Browsing articles in "Debt Market Commentary"
The Perfect Storm-for Investment Grade Corporate Debt Issuance
September 2016      Debt Market Commentary   

Quigley’s Corner 09.07.16-Investment Grade Corporate Debt Issuance Storm

 

Investment Grade New Issue Re-Cap – “Heavens to Mergatroyd”

Global Market Recap

Fed Beige Book Headlines and Text

New Issues Priced

Investment Grade Spreads (by Rating/Industry)

Lipper Report/Fund Flows – Week ending September 1st      

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

 

 

After the IG dollar DCM posted the busiest day of the year yesterday with 14 issuers pricing 29 tranches for $21.075b, today could only pale in comparison, right?  WRONG! Investment Grade Corporate Debt Issuance truly is the only game in town in what is a perfect storm for issuers to secure low funding as investors clamor in their search for yield in better rated Corporate debt.  Today’s tally – 15 IG Corporate issuers priced 24 tranches totaling $18.975bn while the SSA space featured 5 issuers, 5 tranches and $6.1b bringing the all-in IG day total to 20 issuers, 29 tranches and $25.075b.

The WTD IG Corporate only volume total now stands at $40.05b or 34.5% of the syndicate midpoint average estimate for all of September!  After only two active print days thus far this month, all-in (IG Corporate plus SSA) September volume is $46.15b.

Of course it’s not just about investors seeking yield and companies issuing cost efficient debt, it’s also about the state of our inextricably global-linked world economy.  Tomorrow all eyes and ears will once again be on and tuned into what ECB President Mario Draghi says and how he says it. Although the June BREXIT impact on the EU will need more time to influence now start showing up in the EU’s numbers as everything in their economic toolbox to raise inflation has faltered.

How much can issue in September? Well, we each have our own opinion, but we also have our respective corrals of long-time, trusted “go to” market participants, sources and cognoscente, whose opinions we value and who provide great sounding boards, queries and insights along with quality daily humor, etc.  Included in my stable is Bloomberg’s formidable old school tag team of Ed Baldinger and Bob Elson.  (Pssst! Don’t be fooled though…….we all know Lisa Loray is the girl behind the curtain when it comes to the dynamic duo!) Anyway, Bob reached out today asking me, “I’m just curious but has anybody come back and changed their $125b estimate for September to something higher? Like 180b?…….Do I hear $200b?”  That’s what’s going on folks.  Here’s my response, “Yeah exactly. No one did.  But my “Best & Brightest” survey is for IG Corporates only. Across the last 3 years, September SSA issuance has averaged $29.71b so add that to the IG Corporate midpoint average forecast of $116.59b and we get $145.73b. But I get your point.  Tomorrow I am not so sure this machine churns out product at the current two-day pace as there is an important ECB meeting.  However, “if” corporations issue ahead of what can only be further negative EU economic news then I think $180b “all-in” (IG Corps plus SSA) is not out of the question!”

I then consulted with another long-time seer, sage, savant and friend, Ken Jaques of Informa Globalmarkets and asked him what he thought..  His quick reply – “I think we’ll see $165b – $170b!”  I’m just saying folks.  Bankers bank.  I get the bulge bracket syndicate desks have visibility argument but here we have – LISTEN UP – a cumulative total of 161 years of experience between Ed, Bob, Ken and I. Hey, it’s gotta count for something right?

Additionally, scroll down and take a look at the “New Issue Pipeline.”  There are 12 imminent deals waiting in the queue not to mention M&A related financings that have to get done.

