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Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank

July 2017 Debt Market Commentary

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

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5^th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Investment Grade New Issue Re-Cap

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

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

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

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

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap

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

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

-Tony Farren

The “QC” Geopolitical Risk Monitor

Risk Level/Main Factor	Geopolitical Risks
HIGH Asian Political Tensions	· N. Korea launches ICBM on July 4^th. Continues development, improving accuracy & distance in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S. sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.
ELEVATED BREXIT Fallout	· U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian domestic bank bail-out outside EU “rule of law” concern for EU stability.
CAUTION “U.S. political gridlock” Escalating war in Syria	· Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned/Dems lose 4 consecutive special elections despite so-called “media bias.” · U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode. · GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties. · Italian debt-to-GDP ratio is 133% – world’s 3^rd highest. €17bn gov’t. bail out of two Italian banks. · Closing in on ISIS is very problematic as it is scatterring across a wider MENA region and Europe. · Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia). · Central banks shrinking balance sheets/higher volatility in 2H17.
MODERATE	· Trump/Putin meet at G-20 Summit in Hamburg last week. Move toward mutual cease fire in Syria; to identify de-escalation zones; discussed hacking controversy and agreed to improved relations. · China hard landing – rising corporate debt have the OECD and IMF concerned. · Venezuela – tumbling oil prices/Maduro resistance impacting ability to repay debt; civil unrest.
MARGINAL 2018 U.S. Recession	· Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights on one more rate hike in 2017.

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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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 10^th

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 Presidential Election on Tuesday, November 8^th, 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 6^th thru November 8^th.

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…)