global Market Recap

IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 12th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

noisy-silence-mischler-debt-market-commentAs James Stewart’s character Charlie Anderson quips at the family dinner table in Andrew McLaglen’s Civil War 1965 film Shenandoah, “If there’s anything I can’t stand, it’s a lot of noisy silence!’

 

Yes, the Kingdom of Saudi Arabia is printing a suspected $15b three-part 5-, 10- and 30-year inaugural debt transaction tomorrow, but that wasn’t the big subject of talk in today’s primary market session.  Nor, surprisingly, was it Bank of America/Merrill Lynch’s $5b 3-part Senior Unsecured callable, the largest of its kind, 6NC5 FXD/FRN and 11NC10 notes issued to lower costs related to compliance with loss-absorbing debt requirements. Rather it was Wells Fargo & Co. that announced a 10-year Senior Notes new issue carrying IPTs in the +140-145 range that never went to guidance and had many/most suspecting it would go straight to the launch.  Lo and behold just after 3:30pm ET it was heard that the deal would not price until tomorrow, as apparently news would hit the tapes that would be relevant to bondholders that resulted in Wells deciding not to “rush everything.”  The order book was “heard” to have $10b in orders at 2:30pm ET.

On the day 4 IG Corporate issuers priced 7 tranches between them totaling $7.35b while the SSA space hosted 2 issuers, 2 tranches and $5.50b for an all-in IG day total of 6 issuers, 9 tranches and $12.85b.  WTD we’ve now issued 67% of this week’s syndicate midpoint average forecast for IG Corporates or $15.70b vs. $23.17b. MTD we’ve issued 58% of the syndicate average or $52.155b vs. $88.59b.  The all-in IG MTD total (Corporates & SSA) is $72.255b.

 

Mischler Financial is proud to announce that it served as a Co-Manager on today’s new Bank of America $5b 3-part callable new issue.  Demand was strong for the structure with the 6yr FXD book heard to be $5b (2.5x); the 6yr FRN $2b (4x) and the 11yr $7b (2.5x) when the deal went subject.  In fact, Mischler served as a Co-Manager on both of JPM’s similar structures, and as a proud active Co-Manager on Goldman Sach’s two-part 5NC4 FXD/FRNs. Once again, Mischler is proud to have been involved on all the recently priced callable structures among the six-pack – two with JPM, a two-part with GS and today’s 3-part with BAML.  Therein, we thank all of those firms for including us.

 

As Halloween Approaches, How “Scary” are European Banks?

mischler-debt-market-bloomberg-chart

Screen shot courtesy of Bloomberg LP

 

 

Capital flows suggest that some people aren’t waiting to find out if Italy will follow the U.K.’s example and leave the European Union, according to Bloomberg View’s Mark Whitehouse. Italy’s central bank liabilities to the Euro system stood at about 354 billion euros ($390 billion) at the end of September, up 118 billion euros from a year earlier and up 78 billion euros since the end of May, before the U.K. voted to leave the bloc. The outflow isn’t quite as large as during the sovereign-debt crisis of 2012, but it’s still significant and compares to the main beneficiary, Germany, which has seen its credits to the Euro system increase by 160 billion euros over the past year.

 

Global Market Recap

 

  • S. Treasuries – USTs, Gilts & Bunds all improved with the Gilts the catalyst.
  • Stocks – Global stock rally.
  • Economic – CPI y/y in the U.S. & U.K. both printed at the highest rate in 2 years.
  • Currencies: Big day for the Pound vs. the USD. Euro lost ground & Yen unchanged.
  • Commodities; Small gains for the CRB, crude oil & gold.
  • CDX IG: -1.20 to 74.88
  • CDX HY: -4.84 to 403.19
  • CDX EM: -3.19 to 244.31

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points – Tone Goes Out Strong; Nice Set Up For Next Week

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 7 IG Corporate-only new issues was 13.93 bps.
  • BAML’s IG Master Index widened 1 bp to +137 vs. +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to a new tight of +130 vs. +131.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.9b on Monday versus $11.7b Friday and $11.2b the previous Friday.
  • The 10-DMA stands at $14.1b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $15.70b
October 2016 vs. Current
MTD – $52.155b
Low-End Avg. $22.30b 70.40% $87.83b 59.38%
Midpoint Avg. $23.17b 67.76% $88.59b 58.87%
High-End Avg. $24.04b 65.31% $89.35b 58.37%
The Low $15b 104.67% $75b 69.54%
The High $30b 52.33% $125b 41.724%

 

Now let’s end tonight’s piece where I started it – as James Stewart’s character Charlie Anderson quips at the family dinner table in the 1965 film Shenandoah, “If there’s anything I can’t stand, it’s a lot of noisy silence!”

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

 

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

NICs, Bid-to-Covers, Tenors and Sizes

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
New Issue Concessions 6.62 bps 1.87 bps 4.36 bps 2.71 bps 0.69 bps
Oversubscription Rates 2.11x 3.28x 4.20x 3.52x 3.23x
Tenors 6.06 yrs 11.51 yrs 12.16 yrs 10.51 yrs 9.36 yrs
Tranche Sizes $1,043mm $640mm $523mm $646mm $964mm

 

New Issues Priced

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

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

 

IG

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Bank of America BBB+/A FRN 10/21/2022 500 3mL+equiv 3mL+121a (+/-3) 3mL+118 3mL+118 BAML-sole
Bank of America BBB+/A 2.503% 10/21/2022 2,000 +137.5a +130a (+/-3) +127 +127 BAML-sole
Bank of America BBB+/A 3.248% 10/21/2027 2,500 +162.5a +155a (+/-5) +150 +150 BAML-sole
Export Credit Bank of Turkey Ba1/BBB- 5.375% 10/24/2023 500 MS+420a MS+410a MS+400 +386.8 CITI/HSBC/ING/MIZ/MUFG/STAN
Jackson Nat’l. Life Glbl. Fdg. AA/AA 2.10% 10/25/2021 350 +high 90s/+97.5 +90a (+/-2) +88 +88 BAML/GS
Nike Inc. A1/AA- 2.375% 11/01/2026 1,000 +80-85 +70a (+/-5) +65 +65 BAML/CITI/DB
Nike Inc. A1/AA- 3.375% 11/01/2046 500 +110a +95a (+/-2) +93 +93 BAML/CITI/DB

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
EIB Aaa/AAA 1.25% 12/16/2019 4,500 MS+17a MS+17a MS+83 +31.2 CITI/GS/HSBC
JFM A1/A+ 2.125% 10/25/2023 1,000 MS+90a RG: MS+84a +/-1
MS+87a
MS+83 +70.18 BAML/CITI/DAIWA/MIZ

  (more…)

Corporate Bond Issuance: Tone Is Firm and Firmer; Mischler Comment
October 2016      Debt Market Commentary   

Quigley’s Corner 10.17.16 Corporate Bond Issuance; Its About Price, Not Politics

 

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 12th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

 

6 IG Corporate issuers priced 8 tranches between them totaling $8.35b with no assist from the SSA space today and representing 37% of this week’s syndicate midpoint average forecast for $23.17b.

 

Global Market Recap

 

o   U.S. Treasuries – USTs better despite more hawkish Fed Speak (Fischer & Rosengren).

o   Overseas Bonds – Gilts hammered overnight but rallied during NY hours.

o   Stocks – U.S. stocks red (3:30pm). Down day in Europe. Asia red except the Nikkei.

o   Economic – U.S. data on weaker side. EU CPI as expected (too low) & solid data in Japan.

o   Currencies – USD lost ground vs. all of Big 5. DXY Index only had a small loss.

o   Commodities – Small down day for crude oil & small up day for gold.

o   CDX IG: +0.26 to 75.93

o   CDX HY: +1.77 to 407.45

o   CDX EM: +5.10 to 247.82

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points – Tone Goes Out Strong; Nice Set Up For Next Week

 

  • ICBC (NY Branch) dropped the 10yr tranche from today’s earlier announced two-part 5s/10s Senior Unsecured Notes new issue.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues was 15.375 bps.
  • BAML’s IG Master Index tightened 1 bp to +136 vs. +137.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to a new tight of +131 vs. +132.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $11.7b on Friday versus $17.8b Thursday and $11.2b the previous Friday.
  • The 10-DMA stands at $13.9b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $8.35b
October 2016 vs. Current
MTD – $44.805b
Low-End Avg. $22.30b 37.44% $87.83b 51.01%
Midpoint Avg. $23.17b 36.04% $88.59b 50.58%
High-End Avg. $24.04b 34.73% $89.35b 50.15%
The Low $15b 55.67% $75b 59.74%
The High $30b 27.83% $125b 35.84%

 

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.