Global Market Recap

 

o   U.S. Treasuries – Closed mixed & little changed. Big day for new issue corporates……AGAIN!

o   Overseas Bonds – JGB’s in rally mode. Long end trades with a bid in Europe.

o   Stocks – U.S. stocks mixed & little changed at 3:30pm. DAX is now positive YTD.

o   Economic – The Fed’s Beige Book was a non-event. JOLTS were strong.

o   Currencies – USD outperformed 4 of Big 5. The Yen was the lone winner vs. the USD.

o   Commodities – Crude oil was high while gold & silver were lower.

o   CDX IG: +0.78 to 71.94

o   CDX HY: +3.87 to 387.80

o   CDX EM: -5.15 to 230.83

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

-Tony Farren

 

Fed Beige Book Headlines and Text

 

o   The Fed reports modest economic growth as inflation remains “slight.”

o   Contacts in several districts expect modest price gains.

o   FOMC says moderate upward wage pressures increased further.

o   Labor market conditions still tight in most districts.

o   Most Fed districts reported “modest” or “moderate” growth pace.

o   Says consumer spending is little changed in most Fed districts.

o   Sights manufacturing activity rose slightly in most districts.

o   Credit demand appeared to expand at a moderate pace.

o   Auto sales fell somewhat but are still high while tourism is flat.

o   Fed says real estate markets grew moderately, commercial real estate expanded further.

o   Demand for energy related products and services weakened.

o   Fed said the election is damping the real estate outlook in several districts.

o   Fed releases Beige Book covering the period from July to late August.

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 22 IG Corporate new issues was 18.48 bps.
  • Including today’s lone $25 par preferred, the average spread compression from IPTs thru the launch/final pricing of today’s 23 IG Corporate new issues was 18.22 bps.
  • IADB executed a rare re-launch to upsize today’s 5yr Global Notes new issue to $2.1b from $2b.
  • TJX Companies Inc. increased today’s Senior Unsecured Notes new issue from $750mm to $1b.
  • Protective Life Global Funding bumped up its 3-year new issue to $350mm from $300mm or overall two-part 3s/5s transaction to $650mm from $600mm and at the tightest side of guidance.
  • BAML’s IG Master Index widened 1 bp to +140 versus +139.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +189 versus +188.  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 Tuesday versus $5.6b Friday and $15.4b the previous Tuesday.
  • The 10-DMA stands at $13.3b.

 

Syndicate IG Corporate-only Volume Estimates for September

 

IG Corporate New Issuance September 2016 vs. Current
MTD – $40.05b
Low-End Avg. $115.45b 34.69%
Midpoint Avg. $116.02b 34.52%
High-End Avg. $116.59b 34.35%
The Low $80b 50.06%
The High $150b 26.70%

 

 

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

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
9/05
TUES.
9/06
AVERAGES
WEEK 8/29
AVERAGES
WEEK 8/22
AVERAGES
WEEK 8/15
AVERAGES
WEEK 8/08
New Issue Concessions Labor Day 2.00 bps 5.47 bps 1.86 bps <4.18> bps 1.83 bps
Oversubscription Rates Labor Day 3.20x 2.18x 3.73x 4.40x 3.56x
Tenors Labor Day 9.59 yrs 4.47 yrs 8.94 yrs 11.43 yrs 9.05 yrs
Tranche Sizes Labor Day $727mm $820mm $661mm $697mm $732mm

 

