Browsing articles tagged with "debt capital markets Archives - Mischler Financial Group"
BAML Leads $11.8b Day for Investment Grade Issuance-Mischler DCM Comment
July 2017      Debt Market Commentary   

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

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

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 12th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

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

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

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

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

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

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

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

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

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

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

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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

(more…)

A Tribute to Roger Moore’s AAA-Rated Bond; Mischler Debt Market Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.23.17- Tribute to Roger Moore’s AAA-Rated Bond

Below is the opening extract from Quigley’s Corner aka “QC” Tuesday May 23, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC is one of three distinctive market comment pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk. The QC includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646

Investment Grade New Issue Re-Cap:  Bonds, Bonds and Roger Moore’s AAA Rated Bond

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending May 17th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline – $216.2 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

The vibrant IG primary DCM continued along its trajectory today with 9 IG Corporate issuers pricing 18 tranches between them totaling $13.325b.  The SSA space saw KfW boost the volume totals with a $5b 3-year for an all-in IG day total of 10 issuers, 19 tranches and $18.325b.

 

  • The IG Corporate WTD total is over 109% of this week’s syndicate midpoint average forecast or $33.40b vs. $30.48b.
  • MTD we’ve now priced more than 115% just above the IG Corporate mid-range syndicate projection for May or $142.338b vs. $123.42b.
  • There are now 6 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $159.738b.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Great-West Lifeco upped its 30-year Senior Notes new issue to $700mm from $500mm at the launch and at the tightest side of guidance.
  • Public Storage increased its $25 PerpNC5 preferred new issue today to $250mm from $100mm.
  • Activision Blizzard Inc. its $1.2b 3-part 5-, 10- and 30-year Senior Notes new issue launch 5 bps tighter than the tightest side of guidance today on each of the three tranches.  A rarity among rarities and worth posting here..
  • DDR Corp. increased its 10-year Senior Notes new issue to $450mm from $300mm.
  • Ascension Health upsized the tap of its 3(a)(4) exempt 3.945% Senior Unsecured Notes due 11/15/2046 to $225mm vs. $220mm bringing the new total to $925mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 15 IG Corporate-only new issues, that displayed price evolution and excluding today’s $25 Perp NC5 Preferred was <21.73> bps.
  • The average spread compression including today’s $25 PerpNC5 Preferred was <21.00>.
  • BAML’s IG Master Index was unchanged at +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp +112 versus +113.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  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 Monday versus $11.3b on Friday and $15.4b the previous Monday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap

 

  • U.S. Treasuries – 4th losing session in a row for the UST market.
  • Overseas Bonds – JGB’s better except the 5yr. Europe closed mixed.
  • Stocks – 4th winning session in a row for U.S. stocks
  • Overseas Stocks – Asia closed down while Europe rallied.
  • Economic – U.S. data was a mixed bag. FOMC Minutes tomorrow.
  • Overseas Economic – Japan data was mixed. Solid data in Europe except the U.K.
  • Currencies – USD traded very well during NY hours.
  • Commodities – CRB, natural gas, gold & wheat closed red while crude oil moved higher.
  • CDX IG: -0.29 to 61.91
  • CDX HY: -0.74 to 327.04
  • CDX EM: -3.89 to 193.37

*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 “deployment and mass production” of ballistic missiles that could reach Japan & Guam.

·           Increasing tensions between North Korea (pop: 24mm) & South Korea (pop: 44mm).

·           Dictator Kim Jong-Un increasingly belligerent and irreverent to international community.

·           Disruption of political landscape in the Pacific Rim.

ELEVATED
BREXIT Fallout/
Terror Event in U.K.
·           Suicide bombing in Manchester kills 22 wounding over 50. ISIS claimed responsibility.

·           Pres. Trump lashes out at terrorists; urges unity of people of all faiths to destroy radical factions.

·           Contentious U.K./EU negotiations over BREXIT. U.K. threatens to abandon talks.

·           2nd Scottish independence referendum Fall 2018 or Spring 2019. Also support for a vote in Ireland.

CAUTION
“Trump Factor”
·          Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·          FBI Controversy over firing of Comey/Russia scandal?

·          Potential mid-term election loss to Dems in 11/2018 will impede any progress/GOP dissension.

·          U.S. partisan politics reach zenith combined with media war against Trump

·          Will the Donald be able to fulfill campaign promises & how long before his tax reform plan?

MODERATE
“Dysfunction Junction”
·          Syria/Terrorism/Venezuelan civil unrest/Brazil’s scandal & new recession.

·          Russia meddling in international elections/Russia in expansion mode

MARGINAL
2018 U.S. Recession
·         Chance of a 2018 U.S. recession.

·         Highly fractious Italian political landscape. 64 governments in 72 Post WWII years.