NICs, Bid-to-Covers, Tenors and Sizes

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/10
TUES.
10/11
WED.
10/12
TH.
10/13
FRI.
10/14
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
New Issue Concessions Holiday 3.19 bps 2.00 bps 0.54 bps N/A 1.87 bps 4.36 bps 2.71 bps 0.69 bps
Oversubscription Rates Holiday 3.48x 2.80x 3.17x N/A 3.28x 4.20x 3.52x 3.23x
Tenors Holiday 11.33 yrs 3 yrs 13.04 yrs N/A 11.51 yrs 12.16 yrs 10.51 yrs 9.36 yrs
Tranche Sizes Holiday $663mm $500mm $635mm N/A $640mm $523mm $646mm $964mm

 

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM: (more…)

Three’s A Crowd; Durable Goods and Debt Capital Markets-Mischler Comment
September 2016      Debt Market Commentary   

Quigley’s Corner 09.27.16 Durable Goods and Debt Capital Market Issuance

Investment Grade New Issue Re-Cap – Three’s a Crowd

Tomorrow’s Durable Goods Number Should Result in Issuance and Here’s Why:

Global Market Recap

IG Primary & Secondary Market Talking Points

Presidential Debate Ratings Set New Records

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 21th

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Tomorrow’s Calendar

 

Lehigh University stood alone owning today’s IG Corporate calendar with its $150mm 30-year 3(a)4exempt taxable bond, Series 2016 new issue. The reason?  Big problems in Europe.  Three issuers stood down this morning across the pond and ECB President Mario Draghi spoke of a pervasive sense of urgency in the EU in which he urged governments to “act to stem rising public discontent” adding, “they must show that the Union brings tangible benefits to people’s lives.”  (Oh Really????)  He continued with “the ECB cannot sustain the European recovery alone.” (Duh!!!!)  This, after how many years of applying a kick-the-can mentality that segued to helicopter money and a gung ho “whatever it takes the ECB, we’ll do it” attitude.  This is a change of coarse and invites a serious discussion once again about the viability and sustainability of the European Union. Further compounding continental concerns, Deutsche Bank continued as a primary focus and lynchpin to the entire European banking system.  One FIG and one industrial also stood down in the U.S. IG primary markets as well – that I am aware of.

So, when markets are somewhat volatile, as September has been despite $137b IG Corporate and $158b all-in IG, I tend to turn to “go to” contacts for a more detailed discourse.  In other words, those I’ve known forever and who have withstood the test of time.  Believe it or not there aren’t many of THEM around.  They do likewise.  I gave a ring to my favorite Scotsman Mr. Paul Cohen who during his years as a banker at Banque Paribas, BNP Paribas and Dresdner essentially covered most all corporates including some fallen angels.  Besides being an all-around very good guy, he knows his stuff and is a great person for you to reach out to have him add you to his daily disty list.  Paul is a primary market strategist who writes for Bloomberg London covering IG Euro new issuance.  In our inextricably global-linked world economy that I always write about here, minding your dollars and euros makes sense (cents!) Ask him to put you on his loop and please do tell him that the guy-in-the-corner sent you. All free and all informative for each one of YOU! Remember folks, it’s all about timely, accurate information and how you apply it that keeps you on top of your game while better understanding our markets!  So, go ahead and reach out to him.

The Three Musketeers; The Three Little Pigs; The Three Billy Goats Gruff!  Does the power of three really makes things better?  Funnier? Paul and discussed the theory of “threes” this afternoon…….the three deals that stood down that is.  Paul said, “three deals were pulled within 24 hours across the pond as market conditions changed since last week with issuers perhaps needing to be a bit more flexible in terms of their cost of funding expectations.”  He continued………”a flight-to-quality could be in the cards over the next day or two as the market digests the implications of theses pulled transactions beginning with Lufthansa, followed by NordLB and finally Korean Air.” Now, here’s the good part that cuts through the headline –  Lufthansa is a split-rated credit and perceived by many market participants to fall into the lower ratings category due to investment guidelines that typically err on the side of caution while also satisfying the ECB’s CSPP criteria by maintaining one investment grade rating.  NordLB does harbor its own particular “situation” with its shipping business and acquisition of Bremer LB.  Lastly, the Korean Air Lines pull was the result of contagion from Lufthansa.

So, at first blush, market players came in this morning hearing “3 deals were pulled in Europe…..OMG!”  Knowing the smart minds out there and having access to them with a bit of Quig-Pro-Quo thrown in for good measure, reveals a bit more story, a bit more color and a bit more understanding that’s not nearly as frightful as the words Mario Draghi uttered today or that the market is conjecturing as surrounds Deutsche Bank.  Just a helpful tip for you! And a thank you to Paul “Pablo” Cohen.

Tomorrow’s Durable Goods Number Should Result in Issuance and Here’s Why:

 

durable goods reportOn the home front, IG corporates clearly took a breather today which is a good thing.  We have a Durable Goods Orders number out at 8:30am tomorrow morning which is relatively important given recent volatility so, I suspect that number hits first after which if it’s pretty much as expected or <1.5%> we’ll see issuance. The prior number was 4.4% so perhaps it surprises to the upside.  2 out of 3 is 66% so I’ll say I don’t expect it to miss.  Wrightson, for example is generally an outlier but they also happened to be pretty good. They conjecture that tomorrow’s August Durable Goods report will be 1.5% to the upside – a nice swing versus negative expectations.  The reason?  Boeing’s August orders will translate into a 24% increase in civilian aircraft orders in seasonally adjusted terms which will make up for softness elsewhere.  Just putting it out there folks.

 

Global Market Recap

 

o   U.S. Treasuries: 30yr leads UST rally. Bunds & Gilts improved. JGB curve much steeper.

o   Stocks – Bounce back day for U.S. stocks. Europe closed down & Asia rallied.

o   Economic – U.S. consumer confidence stole the show. The strongest since 2007.

o   Overseas economic – China’s industrial profits increased the most in 3 years.

o   Currencies – U.S. outperformed the Euro but lost ground vs. the PND, Yen, CAD & AUD.

o   Commodities – CRB, crude oil, heating oil, gold, copper & silver all down.

o   CDX IG: -1.06 to 78.05

o   CDX HY: +19.57 to 415.59

o   CDX EM: -0.03 to 238.58

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue was 10.00 bps.
  • BAML’s IG Master Index widened 1 bp to +142 versus +141.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +138 versus +137.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +190 versus +189.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12.8b on Monday versus $13.3b Friday and $12b the previous Monday.
  • The 10-DMA stands at $15.5b.

 

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

 

IG Corporate New Issuance This Week
9/26-9/30
vs. Current
WTD – $5.75b
September 2016 vs. Current
MTD – $136.518b
Low-End Avg. $22.13b 25.98% $115.45b 118.25%
Midpoint Avg. $23.30b 24.68% $116.02b 117.67%
High-End Avg. $24.48b 22.49% $116.59b 117.09%
The Low $15b 38.33% $80b 170.65%
The High $36b 15.97% $150b 91.01%

 

Presidential Debate Ratings Set New Records

Yesterday, I wrote the following about last evening’s first Presidential debate between Clinton and Trump, “You can watch it on virtually any major broadcast and/or cable news network as all of them will be televising this one.  It WILL break all Presidential debate records by a LOT.” Well, the results are in.  More than 46 million people watched the debate across six broadcast networks according to preliminary Nielsen data released by Univision.  CNN published its own data confirming, along with virtually all media outlets. That’s a new record and 7.7% more than the 42.7mm viewers who watched the first Obama-Romney debate in 2012 on those same six channels.

Including cable news network ratings, the debate audience soared to 83 million viewers officially becoming the most-watched Presidential debate in history breaking the 80.6 million who watched Jimmy Carter debate Ronald Reagan back in 1980.

Yet another good reason for you to stay tuned into the daily “QC.”

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…)

The Circus Comes To Town (Hempstead, NY) -Mischler Debt Market Comment
September 2016      Debt Market Commentary   

Quigley’s Corner Weekend Edition 09.23.16- The Circus Comes to Town; Ringling Brothers Barnum and Bailey Presidential debates

 

Investment Grade Corporate Bond New Issue Re-Cap – “The Ronald” Pre-Debate Comment

IG Primary & Secondary Market Talking Points

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

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 14th

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Two IG Corporate issuers took advantage to price new prints this afternoon.  5-BBB First Midwest Bancorp issued a 10-year Subordinated Notes deal and Flowers Foods, Inc. brought an upsized $400mm 10-year Senior Notes deal. So, 2 IG Corporate deals, 2 tranches for a total of $550mm.  Additionally, the SSA space featured the Russian Federation that tapped its outstanding 4.75% due 5/27/2026 to the tune of $1.25b bringing its total amount outstanding to $3b and resulting in a Friday all-in IG day total of 3 issuers, 3 tranches and $1.7b.

As we look toward next week, our IG primary markets will slow down a bit from the rabid pace of these last couple of weeks with roughly $20-25b expected.  I am a big fan of the higher end of supply estimates given Central Bank dovishness, the approach of Q3 earnings and the quickly approaching the circus comes to town (of Hempstead, NY, home of Hofstra University where the first round of the Ringling Brothers Barnum and Bailey Presidential debates will be held on Monday, September 26th.  I am personally looking forward to getting back to some good old fashioned comedy, which I’m sure it will be folks.  Election Day is Tuesday, November 8th so, issuers, bankers and syndicate managers have a window open from now through then after which we’ll enter a period of listening defining and second guessing new administration policies beginning in 2017 and cabinet appointments whoever winds up pulling this election off.  As of now it IS very much up in the air and I expect it to be VERY close as in down-to-the-wire and the dark horse could win this one so DO NOT BE SURPRISED.  Take it from…well, Tthe Ronald! Sorry but I couldn’t resist that one!