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
Associated Banc-Corp. Baa3/BB 5.375% PerpNC5 100 N/A 5.50%a 5.375% $25 Pfd BAML/UBS
Dr. Pepper Snapple Group Baa1/BBB+ 2.55% 9/15/2026 400 +125a +110a (+/-5) +105 +105 CS/JPM/MS
Mizuho Financial Group A1/A- FRN 9/13/2021 1,250 3mL+equiv 3mL+equiv 3mL+114 3mL+114 GS/JPM/MIZ
Mizuho Financial Group A1/A- 2.273% 9/13/2021 1,000 +135a +120a (+/-5) +115 +115 GS/JPM/MIZ
Mizuho Financial Group A1/A- 2.839% 9/13/2026 1,000 +150a +135a (+/-5) +130 +130 GS/JPM/MIZ
Nationwide Bldg. Society Baa1/A- 4.00% 9/14/2026 1,250 +275a +255a (+/-5) +250 +250 BAML/BARC/CITI/JPM/UBS
New York Life Glcl. Fdg. Aaa/AA+ 1.25% 9/14/2021 750 + low 70s
+72.5
+65a (+/-3) +62 +62 BARC/GS/JPM
Nissan Motor Acceptance A3/A- FRN 9/13/2019 500 3mL+equiv 3mL +equiv 3mL+52 3mL+52 CITI/HSBC/MIZ/MUFG
Nissan Motor Acceptance A3/A- 1.55% 9/13/2019 500 +95-100 +73a (+/-3) +70 +70 CITI/HSBC/MIZ/MUFG
Nissan Motor Acceptance A3/A- 1.90% 9/14/2021 500 +105-110 +85a (+/-3) +82 +82 CITI/HSBC/MIZ/MUFG
Nonghyup Bank A1/A+ 1.875% 9/12/2021 500 +100a N/A N/A +85 CITI/CA/HSBC/JPM
Protective Life Glbl. Fdg. A2/AA- 1.555% 9/13/2019 350 +85a +72a (+/-2) +70 +70 BARC/MS/USB
Protective Life Glbl. Fdg. A2/AA- 1.999% 9/14/2021 300 +high 90s
+97.5
+90a (+/-2) +88 +88 BARC/MS/USB
PSE&G Co. Aa3/A 2.25% 9/15/2026 425 + low 90s
+92.5
+75-80 +75 +75 CS/MUFG/WFS
Royal Bank of Scotland Group plc BBB-/BBB+ 3.875% 9/12/2023 2,650 +275a +255a (+/-5) +250 +250 BAML/BNPP/MS/RBS
Shell International Finance Aa2/A FRN 9/12/2019 500 3mL+equiv 3mL+equiv 3mL+35 3mL+35 CITI/GS/JPM
Shell International Finance Aa2/A 1.375% 9/12/2019 1,000 +70a +55a (+/-2) +53 +53 CITI/GS/JPM
Shell International Finance Aa2/A 1.80% 9/12/2021 1,000 +85a +75a (+/-5) +70 +70 CITI/GS/JPM
Shell International Finance Aa2/A 2.50% 9/12/2026 1,000 +125a +110a (+/-2) +108 +108 CITI/GS/JPM
Shell International Finance Aa2/A 3.75% 9/12/2046 1,250 +175a +160a (+/-5) +155 +155 CITI/GS/JPM
TJX Companies Inc. A2/A+ 2.25% 9/15/2026 1,000 +87.5 +80a (+/-2) +80 +80 BAML/DB/JPM/WFS
Valero Energy Corp. Baa2/BBB 3.40% 9/15/2026 1,250 +200a +190 the # +190 +190 BARC/BARC/JPM/MS
MIZ/MUFG/RBC/WFS
W.P. Carey Inc. Baa2/BBB 4.25% 10/01/2026 350 +300a +280a (+/-5) +275 +275 BARC/CITI/JPM

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Dexia Credit Local Aa3/AA 1.875% 9/15/2021 1,250 MS +79a MS +80a MS +79 +80.45 DB/GS/HSBC/JPM
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 BMO/CITI/JPM/RBC
IADB Aaa/AAA 1.25% 9/14/2021 2,100 MS +23a MS +23a MS +22 +23.1 BAML/JPM/NOM/RBC
Instituto de Credito Oficial Baa2/BBB+ 1.625% 9/14/2018 500 MS +70a MS +65-70 MS +65 +90.1 GS/JPM/SG
Kommuninvest Aaa/AAA 1.125% 9/17/2019 1,250 MS +15a MS +14a MS +14 +32.05 CITI/DAIW/HSBC/NORD

 

Lipper Report/Fund Flows – Week ending September 1st      

 

  • For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $224.536m into Corporate Investment Grade Funds (2016 YTD net inflow of $30.097b) and a net outflow of $386.754m from High Yield Funds (2016 YTD net inflow of $9.55b).
  • Over the same period, Lipper reported a net inflow of $61.364m from Loan Participation Funds (2016 YTD net outflow of $4.745b).
  • Emerging Market debt funds reported a net outflow of $51.481mm (2016 YTD inflow of $5.432b).

 

IG Credit Spreads by Rating

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

Spreads across the four IG asset classes are an average 30.0 bps wider versus their post-Crisis lows!