Anyway, another great week for the IG DCM.  As this is the “QC’s” Friday edition just scroll below to find out what the top syndicate desks have to say about next week’s forecasts.  I personally err to the upside as I said earlier.  I am calling for $30b+ but do the prudent thing and digest the numbers and more importantly read the thoughts of the Best and Brightest that syndicate has to offer in the section named for them just below a bit.

 

IG Primary & Secondary Market Talking Points

 

  • Flowers Foods Inc. upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 44 deals that printed, 25 tightened versus NIP for a 57.00% improvement rate while only 14 widened (32.00%) 4 were trading flat (9.00%) and 1 was not available or N/A (2.00%).
  • For the week ended September 21st, Lipper U.S. Fund Flows reported an inflow of $2.122b into Corporate Investment Grade Funds (2016 YTD net inflow of $35.591b) and a net outflow of $273.5m from High Yield Funds (2016 YTD net inflow of $7.433b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue that posted price evolution was 17.5 bps.
  • BAML’s IG Master Index tightened 1 bp to +141 versus +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +137 versus +138.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +190.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.5b on Thursday versus $16.3b Wednesday and $15.9b the previous Thursday.
  • The 10-DMA stands at $15.7b.

 

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

 

IG Corporate New Issuance This Week
9/19-9/23
vs. Current
WTD – $38.563b
September 2016 vs. Current
MTD – $130.768b
Low-End Avg. $29.09b 132.56% $115.45b 113.27%
Midpoint Avg. $30.28b 127.35% $116.02b 112.71%
High-End Avg. $31.48b 122.50% $116.59b 112.16%
The Low $20b 192.81% $80b 163.46%
The High $40b 96.41% $150b 87.18%

 

NICs, Bid-to-Covers, Tenors and Sizes

 

Here’s this week’s day-by-day re-cap of key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:
Please note that this week’s average tenors and tranche sizes are slightly different than what I posted in the aforementioned question to the Best and Brightest as it reflects today’s two new issues for First Midwest Bancorp and Flowers Foods. Those two issues announced after I sent my survey question out. Thanks for understanding! RQ

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
9/19
TUES.
9/20
WED.
9/21
TH.
9/22
FRI.
9/23
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 9/12
AVERAGES
WEEK 9/05
AVERAGES
WEEK 8/29
New Issue Concessions <2.81> bps 4 bps N/A 1.92 bps N/A 0.69 bps 4.66 bps 1.30 bps 5.47 bps
Oversubscription Rates 3.15x 2.40x N/A 3.32 bps N/A 3.23x 3.47x 3.23x 2.18x
Tenors 12.13 yrs 8 yrs N/A 8.05 yrs 10 yrs 9.36 yrs 11.28 yrs 9.42 yrs 4.47 yrs
Tranche Sizes $1,426mm $642mm N/A $852mm $150mm $964mm $710mm $719mm $820mm

 

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

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

“Good morning and a Happy Friday to you!  One heck of a week eh?  We blew right past this week’s syndicate midpoint average forecast by 26% or $38.16 vs. $30.28b. We also surpassed the syndicate estimates for September IG Corporates by 12% or $130.36b vs. $116.02b……with another week to go!  All-in IG supply including SSA issuance is now at $151.96b.  That represents the fourth busiest month of this prolific year. To put that into proper context, $4b more of all-in supply puts this month into 9th place all-time; $27b puts us third place ALL-TIME.

This week hosted more dovishness from the FOMC and BOJ that fueled yesterday’s $17+b corporate supply.    Here are this week’s IG Corporate-only key primary market driver averages:

 

o   NICS:  0.69 bps

o   Oversubscription Rates: 3.23x

o   Tenors:  9.33 years

o   Tranche Sizes: $1,000mm

 

Versus last Friday’s four key primary market driver averages, NICs tightened 3.97 bps to 0.69 vs. 4.66 bps. while oversubscription rates remain strong at 3.23x losing 0.24x vs. last week’s 3.47x bid-to-cover rate.  Average tenors contracted 1.95 years to 9.33 years vs. 11.28 years but tranche sizes swelled significantly by $290mm to an even $1b vs. last week’s average $710mm.   

For the week ended September 21st, Lipper U.S. Fund Flows reported an inflow of $2.122b into Corporate Investment Grade Funds (2016 YTD net inflow of $35.591b) and a net outflow of $273.5m from High Yield Funds (2016 YTD net inflow of $7.433b). 

Week-on-week, BAML’s IG Master Index tightened 2 bps to +141 vs. last Friday’s +143 close.  Spreads across the four IG asset classes tightened 2 bps to 31.50 vs. 33.50. Looking at the 19 major industry sectors, spreads tightened by 1.74 bps to an average 38.00 vs. 39.74 off their post-Crisis lows..
And now I ask the question what are YOUR thoughts and number for next week’s IG new issue volume? 

 (canvass results of fixed income syndicate desks is available exclusively to recipients of the QC Distribution List)

Have a great weekend!
Ron (“The Ronald”) Quigley, Managing Director / Head of Fixed Income Syndicate

(Above canvass results of fixed income syndicate desks is available exclusively to recipients of the QC Distribution List) 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…)

In Advance of Fed and BoJ Comments, Corporate Debt Issuers Sidelined
September 2016      Debt Market Commentary   

Quigley’s Corner 09.21.16 No Prints and No Rate Increases; Corporate Debt Issuers Sit it Out

 

Investment Grade New Issue Re-Cap 

A Big Red Zero – Land of the Rising “None” as BoJ Keeps Rates at <0.1%> & Introduces More Shifts to Policy

“Fed” Up with Rates, FOMC Holds; November Increase Has No Chance Pre- Election and Santa Claus is Coming to Town…with Coal?

All You Want and Need to Know About Today’s Fed Decision

In Janet’s Words

IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

New Issue Volume

Lipper Report/Fund Flows – Week ending September 14th

Investment Grade Corporate Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

It was a no print day today as corporate debt issuers respected both the impact of the BoJ and FOMC.

dewey moment mischler debt market Not so fast my friends…..not so fast!  It’s not exactly a “Dewey Defeats Truman” moment. Still, let’s call it like it is folks – I did say “the next best thing to having tomorrow’s newspaper today is the ‘QC’”.  Then on Monday, September 19th and alluding to today’s BoJ and FOMC rate decisions, I wrote, “Fed Holds; BoJ Cuts Rate and Then Some.” Well, I guess it’s not “tomorrow’s newspaper today” but I still think it’s the “next best thing to it.” The Fed Held, the BoJ introduced new fringy though convoluted easing details (“and then some”) but the BoJ kept rates unchanged.  Two out of three isn’t bad, but that’s why it’s “the next best thing.” If I played baseball, I’d be in the Hall of Fame with a .666 average.  Joking aside, a Fed that infers raising rates by December should have hiked rates today, but they didn’t. This is more of the same readers.  Look for Fed members – both voting and non-voting – to continue giving speeches and appearing on television to opine about the rate flux that has restricted so many from doing so much.  The street is the leader; the Fed is the ultimate laggard.  It’s how it is.  Today was more of the same. No surprise at all.  The government should consider issuing a gag order on any and all Fed-speak in between meetings for all members, both voting and non-voting.  They only confuse the situation and shock markets.

First up, let’s look at what the BoJ did while we were in REM sleep this morning:

A Big Red Zero – Land of the Rising “None” as BoJ Keeps Rates at <0.1%> & Introduces More Shifts to PolicyBoJ Mischler Debt Market Comment

Central Banks from the FOMC to the BOE and from the ECB to the BoJ all seem to be pointing to the downside risks to continued rate cuts while at the same time highlighting that monetary policy needs to be substantially accommodative while calling on governments to share more of the economic burdens. Here’s what’s clear: growth is anemic to non-existent, inflation unchanged to nowhere, accommodative policies are manifesting themselves in new policy twists and turns and big government needs to get more involved.  Hmmm…..sounds like things aren’t quite working out, eh?

 

Here are the talking points from this morning’s BoJ announcement:

 

o   The BoJ left interest rates at its still record low <0.1%>.

o   Committed to intervene until inflation reaches 2% and remains stable above that level.

o   Will cap 10-year yields at 0.00% by continuing to buy 10yr JGBs implying that the BoJ must continue intervening to prevent borrowing costs from rising and to ensure that it can borrow for a decade for free.

o   Changed its policy from a focus on a base money target to controlling the yield curve.

o   Pledged to maintain its government bond-buying in line with ¥80 trillion annually while buying fewer long-dated maturities hoping to pump up long-term interest rates thereby helping banks boost profits. There was no expansion of its current quantitative easing program.

 

Will this new approach be effective?  Only time will tell.  It certainly is a shift in monetary policy to control the yield curve. It is NOT a bazooka by any stretch and more like “fiddling around the edges.”  As for the 2.00% target? Folks, we all know that’s a loooong way off. Market participants have a lot of questions with many sharing that the “BoJ should’ve just cut rates again.” Equity markets loved the news. The DOW closed up 163, the S&P was in the black 23, the VIX compressed over 2.5 and CDX27 tightened 3.2 bps.

“Fed” Up with Rates, FOMC Holds; November Increase Has No Chance Pre- Election and Santa Claus is Coming to Town…with Coal?

The Fed held rates albeit the subsequent press conference was more optimistic, if one can call it that, saying the economy appeared “slightly balanced” and “the case for an increase in the fed funds rate strengthened but decided, for the time being to wait for further evidence of continued progress toward its objectives.”  You all know about the myriad global event risk factors out there.  There are so many that on any given day in our inextricably global-linked world economy, should one or several of them get worse, which is entirely plausible-to-likely, the Fed can skirt around a hike by once again pointing to global events, as they have in the past, to justify standing down.  In fact, in its statement Chair Yellen said, “we will closely monitor inflation and global developments.” What’s more, the next FOMC meeting will be held on November 1srt and 2nd and is not associated with a Summary of Economic Projections or a press conference by Yellen. It is highly unlikely that the Fed raises rates in November given that the meeting will take places 6 days before one our nation’s most tumultuous and raucous elections.  Last year saw one rate hike to close out 2015 at its December meeting.  Santa Claus will be coming to town early at the year’s last meeting of 2016 held December 13th-14th …………..but don’t be surprised to find coal in the stocking.

Folks, Q3 is about over.  You hear that sound?   That’s the sound of trucks?  They’re backing up to print between now and Election Day – BIG TIME. 12 IG issuers are in the pipeline with a whole lot of M&A deals getting closer.

Here’s All You Want and Need to Know About Today’s Fed Decision

o   The FOMC kept rates unchanged as three officials dissent for a hike.

o   George, Mester, Rosengren dissented in favor of a hike.

o   Case for rate hike strengthened as forecast shows a 2016 increase.

o   Fed “decided to wait for the time being for additional evidence.”

o   Reiterates they expect the economy to “warrant only gradual hikes.”

o   FOMC repeats it will closely monitor inflation and global developments.

o   Job market continued to strengthen and economy picked up.

o   Says “job gains are solid and household spending is growing strongly.”

o   Market-based measures of inflation remain low.

o   Sees inflation rising to 2% over the medium term.

o   Business fixed investments has remained soft.

o   Near-term risks to its outlook “appear roughly balanced.”

o   Maintains its reinvestment policy.

 

In Janet’s Words

o   “FOMC policy should help economy move toward goals.”

o   “Economic growth appears to have picked up.”

o   “Economy to expand at moderate pace in next few years.”

o   “Pace of job gains above rate needed for new entrants.”

o   “Unemployment measures show more people seeking jobs.”

o   “PCE inflation still short of 2% objective.”

o   “Can’t take inflation expectations stability for granted.”

o   “Don’t want to overshoot inflation goal significantly.”

o   “We chose to wait for more evidence of progress.”

o   “On current course, some gradual hikes will be warranted.”

o   “There appears little risk of falling behind curve.”

o   “We’re generally pleased with how U.S. economy is doing.”

o   “Seeing evidence economy is expanding more strongly.”

o   “We’re not seeing pressures suggesting overheating.”

o   “Economy has a little more room to run than thought.”

o   “Zero lower bound is a concern.”

o   “My colleagues and I discussed timing of next rate hike.”

o   “Most of us judged it sensible to wait for more evidence.”

o   “Monetary policy is somewhat accommodative.”

o   “Should be concerned about risks from reach for yield.”

o   “Most of my colleagues agree with my Jackson Hole remark.”

o   “Of course we’re worried bubbles could form.”

o   “Soundness of banking system has improved substantially.”

o   “Less disagreement on FOMC than you might think.”

o   “Important to have a range of views expressed on the FOMC.”

o   “We don’t discuss politics at our meetings.”

 

Global Market Recap

 

o   FOMC – Unchanged as expected but there were 3 dissenters. Dots were dovish (again).

o   BOJ – Main policy target is the yield curve from the monetary base (rates unchanged).

o   U.S. Treasuries – Closed mixed & flatter. USTs traded better after the FOMC/Yellen.

o   Overseas Bonds – Europe was unchanged to red & steeper. JGB’s was all red & flatter.

o   Stocks – Strong session for U.S.

o   Overseas Stocks – Europe closed higher. Nikkei rallied & China small gains.

o   Economic – Nothing of note in the U.S. Data in Japan was weak.

o   Currencies – USD lost ground vs. all of the Big 5. The Yen was very strong.

o   Commodities – CRB, crude oil, gold & silver were all well bid.

o   CDX IG: -3.25 to 78.44

o   CDX HY: -18.52 to 391.26

o   CDX EM: -12.30 to 230.74

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index was unchanged at +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +139 versus +140.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +190.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.1b on Tuesday versus $12b Monday and $15.8b the previous Monday.
  • The 10-DMA stands at $15.4b.

 

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

 

IG Corporate New Issuance This Week
9/19-9/23
vs. Current
WTD – $20.963b
September 2016 vs. Current
MTD – $113.168b
Low-End Avg. $29.09b 72.06% $115.45b 98.02%
Midpoint Avg. $30.28b 69.23% $116.02b 97.54%
High-End Avg. $31.48b 66.59% $116.59b 97.06%
The Low $20b 104.81% $80b 141.46%
The High $40b 52.41% $150b 75.45%

 

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

 

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

Shire Bumps; Fed Holds: Lord of the Things-Mischler Debt Market
September 2016      Debt Market Commentary   

Quigley’s Corner 09.19.16 Shire Bumps; Fed Holds: Lord of the Things

 

Investment Grade Corporate Debt New Issue Re-Cap  IG DCM Welcomes “Preciousssssss”

“Shire” Bumps Up the Totals with Lots of Green!

New IG DCM Sets New Record – Fastest Ever to $1.3 Trillion

Lord of the “Things” – “Fed Holds; BoJ Cuts Rate and Then Some”

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week ending September 14th

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline – $204.05 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

 

You’ve all been reading here these past many days that Shire Acquisitions Investments Ireland DAC and guaranteed by Shire Plc (Baa3/BBB-) mandated Bank of America/Merrill Lynch, Barclays and Morgan Stanley to arrange fixed income investor meetings in the U.S. and London scheduled that began on Monday, September 12th in preparation for a dollar-denominated Senior Notes transaction. BAML coordinated the meetings that took place from the 12th thru the 15th in Boston, New York, Chicago and wrapped up last Thursday in London.  Many, me included, thought Shire could potentially come last Thursday given the time difference between London’s meetings wrapped and the New York tradign session kicked off.  However, there other investor calls to be made. Shire PLC announced in January 2016 that it would acquire Baxalta Inc. (Baa2/BBB) for approximately $32.2 billion in cash and stock.  Shire closed that acquisition on June 3rd securing an $18b bank facility to finance the cash portion and said it would refinance it in debt.  Shire filed to offer the 5-part Senior notes transaction guaranteed by Shire Plc. Today’s transaction will use proceeds to repay loans under a $12.39b 2016 bridge facility to fund the takeover. The deal creates the single largest maker of rare disease drugs in the world.  Fighting the dark side is what this merger is all about hopefully leaving the world in a better place than it currently is.

New IG DCM Sets New Record – Fastest Ever to $1.3 Trillion…by 32 Days!

Today’s tally including Shire’s $12.1b 4-part 3-, 5-, 7- and 10-year transaction came to 6 issuers, 12 tranches and $17.113b.  One SSA deal from IFC totaling $500mm brought the all-in IG day totals to 7 issuers, 13 tranches and $17.613b.  In the process we set yet another new IG DCM record by reaching the $13 trillion mark at the quickest pace in history breaking last year’s record that was set on Thursday, October 22ndWe are a full 32 days ahead of that pace!

Lord of the “Things” – “Fed Holds; BoJ Cuts Rate and Then Some”

Wouldn’t it be great to have tomorrow’s newspaper today?  Well the aforementioned heading is just that.  It’s what’s going to happen by this Wednesday at 2:00pm.  We’ll know the BoJ determination while in REM sleep on Tuesday morning and the FOMC Rate Decision releases on Wednesday at 2:00 PM ET.

I wrote last Monday, September 12th  – just to remind you again – about the state of global affairs adding of course the lone wolf terror atttacks that took place in New York, New Jersey and Minnesota over the weekend.

Here’s the re-print:

Presidential election debates; the election itself is Tuesday, November 8th; world unrest beginning with the aggressive nature and positioning of Vlad the-Terrible Putin; a diminished image of the United States throughout the world makes it a more dangerous place; the South China Sea Islands in which China continues to fearlessly antagonize the region; war in MENA; Terrorism; immigration issues in Europe and specifically Germany; Russia’s dominant role in Syria and intent to build bases in North Africa; as the Islamic State crumbles terrorists will flee throughout the world giving rise to widespread global terror; Nationalism continues to rise throughout the crumbling EU; Brexit is not looking so bad after all for the U.K but what’s it mean for the EU?; North Korea continues its nuclear proliferation ambitions having exploded a 10 kiloton bomb (just over a week ago) with ICBMs capable of hitting California within 5 years; the EU’s inability to spur inflation; negative rates in Japan and hovering negative in Germany.  Japan, in fact, may run out of bonds to buy within 18 months and the EU could soon follow.