 

ASSET CLASS 9/06 9/05 9/02 9/01 8/31 8/30 8/29 8/26 8/25 8/24 1-Day Change 10-Day Trend PC
low
IG Avg. 140 139 139 139 139 138 138 138 139 140 +1 0 106
“AAA” 81 80 80 80 80 76 76 77 77 77 +1 +4 50
“AA” 82 82 82 82 82 81 81 81 82 81 0 +1 63
“A” 110 109 109 109 109 108 108 108 109 109 +1 +1 81
“BBB” 183 183 183 183 183 181 182 182 183 183 0 0 142
IG vs. HY 369 370 370 373 371 369 372 366 375 373 <1> <4> 228

 

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:

Spreads across the major industry sectors are an average 36.58 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 9/06 9/05 9/02 9/01 8/31 8/30 8/29 8/26 8/25 8/24 1-Day Change 10-Day Trend PC
low
Automotive 115 115 115 115 114 113 113 113 114 114 0 +1 67
Banking 128 128 128 128 128 126 126 126 127 128 0 0 98
Basic Industry 187 187 187 187 187 184 185 184 186 187 0 0 143
Cap Goods 102 101 101 102 101 100 101 101 102 102 +1 0 84
Cons. Prod. 109 109 109 109 109 107 107 107 108 108 0 +1 85
Energy 189 189 189 190 189 187 188 187 189 189 0 0 133
Financials 165 164 164 164 164 163 165 163 166 167 +1 <2> 97
Healthcare 116 115 115 115 115 114 114 114 115 114 +1 +2 83
Industrials 141 141 141 141 141 140 140 140 141 141 0 0 109
Insurance 163 162 162 162 162 162 162 161 163 164 +1 <1> 120
Leisure 140 141 141 140 141 140 141 142 143 143 <1> <3> 115
Media 163 163 163 163 163 162 162 163 164 163 0 0 113
Real Estate 147 148 148 149 149 148 148 149 150 150 <1> <3> 112
Retail 117 116 117 116 116 115 115 116 116 116 +1 +1 92
Services 135 134 135 135 135 133 133 134 136 135 +1 0 120
Technology 120 120 120 120 120 121 122 123 124 124 0 <4> 76
Telecom 161 160 161 160 161 160 160 160 161 161 +1 0 122
Transportation 139 138 138 139 139 138 138 138 139 140 +1 <1> 109
Utility 140 139 139 139 139 140 140 140 142 142 +1 <2> 104

 

New Issue Volume

 

Index Open Current Change  
IG26 71.162 71.635 0.473
HV26 166.84 165.17 <1.67>
VIX 12.02 11.94 <0.08>  
S&P 2,186 2,186 0
DOW 18,538 18,526 <12>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $18.975 bn DAY: $25.075 bn
WTD: $40.05 bn WTD: $46.15 bn
MTD: $40.05 bn MTD: $46.15 bn
YTD: $965.568 bn YTD: $1,227.455 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
MBA Mortgage Applications Sept. 2 —- 0.9% 2.8% —-
JOLTS Job Openings July 5630 5871 5624 5643

 

Rates Trading Lab

 

Market held support today and we pretty much traded in tandem with Europe. Curve is showing its seasonal bias to steepen evince itself as the long end seemed to be for sale at every pop.

 

ECB takes center stage tomorrow at 7:45AM EDT. It won’t be easy for them, as they have to balance mixed confidence indicators since the Brexit referendum, ongoing uncertainty about the future relationship between the U.K. and the EU, as well as the outlook for the U.S. and the Fed rate glide-path. This week’s disappointing German data comes too late for the updated set of staff projections, but will support the doves. However, the ECB doesn’t have many QE options left lest it risks more market dislocation. We’ll probably get dovish talk from Draghi and perhaps extension of the time frame for QE coupled with some tweaks, like a possible removal of the deposit rate as the lower limit for purchases to alleviate the increasing shortage of bonds but also push short term rates even lower. It does seem certain that the ECB will highlight the need for structural reforms to boost Eurozone growth. European yields have fallen and equities have moved higher in anticipation of more accommodation despite officials trying to limit expectations, so risk is at least an initial correction in both bond and stock markets, though effects here would be muted to an extent given the outperformance of Europe.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-282 100-106 100-11+ 100-08+ 101-17
RESISTANCE LEVEL 99-25+ 100-062 100-05+ 99-31+ 101-01
RESISTANCE LEVEL 99-24+ 100-03+ 100-01+ 99-26 100-31
           