Now, adding to what I wrote last week is that Germany’s Angela Merkel suffered what amounted to the single worst (the FT described it as “humiliating”) election defeat yesterday in German regional elections as voters turned out en masse to voice their disapproval of her liberal immigration policies.  More revealing, however, is the massive support for the AfD or Alternative German Party – the anti-immigration party – that ushered in heightened drama to the German political stage. German voters are pummeling Angela Merkel for her very liberal immigration stance that opened the door to millions of immigrants.

 

Here is Germany:

o   A mob of a thousand men of “Arab or North African” origin sexually assaulted more than 500 German women in downtown Cologne on New Year’s Eve. Similar attacks also occurred in Hamburg and Stuttgart. Cologne’s Mayor Henriette Reker, said that “under no circumstances” should the crimes be attributed to asylum seekers. Instead, she blamed the victims for the assaults.

o   “There is nothing wrong with being proud German patriots. There is nothing wrong with wanting Germany to remain free and democratic. There is nothing wrong with preserving our own Judeo-Christian civilization. That is our duty.” — Geert Wilders, Dutch politician, addressing a rally in Dresden.

o   “We are importing Islamic extremism, Arab anti-Semitism, national and ethnic conflicts of other peoples, as well as a different understanding of society and law. German security agencies are unable to deal with these imported security problems, and the resulting reactions from the German population.” — From a leaked government document, published by Die Welt.

o   Germany will spend at least €17 billion ($18.3 billion) on asylum seekers in 2016 — Die Welt.

o   Saudi Arabia is preparing to finance the construction of 200 new mosques in Germany to accommodate asylum seekers. — Frankfurter Allgemeine.

o   Nearly half of Muslim immigrants in Germany consider following Islamic teaching MORE important than abiding by the law.  One in five German-Turks (the most dominant Muslim immigrants in Germany) said they would justify violence if provoked by the West. One third of them said they yearn to live in a society of the times of the prophet Mohammed. 

o   Over 1.1 million migrants entered Germany in 2015 mostly from the North African and the Middle East for which Angela Merkel has consistently berated other European countries for re-introducing border controls to Europe putting a virtual freeze on the critically important Schengen Agreement which along with the single currency itself are the two legs on which the Euro stands.

o   Social Democratic Party MP, Heinz Buchkowsky estimated that the total number of refugees and migrants coming into Germany by 2020 could reach up to 10 million while the german Interior ministry expects at least another 1 million to enter Germany this year.  

These are sound bites, bullet points, if you will,  to express what’s going on in the keystone of Europe.  It is a massive problem both economically and politically.  It also only begins to drill down into the issues and problems of Germany and in a broader discussion of the EU which has a host of other colossal issues to deal with such as the ramifications of Brxit on the EU; the weak banking system in Italy supporting the world’s third largest debtor nation; terror alerts throughout France; swelling support throughout the EU of rising Nationalism; elections in France, Germany and Italy; failure to stoke inflation after trillions of dollars and the ECB essentially asking EU member to do more to help the economic crisis there.

Each one of the earlier mentioned global event risk factors is front page news on their own merits.  This is merely scratching the surface on one of them.  There are so many of them that on any given day they are not being written about at all until the fester and attract attention again.  Collectively they are like Sauron in the Lord of the Rings – personifying the darkness in everyone’s souls.

FOMC?  BoJ?  You have to be kidding me right? The world’s in a whole lot of hurt.  There’s no place like home to this Hobbit and the peace and tranquility of the Shire can be found in the world of investment grade rated corporate bonds.  Remember that there’s no one out there banging that message home louder than the guy-in-the-corner.

 

Global Market Recap

 

o   U.S. Treasuries – The most exciting part today was the front end of the bill market.

o   Stocks – Roller coaster session for U.S. stocks that ended with small losses.

o   Overseas Stocks – Europe & China rallied. The Nikkei was closed.

o   Economic – Positive housing data in the U.S. & China.

o   Currencies – USD lost ground vs. all of the Big 5.

o   Commodities – Up session for crude oil, gold & silver.

o   CDX IG: -0.96 to 75.0

o   CDX HY: -3.96 to 406.18

o   CDX EM: -7.20 to 253.19

 

IG Primary & Secondary Market Talking Points

Please note that I added the Bloomberg Barclays U.S. IG Corporate Bond Index OAS spread to the below daily indexes.  Many market participants use both that and BAML’s and S&P’s levels. Thanks to Anne Daley at Barclays Syndicate and my  Bob Elson at Bloomberg.

  • Providence of St. Joseph Health upsized today’s two-part 10s/long 30s taxable bond new issue notional amount to $700mm from $600mm at the launch and at the tightest side of guidance.
  • Sabine Pass Liquifaction LLC. increased today’s 144a/REGS Senior Secured 10.5NCL Notes new issue to $1.5b from $1b.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was 18.75 bps.
  • BAML’s IG Master Index was unchanged at +143.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS at 140 vs 140. “LUACOAS” (ticker) as it’s known 2016 wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +191 versus +192.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12b on Friday versus $15.9b Thursday and $15.7b the previous Friday.
  • The 10-DMA stands at $13.9b.

(more…)

Fed NOT Raising Rates-Mischler Debt Market Comment
September 2016      Debt Market Commentary   

Quigley’s Corner 09.15.16 Fed Not Raising Rates

 

Investment Grade Corporate Debt New Issue Re-Cap – IG Lotto:Corporate Volume Tops Weekly Syndicate Estimates

 Global Market Recap

All You Need to Know About Today’s Bank of England Meeting

IG Primary & Secondary Market Talking Points

Fixed Income Syndicate IG Corporate-only Volume Estimates for September

New Issues Priced

Lipper Report/Fund Flows

IG Corporate Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Today’s winning lotto numbers are 11-16-945 as in 11 IG Corporate issuers, priced 16 tranches totaling $9.45b.  With that amount we have officially broken through this week’s syndicate midpoint average forecasts by over 7% or $39.745b vs. $36.91b. Notable today was that 4 issuers upsized their transactions from initial morning announcement sizes.

Remember what I wrote this past Monday folks (Check your “QC” dated 9/12/2016.  – “Look folks, the Fed is not raising rates this year.  Many sight December as the next hike but it’s not happening.” The world can barely stand on two feet let alone get economic engines back to growth mode.  Today’s numbers confirm that. With that, read my lips, or read my commentary, but the take-away is the same: Fed NOT Raising Rates (at least not anytime soon, nor with any degree of significance that would upend the current global financial market environment).

Global Market Recap

 

  • S. Treasuries – USTs closed mixed with steeper curve. 5/30’s has steepened 10 days in a row.
  • 3mth Libor – Set at its highest yield (0.85656%) since May 2009.
  • Stocks – US stocks with a strong rally. FTSE leads Europe higher. Nikkei had a bad day.
  • Economic – Very disappointing day on the U.S. economic front.
  • Currencies – USD mixed & little changed vs. Euro & PND but lost ground vs. Yen/CAD/AUD.
  • Commodities – Crude eked out a gain, heating oil higher & gold lost ground.
  • CDX IG: -3.0 to 74.31
  • CDX HY: -11.76 to 405.92
  • CDX EM: -5.58 to 255.94

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

-Tony Farren

 

All You Need to Know About Today’s Bank of England Meeting

 

  • BOE Sees chance of another rate cut this year but holds today at 0.25%; Vote 9-0.
  • BOE keeps gilt purchase plan at £435b; Vote 9-0.
  • Holds corporate bond plan at £10b; Vote 9-0.
  • Monetary Policy Committee Majority expect rate cut “if” August outlook is confirmed.
  • Initial impact of August stimulus is “encouraging.”
  • Some near-term indicators are “better than expected.”
  • Inflation reaching 2% target in first half of 2017.
  • Lower bound is close to but a bit above, zero.
  • Second half slowdown may be less severe than previously forecast.
  • Cannot infer from near-term about 2017 or 2018 projections.
  • MPC view of “contours of economic outlook” are unchanged.
  • Hawkish BOE members Forbes, McCafferty say extra gilt purchases still not warranted.

 

IG Primary & Secondary Market Talking Points

 

  • Kite Realty Group LP upsized today’s 10-year Senior Notes new issue to $300mm from $250mm at the launch and at the tightest side of guidance.
  • CCL Industries Inc. increased today’s 10-year Senior Notes new issue to $500mm from $400mm at the launch and at the tightest side of guidance.
  • Dairy Farmers of America Inc. bumped up its new $1,000 par PerpNC10 cumulative preferred securities, Series “C” new issue to $150mm from $100mm at the launch and at the tightest side of guidance.
  • Pitney Bowes Inc. boosted its 5-year Senior Notes new issue to $600mm from $400mm at the launch.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 16 IG Corporate-only new issues was 23.34 bps.
  • BAML’s IG Master Index widened 1 bp to +143 versus +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +191.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17b on Wednesday versus $15.8b Tuesday and $16.5b the previous Wednesday.
  • The 10-DMA stands at $14b.

(more…)

IG Corporate Debt Issuance YTD: 1tn aka 1 TRILLION
September 2016      Debt Market Commentary   

Quigley’s Corner 09.13.16 –2016 IG Corporate Debt Issuance (so far)= $1 T-r-i-l-l-ion!

 

Investment Grade Corporate Debt New Issue Re-Cap – Another Broken Record –

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week ending September 7th

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 broken-record-ig-debt-mischler

Yesterday I wrote, “the session finished with only those two deals priced totaling $1.2b with a promise from the guy-in-the-corner that tomorrow WILL be a VERY busy day!” Well tomorrow is today and true to my word we had a blockbuster.  I then wrote, “We are only $20.822bn away from $1 trillion in IG Corporate-only issuance YTD.   Last year we set a new IG Corporate-only record by reaching the $1 trillion mark on Thursday, October 1st(see your incoming “Quigley’s Corner” 9-30-2015). We’d shatter that record by nearly three weeks if it happens tomorrow!

I am happy to report that we reached the $1 trillion dollar mark in IG Corporate-only volume at the earliest stage in any year, shattering last year’s record set on October 1st by 18 business days or 2 weeks and 3 days.

13 IG Corporate issuers printed 26 tranches between them today totaling $22.344b5 SSA issuers added 5 tranches totaling $9.25b for an all-in IG day total of 18 issuers, 31 tranches and $31.594b.

There remain 12 new issues in the imminent pipeline either currently road showing, about to conduct investor meetings/calls or have already wrapped those up.  So, there’s plenty of business to go not counting M&A deals of which Shire looms large.

IG Corporate New Issuance This Week
9/12-9/16
vs. Current
WTD – $23.194b
September 2016 vs. Current
MTD – $75.654b
Low-End Avg. $35.83b 64.73% $115.45b 65.53%
Midpoint Avg. $36.91b 62.84% $116.02b 65.21%
High-End Avg. $38.00b 61.04% $116.59b 64.89%
The Low $30b 77.31% $80b 94.57%
The High $46b 50.42% $150b 50.44%


Here’s how it looked:

Category Totals
# of IG Corporate Issuers 12
# of IG Corporate Tranches 25
Total IG Volume $22.194b
# of SSA Issuers 5
# of SSA Tranches 5
Total SSA Volume $9.25b
Total Amount of All-in Issuers 17
Total Number of All-in Tranches 30
All-in Corps + SSA Amount $31.244b

 

Here’s a look at some other records:

 

o   $31.594 ranks as the 5th highest volume day in history for IG Corps plus SSA.

o   $31.594b ranks as the 2nd busiest all-in issuance day of 2016.

 

Global Market Recap

 

o   U.S Treasuries – Terrible day for USTs Bund’s & Gilts also headed south. JGB’s better.

o   Stocks – U.S. down Friday, up yesterday & down today. Europe red & Asia was mixed.

o   Economic – Nothing of note in the U.S. China & Japan data better. Europe mixed.

o   Currencies – Very good day for the USD & DXY Index.

o   Commodities – Crude oil and commodities, in general, struggled.

o   CDX IG: +3.70 to 76.96

o   CDX HY: +16.91 to 413.84

o   CDX EM: +12.92 to 254.60

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • Liberty Property Trust upsized today’s 10yr Senior Unsecured Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • Split-rated Aspen Insurance Holdings Ltd. increased its $25 par PerpNC10 non-cumulative Preferred new issue to $225mm from $150mm at the launch and tightest side of guidance.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 24 IG Corporate-only new issues was 16.99 bps.
  • Including today’s Aspen $25 par Preferred, the average spread compression from IPTs thru the launch/final pricing of today’s 25 IG Corporate new issues was 16.54 bps.
  • BAML’s IG Master Index widened 2 bps to +142 versus +140.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +190 versus +189.  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 Monday versus $15.7b Friday.
  • The 10-DMA stands at $13.8b.

 

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.

Ron Quigley, Managing Director / Head of Fixed Income Syndicate (more…)

Market Volatility and Utilities DCM-NO Correlation; Mischler Comments
September 2016      Debt Market Commentary   

Quigley’s Corner 09.12.16 Equities Market Volatility and Utilities DCM-NO Correlation

Investment Grade New Issue Re-Cap – Record $1 Trillion Milestone Within Reach
New Historic Volume Record Well Within Reach
Dear “Prudence” – The Beatles, Bonds and the World
Deal Dashboard for Interstate Power & Light Company
Global Market Recap
IG Primary & Secondary Market Talking Points – Little Ole Mischler Financial Lights Up the Leaderboards Today – Two Deals; Two Roles
Syndicate IG Corporate-only Volume Estimates for September
NICs, Bid-to-Covers, Tenors and Sizes
New Issues Priced
Lipper Report/Fund Flows – Week ending September 7th
Investment Grade Credit Spreads (by Rating & Industry
Economic Data Releases
Rates Trading Lab
New Issue Pipeline
M&A Pipeline

This morning a couple bulge bracket firms, one in particular, had a handful of deals waiting to go but alas with futures down 100 points and European equities in the red, issuers and leads felt volatility would rule the day on the heels of Friday’s 394 drop, the market’s lowest since June 24th. Go/No Go calls favored standing down with two exceptions – two domestic utilities, Interstate Power and Light Co. and Southern Company both of which took advantage of their sector’s defensive nature to price two very strong deals in today’s IG dollar DCM. Mischler served as active Co-Manager on Interstate P&L and was an Underwriter on Southern Company’s $25 par 60NC5 Series 2016A Junior Subordinated Notes new issue due 10/01/2076.

The session finished with only those two deals priced totaling $1.2b with a promise from the guy-in-the-corner that tomorrow WILL be a VERY busy day! Still, in only the 7th business day of September including two Friday’s, one of which preceded Labor Day weekend, we’ve already issued over 46% of the syndicate midpoint average forecast for the entire month with 14 business left to go!

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.
Ron Quigley, Managing Director, Head of Fixed Income Syndicate (more…)

Record Setting Week Investment Grade Debt Issuance-Again!
September 2016      Debt Market Commentary   

Quigley’s Corner 09.09.16 Another Record Setting Week for Investment Grade Issuance

 

Investment Grade New Issue Re-Cap – One and Done to Cap Off Record Setting Week

Global Market Recap

IG Primary & Secondary Market Talking Points

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

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

Lipper Report/Fund Flows – Week ending September 7th

New Issue Volume

Economic Data Releases

Rates Trading Lab- The Pain Trade(s)

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

Asia Development Bank printed its well telegraphed $500mm tap of its 5yr FRNs due 9/16/2021 and that was all she wrote to close a record setting number of deals in this holiday-shortened week.  I’ll keep it short and sweet readers.  This week hosted 40 IG Corporate issuers across 73 tranches.  Including SSA issuance, the IG dollar DCM featured 46 issuers and 79 tranches.  Both are records for any three consecutive sessions in history.  So, you’re probably wondering what’s ahead for next week?  Well, I could scribe a long ditty for you but everything is already here.  Today is Friday and you know what that means – I contacted the top 23 syndicate desks to get their thoughts and numbers for next week.  I happen to think we’ll print $50b but that’s just me.  Scroll down and read what the “Best and the Brightest” have to say about the week ahead. It’s all here.  Remember, if you fail to prepare, you’re prepared to fail.  What’s more it’s free from me to you.

Before I do, however, and knowing what it’s like to sit in the syndicate pit – the nerve center of our debt capital markets –  how about a resounding round of applause – no make it a standing “O” – for all the syndicate desks out there who accomplished such a tremendous feat this week.   Yeah you know it, I am actually standing up on my trading floor clapping my hands for all of them. You really have no idea what busy means until you run a syndicate desk. A lot less people are working a LOT harder on syndicate desks setting new records along the way.  I hope those sitting in their ivory towers remember that at the end of the year.

Global Market Recap

 

o   U.S. Treasuries – Back-to-back terrible days for global bond markets led by the long end.

o   Stocks – U.S. stocks were hit hard (3pm). Europe traded poorly. Asia closed mixed.

o   Economic – Fed Speak mixed in the U.S. Weaker data in Germany & France.

o   Currencies – Big day for the USD outperforming all of the Big 5.

o   Commodities – Very bad day in commodity land.

o   CDX IG: +3.66 to 75.31

o   CDX HY: +16.42 to 404.18

o   CDX EM: +11.28 to 243.95

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points
[icegram campaigns=”5396″]
 

o   Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 79 deals that printed, 48 tightened versus NIP for a 60.75% improvement rate while only 15 widened (19.00%) and 16 were trading flat (20.25%).

  • For the week ended September 7th, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b).
  • BAML’s IG Master Index was unchanged at +140.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research was also unchanged at +189.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15b on Thursday versus $16.5b Wednesday and $12.8b the previous Thursday.