SUPPORT LEVEL 99-212 99-28+ 99-24 99-13 100-02
SUPPORT LEVEL 99-192 99-226 99-16 99-02 99-25
SUPPORT LEVEL 99-18 99-196 99-12 98-29 99-12

 

Tomorrow’s Calendar

 

o   China Data: Trade Balance, Import/Export, Trade Balance, Foreign Direct Investment

o   Japan Data: BoP Current Account Balance/Adjusted, Trade Balance BoP Basis, GDP, Japan Foreign Bond Buying

o   Australia: Trade Balance

o   EU Data: German-Q2 ULC U.K.-Aug RICS

o   U.S. Data: Claims, Cons Comf, Jul Cons Cred

o   Supply: Irish 10y (€1.0bn), Italy auction details, U.S. auction details

o   Events: ECB & Press Conf.

o   Speeches: Nakaso, Lowe, Jansson, Lane (more…)

IG Corporate Debt Market Outlook In Advance of Labor Day
August 2016      Debt Market Commentary   

Quigley’s Corner 08.18.16-In Advance of Labor Day: IG Corporate Debt Issuers Should Err to the Upside

 

Investment Grade New Issue Re-Cap – It Ain’t Over ‘Til It’s Over!  Guess what?  It’s O-V-E-R!

IG Primary & Secondary Market Talking Points

“The Best and the Brightest”- Fixed Income Syndicate Outlook (Beyond Labor Day)

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

From Quig-litz to Stiglitz: Is There A Solution?  A Northern and Southern Euro!

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

Lipper Report/Fund Flows

Investment Grade Credit Spreads

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Nothing…..zero..de nada!…Hasta la vista! The market is now officially in summer vacation mode folks.  Sure we might get some opportunistic issuers looking to get in ahead of the September rush, however, I was able to speak with all the major syndicate desks today.  My survey/poll was two-fold – to gauge volume forecasts for the remainder of August ($5.44b) and separately, for September issuance projections ($116.02b).  Several commented that the September tally is fluid because issuers are discussing pulling forward their issuance, so take it from me when I tell you to “err to the upside!”

September is traditionally a busy month (scroll down to my “Knowing the Past for the Future” section) as I take a look back at a decade’s worth of September IG issuance for each of IG Corporate, SSA and all-in volume.  The Fed mentioned the Italian banking crisis twice in their minutes yesterday.  The EU is coming undone. Vlad-the-Terrible Putin has a green card to annex Crimea and he will take full advantage of the fact that the EU cannot focus on him in their rearview mirror.  Putin knows this and he’ll take full advantage of it. The EU has too many troubles of its own.  We have a Presidential election on Tuesday, November 8th that could very well compress issuance from the standard stretch run to Thanksgiving (November 24th) by 12 days as a result.  When you err, err to the upside. 

IG Primary & Secondary Market Talking Points

 

  • Taking a look at the secondary trading performance of this week’s IG Corporate and SSA issues, of the 15 deals that printed, 12 tightened versus NIP for a 00% improvement rate while only 2 widened (13.33%) and 1 were trading flat (6.67%).
  • BAML’s IG Master Index tightened 1 bp to +142 versus +143.  +106 represents the post-Crisis low dating back to July 2007.
  • 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 $16.9b on Wednesday versus $15.7b Tuesday and $15.6b the previous Wednesday.
  • The 10-DMA stands at $14.2b.

 

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

 

IG Corporate New Issuance This Week
8/15-8/19
vs. Current
WTD – $8.448b
August 2016 vs. Current
MTD – $95.45b
Low-End Avg. $12.78b 66.10% $60.48b 157.82%
Midpoint Avg. $14.09b 59.96% $61.13b 156.14%
High-End Avg. $15.39b 54.89% $61.78b 154.50%
The Low $5b 168.96% $45b 212.11%
The High $20b 42.24% $75b 127.27%

 

“The Best and the Brightest” –  Syndicate Forecasts and Sound Bites for the Remainder of August and September 

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 22 syndicate desks surveyed in today’s Best & Brightest poll.  20 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 20 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 80.29% 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.