 

Syndicate IG Corporate-only Volume Estimates for September

 

IG Corporate New Issuance September 2016 vs. Current
MTD – $52.46b
Low-End Avg. $115.45b 45.44%
Midpoint Avg. $116.02b 45.22%
High-End Avg. $116.59b 45.00%
The Low $80b 65.58%
The High $150b 34.97%

 

Syndicate IG Corporate-only Volume Estimates for Next Week

 

IG Corporate New Issuance Next Week
9/12-9/16
Low-End Avg. $35.83b
Midpoint Avg. $36.91b
High-End Avg. $38.00b
The Low $30b
The High $46b

 

A Look at How the Voting Brackets Broke-Out for Next Week

 

Next Week
2: 30b
2: 30-35b
4: 35b
8: 35-40b
1: 38b
5: 40b
1: 46b

 

“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 81.07% 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. The question posed to the “Best and the Brightest” early this morning was premised on the following:

“We set a new all-time activity record for number of issues and tranches in three consecutive days from (Mon-Thurs.) having featured 40 IG Corporate issuers and 73 tranches between them.  This week’s final all-in tally of $52.76b ranks as the 7th highest volume week in history for IG Corporate plus SSA issuance.  This week also finishes as the 4th highest volume week of the year for all-in IG issuance. 

Treasuries are getting slammed this morning on consensus that global Central Bank’s apprehension as to the benefits of further easing.  I personally think USTs should be moving in the opposite direction.  Yesterday ECB President Draghi called on EU governments to intercede to do more.  Here’s what we know – while he began speaking a total of 11 issuers announced 20 tranches between them totaling $12.41b.  Net, net – who cares what he thinks?  The market’s response was clear -we have a lot lined up for next week and the rest of this month so, let’s get to it. This after setting an all-time issuance records for August IG Corporate-only issuance with $114.325b priced and for all-in IG Corps plus SSA issuance with $136.575b priced.  


This week we priced $59.06b of all-in IG Corporate and SSA issuance. IG Corps were $52.46b.  In only three active days of September we priced 45% of the syndicate midpoint average forecast for IG Corporates for the entire month or $116.02b.


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

 

o   NICS:  1.30 bps

o   Oversubscription Rates: 3.23x

o   Tenors:  9.42 years

o   Tranche Sizes: $719mm

For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b). 

Week-on-week, BAML’s IG Master Index is 1 bp wider or +140 vs. last Friday’s +139 close.  Spreads across the four IG asset classes since I left for block leave on August 19th tightened 3 bps to 30.25 vs. 33.25. Looking at the 19 major industry sectors, spreads tightened 4.32 bps to an average 36.63 versus 40.95 bps off their post-Crisis lows also since August 19th. 

Finally, what are YOUR thoughts and number for next week’s IG new issue volume? 

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

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

(This section available exclusively to QC distribution list recipients)

 

            

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

 

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the XX deals that printed, 48 tightened versus NIP for a 60.75% improvement rate while only 15 widened (19.00%) and 16 were trading flat (20.25%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom.  Thanks! –RQ

 

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED TRADING
Bemis Company Inc. Baa2/BBB 3.10% 9/16/2026 300 +175a +155a (+/-5) +150 +150 145/143
BMW US Capital LLC A2/A+ FRN 9/13/2019 250 3mL+equiv 3mL+equiv 3mL+41 3mL+41 3mL+41/40
BMW US Capital LLC A2/A+ 1.45% 9/13/2019 500 +70a +65a (+/-5) +60 +60 59/57
BMW US Capital LLC A2/A+ 1.85% 9/15/2021 750 +80a +75a (+/-5) +70 +70 70/68
BMW US Capital LLC A2/A+ 2.25% 9/15/2023 750 +95a +90a (+/-5) +85 +85 84/82
BOC Aviation Ltd. BBB+/A- 2.375% 9/15/2021 500 +165a +135-140 +135 +135 130/128
Capital One NA /
McLean, VA
Baa1/A- FRN 9/13/2019 300 3mL+equiv 3mL+equiv 3mL+76.5 3mL+76.5 3mL+74/72
Capital One NA /
McLean, VA
Baa1/A- 1.85% 9/13/2019 1,250 +110a +95-100 +95 +95 94/92
Capital One NA /
McLean, VA
Baa1/A- 2.25% 9/13/2021 1,000 +120-125 +110-115 +110 +110 109/107
Cox Communications Inc. Baa2/BBB 3.35% 9/15/2026 1,000 +low 200s
(212.50)
+187.5 (+/-12.5) +175 +175 170/168
Entergy Mississippi, Inc. A3/A 4.90% 50NC5 260 N/A 4.95%a 4.90% $25 FMBs $24.98/95
GATX Corporation Baa2/BBB 3.25% 9/15/2026 350 +187.5 +175a (+/3) +172 +172 169/166
Met Life Global Funding I Aa3/AA- FRN 9/14/2018 350 3mL+equiv 3mL+equiv 3mL+34 3mL+34 3mL+34/32
Met Life Global Funding I Aa3/AA- 1.35% 9/14/2018 550 +70a +60 the # +60 +60 60/58
Met Life Global Funding I Aa3/AA- 1.55% 9/13/2019 350 +75-80 +70 the # +70 +70 70/67
Met Life Global Funding I Aa3/AA- 1.95% 9/15/2021 750 +90a +80 the # +80 +80 80/77
Southern Co. Gas Corp. Baa1/A- 2.45% 10/01/2023 350 +135a +105a (+/-5) +100 +100 96/94
Southern Co. Gas. Corp. Baa1/A- 3.95% 10/01/2046 550 +185-190 +170a (+/-5) +165 +165 160/157
Toronto Dominion Bank A2/A- 3.625% 15NC10 1,500 REV. IPTS +225a
+237.5a
+210 (+/-5) +205 +205 197/194
Woodside Finance Ltd. Baa1/BBB+ 3.70% 9/15/2026 800 REV IPTs: +237.5a
+237.50-250
+215a (+/-5) +210 +210 207/203
Associated Banc-Corp. Baa3/BB 5.375% PerpNC5 100 N/A 5.50%a 5.375% $25 Pfd $25.30/.25
California Institute of Technology (px’d 9/07) Aa2/AA- 4.283% 9/01/2116 150 +210a vs OLB N/A N/A +205 +202/
Dr. Pepper Snapple Group Baa1/BBB+ 2.55% 9/15/2026 400 +125a +110a (+/-5) +105 +105 102/99
Mizuho Financial Group A1/A- FRN 9/13/2021 1,250 3mL+equiv 3mL+equiv 3mL+114 3mL+114 3mL+113/111
Mizuho Financial Group A1/A- 2.273% 9/13/2021 1,000 +135a +120a (+/-5) +115 +115 118/116
Mizuho Financial Group A1/A- 2.839% 9/13/2026 1,000 +150a +135a (+/-5) +130 +130 127/125
Nationwide Bldg. Society Baa1/A- 4.00% 9/14/2026 1,250 +275a +255a (+/-5) +250 +250 240/235
New York Life Glbl. Fdg. Aaa/AA+ 1.25% 9/14/2021 750 + low 70s
+72.5
+65a (+/-3) +62 +62 62/60
Nissan Motor Acceptance A3/A- FRN 9/13/2019 500 3mL+equiv 3mL +equiv 3mL+52 3mL+52 3mL+53/51
Nissan Motor Acceptance A3/A- 1.55% 9/13/2019 500 +95-100 +73a (+/-3) +70 +70 71/68
Nissan Motor Acceptance A3/A- 1.90% 9/14/2021 500 +105-110 +85a (+/-3) +82 +82 82/80
Nonghyup Bank A1/A+ 1.875% 9/12/2021 500 +100a N/A N/A +85 83/82
Protective Life Glbl. Fdg. A2/AA- 1.555% 9/13/2019 350 +85a +72a (+/-2) +70 +70 70/68
Protective Life Glbl. Fdg. A2/AA- 1.999% 9/14/2021 300 +high 90s
+97.5
+90a (+/-2) +88 +88 88/86
PSE&G Co. Aa3/A 2.25% 9/15/2026 425 + low 90s
+92.5
+75-80 +75 +75 72/70
Royal Bank of Scotland Group plc BBB-/BBB+ 3.875% 9/12/2023 2,650 +275a +255a (+/-5) +250 +250 247/246
Shell International Finance Aa2/A FRN 9/12/2019 500 3mL+equiv 3mL+equiv 3mL+35 3mL+35 3mL+34/31
Shell International Finance Aa2/A 1.375% 9/12/2019 1,000 +70a +55a (+/-2) +53 +53 55/53
Shell International Finance Aa2/A 1.80% 9/12/2021 1,000 +85a +75a (+/-5) +70 +70 70/68
Shell International Finance Aa2/A 2.50% 9/12/2026 1,000 +125a +110a (+/-2) +108 +108 106/104
Shell International Finance Aa2/A 3.75% 9/12/2046 1,250 +175a +160a (+/-5) +155 +155 154/151
TJX Companies Inc. A2/A+ 2.25% 9/15/2026 1,000 +87.5 +80a (+/-2) +80 +80 78/76
Valero Energy Corp. Baa2/BBB 3.40% 9/15/2026 1,250 +200a +190 the # +190 +190 189/186
W.P. Carey Inc. Baa2/BBB 4.25% 10/01/2026 350 +300a +280a (+/-5) +275 +275 260/255
Dexia Credit Local Aa3/AA 1.875% 9/15/2021 1,250 MS +79a MS +80a MS +79 +80.45 77/75
Export Dev. Bank of Canada Aaa/AAA 1.00% 9/13/2019 1,000 MS +3a RG: MS +2a
MS +3a
MS +1 +19.35 18/16.5
IADB Aaa/AAA 1.25% 9/14/2021 2,100 MS +23a MS +23a MS +22 +23.1 21.5/19.5
Instituto de Credito Oficial Baa2/BBB+ 1.625% 9/14/2018 500 MS +70a MS +65-70 MS +65 +90.1 83/80
Kommuninvest Aaa/AAA 1.125% 9/17/2019 1,250 MS +15a MS +14a MS +14 +32.05 31/29
Asian Development Bank
(tap) New total: $1,000mm
Aaa/AAA FRN 6/16/2021 3mL+19a 3mL+19a N/A 3mL+19 3mL+19 3mL+19/17
American Honda Finance A1/A+ FRN 9/09/2021 250 3mL+equiv 3mL+equiv 3mL+61 3mL+61 3mL+59/57
American Honda Finance A1/A+ 1.70% 9/09/2021 1,000 +75-80 +65a (+/-2) +63 +63 63/61
American Honda Finance A1/A+ 2.30% 9/09/2026 500 +100a +80 the # +80 +80 76/74
BNZ International Fdg. Ltd. Aa3/AA- FRN 9/14/2021 250 3mL+equiv 3mL+equiv 3mL+98 3mL+98 3mL+94/93
BNZ International Fdg. Ltd. Aa3/AA- 2.10% 9/14/2021 600 +120a +105a (+/-5) +100 +100 100/98
Cabot Corp. Baa2/BBB 3.40% 9/15/2026 250 +low 200s
+212.5
+190a (+/-2.5) +187.5 +187.5 174/172
Duke Energy Florida A1/A 3.40% 10/01/2046 600 +130a +120 the # +120 +120 119/117
Home Depot A2/A 2.125% 9/15/2026 1,000 +90a +75a (+/-5) +70 +70 71/69
Home Depot A2/A 3.50% 9/15/2056 1,000 +160-165 +140a (+/-5) +135 +135 132/129
John Deere Capital Corp. A2/A FRN 10/09/2019 250 3mL+equiv 3mL+equiv 3mL+28.5 3mL+28.5 3mL+28/27
John Deere Capital Corp. A2/A 1.25% 10/09/2019 500 +60a +50a (+/-3) +47 +47 49/47
KeyCorp Baa3/BB+ 5.00% PerpNC10 525 5.125%a 5.00%a (+/-10) 5.00% 3mL+360.6 3mL+342/337
Korea Development Bank Aa2/AA 1.375% 9/12/2019 500 +low 70s
+72.5
+60a (+/-2.5) +57.5 +57.5 54/52
Korea Development Bank Aa2/AA 2.00% 9/12/2026 500 +low 70s
+72.5
+55-60 +55 +55 56/54
Magellan Midstream Part. Baa1/BBB+ 4.25% 9/15/2046 500 +235-240 +215a (+/-5) +210 +210 200/197
Mitsubishi UFJ Finc’l. Grp. A1/A FRN 9/13/2021 1,000 3mL+equiv 3mL+equiv 3mL+106 3mL+106 3mL+104/
Mitsubishi UFJ Finc’l. Grp. A1/A 2.19% 9/13/2021 1,500 +120-125 +110a (+/-2) +108 +108 111/108
Mitsubishi UFJ Finc’l. Grp.
(Green Bond)
A1/A 2.527% 9/13/2023 500 +130a +115-120 +115 +115 110/108
Mitsubishi UFJ Finc’l. Grp. A1/A 2.757% 9/13/2026 1,000 +135a +125a (+/-2) +123 +123 124/122
Pricoa Global Funding I AA-/A+ 1.45% 9/13/2019 350 +75-80 +60-63 +60 +60 59/58
SEB Aa3/AA- FRN 9/13/2019 500 3mL+equiv 3mL+equiv 3mL+57 3mL+57 3mL+57/55
SEB Aa3/AA- 1.50% 9/13/2019 1,000 +low 80s
+82.5
+75 the # +75 +75 74/72
SEB Aa3/AA- 1.875% 9/13/2021 1,000 +low 90s
+92.5
+85 the # +85 +85 84/82
Siemens AG A1/A+ FRN 9/13/2019 350 3mL+equiv 3mL+equiv 3mL+32 3mL+32 3mL+32/30
Siemens AG A1/A+ 1.30% 9/13/2019 1,100 +60a +50a (+/-5) +50 +50 52/50
Siemens AG A1/A+ 1.70% 9/15/2021 1,100 +70-75 +60a (+/-5) +60 +60 61/59
Siemens AG A1/A+ 2.00% 9/15/2023 750 +80a +70a (+/-5) +70 +70 71/69
Siemens AG A1/A+ 2.35% 10/15/2026 1,700 +90-95 +85a (+/-5) +85 +85 87/85
Siemens AG A1/A+ 3.30% 9/15/2046 1,000 +120a +110a (+/-5) +110 +110 112/110