 

Syndicate IG Corporate-only Volume Estimates for the Remainder of August & September

 

IG Corporate New Issuance Remainder of August
8/19-8/31
September 2016
Low-End Avg. $4.45b $115.45b
Midpoint Avg. $5.44b $116.02b
High-End Avg. $6.43b $116.59b
The Low $0b $80b
The High $15b $150b

 

A Look at How the Voting Brackets Broke-Out for the Remainder of August & September

Remainder of August September
1: 0b 1:80-85b
1: 1-2b 2: 100b
1: 2b 1: 105b
1: 2-3b 1: 100-110b
3: 0-5b 3: 110b
1: 3b 3: 115b
4: 5b 1: 110-120b
2: 5-7b 2: 120b
1: 5-7.5b 6: 125b
2: 5-10b 1: 130b
4: 10b 1:150b
1: 5-15b  

 

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

 

  • Across the past ten years, all-in dollar-denominated IG Corporate plus SSA September new issuance averaged $117.55b.
  • Over the past five years, all-in IG September new issuance averaged $138.49b.
  • Over the past three years, all-in IG September issuance has averaged $157.58b.
  • The past three years of September saw IG Corporate only issuance average $127.88b.
  • September SSA issuance has averaged $29.71b across the last three years.

 

August
(Year)
All-in IG Issuance (bn) IG Corps
only (bn)
SSA
only (bn)
2015 119.65 106.06 13.59
2014 160.96 124.25 36.71
2013 192.14 153.32 38.82
2012 143.74 124.62 19.12
2011 75.98 52.51 23.47
2010 130.14 112.41 17.73
2009 136.89 78.90 57.99
2008 29.89 17.58 12.31
2007 107.39 85.36 22.03
2006 78.73 61.41 17.32

Note: includes TARP/TALF & FDIC insured issuance

 

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

“Good morning and Happy Thursday is Friday for me! I will be taking my annual block leave beginning tomorrow morning and returning to my corner desk on Tuesday, September 6th.  It would seem summer vacations are now on the docket for the remainder of the month. August all-in IG Corporate plus SSA issuance managed to break thru the $100b mark for the first time in history.  We currently stand at $104.75b.  WTD issuance has dropped off measurably to $8.44b thus far for IG Corporate only prints. Before I leave there are over 3,000 readers of the “QC” interested in knowing your thoughts and numbers for the remainder of August as well as your projections for September issuance.


This week we priced $8.698b of all-in IG Corporate and SSA issuance. IG Corps were $8.448b or only 60% of this week’s syndicate midpoint average forecast calling for $14.09b.

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

 

  • NICS:  <4.27> bps
  • Oversubscription Rates: 4.26x
  • Tenors:  11.73 years
  • Tranche Sizes: $603mm

 

Week-on-week demand for IG corporate credit primary paper strengthened versus last week posting an average bid-to-cover rate of 4.26x vs. 3.56x.  Average NICs tightened 6.10 bps to an average negative <4.27> bps vs. last week’s +1.83 bps.  Average tranche sizes decreased to $603mm per issue vs. $735mm. Average tenors extended by an average 2.56 years to 11.73 years against last week’s 9.17 years.

Week-on-week, BAML’s IG Master Index is 3 bps tighter or +142 vs. last Friday’s +145 close.  Spreads across the four IG asset classes tightened 2.50 bps to 30.75 vs. 33.25. Looking at the 19 major industry sectors, spreads tightened 1.53 bps to an average 39.42 bps off their post-Crisis lows versus last Friday’s 40.95 bps close.               

Finally, what are YOUR thoughts and number for the remainder of August and separately for September IG issuance?