 

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.

Ron Quigley, Managing Director

NICs, Bid-to-Covers, Tenors and Sizes

 

Here’s this week’s day-by-day re-cap of key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
9/05
TUES.
9/06
WED.
9/07
TH.
9/08
FRI.
9/09
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 8/29
AVERAGES
WEEK 8/22
AVERAGES
WEEK 8/15
New Issue Concessions Labor Day 2.00 bps 0.55 bps 1.06 bps N/A 1.30 bps 5.47 bps 1.86 bps <4.18> bps
Oversubscription Rates Labor Day 3.20x 2.99x 3.53x N/A 3.23x 2.18x 3.73x 4.40x
Tenors Labor Day 9.59 yrs 11.33 yrs 6.90 yrs N/A 9.42 yrs 4.47 yrs 8.94 yrs 11.43 yrs
Tranche Sizes Labor Day $727mm $791mm $621mm N/A $719mm $820mm $661mm $697mm

 

 

Lipper Report/Fund Flows – Week ending September 7th

     

  • For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $2.804b into Corporate Investment Grade Funds (2016 YTD net inflow of $32.901b) and a net inflow of $610.273m from High Yield Funds (2016 YTD net inflow of $10.160b).
  • Over the same period, Lipper reported a net inflow of $318.421m from Loan Participation Funds (2016 YTD net outflow of $4.426b).
  • Emerging Market debt funds reported a net inflow of $51.481mm (2016 YTD inflow of $5.724b).

 

 

New Issue Volume

 

Index Open Current Change
IG26 71.652 76.072 4.42
HV26 164.025 169.835 5.81
VIX 12.51 17.50 4.99
S&P 2,181 2,127 <54>
DOW 18,479 18,085 <394>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $0.00 bn DAY: $0.50 bn
WTD: $52.46 bn WTD: $59.06 bn
MTD: $52.46 bn MTD: $59.06 bn
YTD: $977.978 bn YTD: $1,240.365 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Wholesale Inventories MoM July 0.1% 0.0% 0.0% —-
Wholesale Trade Sales MoM July 0.2% <0.4%> 1.9% 1.7%

 

Rates Trading Lab: The Pain Trade

 

There is a lot of pain out there. Why, you may ask, do we have a steepening curve in the face of hawkish Fed-speak? I say it is partly because the shedding of duration trumps anything that may happen on the curve. As I have said time and again, any change in either the nature or pace of monetary stimulus will first lead to a shedding of duration. After all, it would be difficult to justify adding duration in the face of either a tighter Fed or a less dovish ECB or BOJ. I’m not saying that more restrictive monetary policy will not flatten the curve. Brainard’s speech looms as a potential harbinger of a move sooner rather than later given her traditionally dovish stance. But I do know we have a lot of supply and at least some central bank rhetoric coupled with market concerns over the efficacy of continuing current monetary policy dogma. Add unwinds of risk parity trades in a very illiquid market and you have a lot of longs all heading for the exits at the same time. I will be out of the office until next Friday attending a conference. Have a nice weekend.                                                                              -Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-19 99-27 99-18 99-05+ 98-14+
RESISTANCE LEVEL 99-18 99-23+ 99-11+ 98-28 97-27+
RESISTANCE LEVEL 99-166 99-196 99-07 98-20 97-13+
         
SUPPORT LEVEL 99-152 99-16 99-02 98-12 96-28
SUPPORT LEVEL 99-136 99-142 98-28 98-06 96-15
SUPPORT LEVEL 99-126 99-11+ 98-23+ 98-00+ 95-22

 

Tomorrow’s Calendar

 

o   China Data: Nothing Scheduled

o   Japan Data: Machine Orders, PPI, Machine Tool Orders

o   Australia: Manpower Survey

o   EU Data: GE-Germany Fourth Quarter Manpower Employment Outlook

o   U.S. Data: Nothing Scheduled

o   Supply: U.S. 3y and 10y Note

o   Events: BoE buys 3y-7y Gilts

o   Speeches: Lockhart, Kashkari, Brainard (more…)