Thank you as always in advance.  Let’s give the readership a nice read to close out the summer and to prepare for the stretch run.
Best wishes to you and yours thru Labor Day! –Ron”

 

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

(Remainder of this section exclusive to distribution list recipients)

 

From Quig-litz to Stiglitz

This morning Bloomberg TV featured an interview with Columbia University economist and professor as well as Nobel laureate Joseph Stiglitz, who expressed his opinion that if the Euro Zone continues on its current dysfunctional path, it should split up! It’s gotten lots of air time, coverage and traction.  He referred to such a split as an “amicable divorce” with “two or three different currency zones.”  I watched it and had two comments to make.  The first was that Mr. Stiglitz looks like guitarist Joe Walsh might look when the latter turns 75 with a beard.  Then I found out that Stiglitz is 73 while Joe Walsh is 65.  I guess all those lost years kept Joe W. young at heart and with age.  Anyway, the other comment  I made was “hey I wrote about the EU splitting into two zones with two currencies a long time ago.”  I then went searching thru prior “QC’s to find it.  Here it is in its entirety written and distributed to you, if you were onboard the “QC” on January 27th, 2015 you’ll have on your desktops. (more…)

Corporate Debt Issuance Thermometer: Patients’ Resting; Mischler Comments
August 2016      Debt Market Commentary   

Quigley’s Corner 08.15.16 : Corporate Debt Issuance Thermometer

 

Investment Grade Corporate Bond New Issue Re-Cap

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

New Issue Volume

Lipper Report/Fund Flows – Week ending August 10th     

Economic Data Release

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Front-loaded!  FRONT-LOADED? The call was for a top heavy week to digest the bulk of light $14.09b in new supply.  Today however, as Bloomberg’s Bob Elson shared with me this morning, “in case you’re wondering, if it was a prime vacation period, here we are near 7:45 and 40% of the usual suspects are not signed on……..(to Bloomberg).”  Followed by “Big Drop in Issuance Is Expected.”  And so it was.

4 IG Corporate issuers priced 5 tranches between them totaling a mere $1.825b or just shy of 13% of this week’s syndicate midpoint average forecasts.  For that matter though, this month has gone down in the record books as the highest volume August for both IG Corporates and all-in (Corp + SSA) supply.

I am hearing a potentially record breaking stretch run from Post Labor Day thru Thanksgiving with the caveat that due to this year’s corporate-debt-issuance thermometer-Presidential Election on Tuesday, November 8th, we could potentially compress supply that would typically print into Thanksgiving week.  Issuers might pull issuance forward due to election uncertainties making for a very active and high volume period from September 6th thru November 8th.

Global Market Recap

o   U.S. Treasuries – USTs traded poorly as risk assets rallied.

o   Stocks – All-time highs reached for S&P’s, Dow & NASDAQ and Russia too.

o   Overseas Stocks – Europe mostly green, Nikkei red & China had a big rally.

o   Economic – U.S. data was mixed. U.K. data was weaker. Japan GDP was weaker.

o   Currencies – USD outperformed the Pound but lost vs. the Euro, Yen, CAD & AUD.

o   Commodities – Crude oil with another good day. Weaker USD helped commodities.

o   CDX IG: -1.03 to 70.57

o   CDX HY: -6.20 to 382.41

o   CDX EM: -4.74 to 236.38

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

-Tony Farren


IG Primary & Secondary Market Talking Points

 

  • Brixmor Operating Partnership LP upsized today’s 7-year Senior notes new issue to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression through price evolution of today’s 5 IG Corporate new issue was 25.80 bps.  It was a split-rated Murphy Oil. Evolution reflects to guidance only.
  • BAML’s IG Master Index was unchanged at +145.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +199.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $10.3b on Wednesday versus $14.6b Tuesday and $12.6b the previous Wednesday.
  • The 10-DMA stands at $14.6b.

 

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

 

IG Corporate New Issuance This Week
8/15-8/19
vs. Current
WTD – $1.825b
August 2016 vs. Current
MTD – $88.83b
Low-End Avg. $12.78b 14.28% $60.48b 146.87%
Midpoint Avg. $14.09b 12.95% $61.13b 145.31%
High-End Avg. $15.39b 11.86% $61.78b 143.78%
The Low $5b 36.50% $45b 197.40%
The High $20b 9.125% $75b 118.44%

 

 

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…)

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