·         Italy’s 5 Star Movement & EU skeptic parties have more influence than in other EU elections.

·         As Italian elections approach, EU risks increase significantly/Italian debt-to-GDP ratio is 133%.

·         A referendum vote could result in a “QUITALY”/Also, China hard landing

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/22-5/26
vs. Current
WTD – $33.40b
May 2017
Forecasts
vs. Current
MTD – $142.338b
Low-End Avg. $29.69b 112.50% $122.27b 116.41%
Midpoint Avg. $30.48b 109.58% $123.42b 115.33%
High-End Avg. $31.27b 106.81% $124.56b 114.27%
The Low $20b 167.00% $100b 142.338%
The High $40b 83.50% $150b 94.89%

 

……….and Roger Moore,  the AAA Rated Bond

bond tribute roger moore AAA rated

 

 

The 25 Bond films have grossed a total of $7.1 billion in global box office receipts. It is estimated that half of the world’s population has seen a James Bond film. Ian Fleming’s 14 Bond books have sold over 100 million copies.  (I have read all them……twice!) So, it’s no wonder this USC film school graduate, long ago TV commercial film producer and film buff was bummed out this morning upon hearing of the passing of Sir Roger Moore at the age of 89 in Switzerland.  A private funeral will be held in Monaco so Roger will be going out in true Bond style.

It was another act of violence, this time in Manchester, England last evening that kept many viewers transfixed to their televisions. Thoughts and prayers extended for the 22 killed, the 59 injured and their respective families, relatives and friends. What makes it so difficult to fathom such an act in our civilized society is that yesterday’s suicide bombing took the lives of so many young children who had just enjoyed a concert. Tragic. So, tragic.  What also gripped me last night was that as I watched, it became immediately noticeable how objective the news reporting was as I switched cable news channels during commercial breaks. The journalists and anchors did their job as live feeds came in and the story developed before our eyes.  It was a tragedy that took the lives of innocent people to get the media industry to report objectively (FINALLY!) and they each did a highly commendable job.  But it left me wanting more from them and not just in covering last evening’s story but in covering news – generally speaking – as it should be every single day.

Segue to this morning’s coverage of Israeli Prime Minister Benjamin Netanyahu’s speech and introduction of President Trump who then spoke eloquently about history, religion, and the war on terror.  The message was clear – Christians, Jews and Muslims alike should unite to aggressively confront threats to our civilization and to each of our religions so we can all enjoy living together in our increasingly diverse world.

 

In light of the harsh realities of our new world order and common fight against terror it’s no surprise then to realize that for 55 years dating back to Dr. No in 1962, people have found and embraced a universal James Bond, the super spy character created by Ian Fleming. We all need a ruthless hero in the form of a good guy who at times has to execute bad things for the greater good. When he empties a full revolver into his first onscreen kill in Doctor No, he quips, “That’s a Smith & Wesson, and you’ve had your six.”  In film we can appeal to our primordial instincts and Bond exits as hero each time the world traveler tracks down and kills society’s evil thugs.  One can get away with that in film.  Like relative value studies, it’s part art part science.  It’s film, but it’s portrayed by real living performers.  Bond is decisive and gets his job down each and every time. He kills people who deserve to die and, viewers all agree, they need to go.  Just like terrorists in today’s world. Roger Moore starred in a total of seven Bond epics and endeared himself throughout the world audience through his refreshing portrayal of the daring character he played.  Following on the heels of Sean Connery, Moore knew from his first Bond adventure, Live and Let Die, that he couldn’t be the former so he added amusing humor to the character in a very deadpan, witty and raffish way admired the around the world.

Bond does it with class, adventure, luxury and with the most gorgeous people by his side in the world’s most exotic locations.  He has taste, style, sophistication and oh that sense of humor. A good guy killer wrapped in a tuxedo. With his mission accomplished Bond always takes a sabbatical from work as a reward for saving society from domineering bad guys and terrorists. So, last night’s tragic evening segued into a somber and seriously Presidential speech this morning that then turned into the sad news of the passing of Sir Roger Moore who in his own right did so much in his retirement as UNICEF’s world Ambassador – which he always said was his life’s greatest achievement.  Even Bond gives back to society! We need Bond. We like when the good guy wins.  When we get the bad guy and do it with  style, with panache and in a raffish way, it’s feels even better.  That’s Illusion vs. reality unfortunately.  A lot of things coming together here at once.  The tragedy in Manchester, a President serious about eradicating terrorism and the wish that we had some savior to execute the mission, like James Bond – a fictitious character who was perhaps best portrayed by Roger Moore, who sadly passed away today.

Last Scene From The Spy Who Loved Me

Bond (Roger Moore) and Asamova (Barbara Bach) are discovered by their respective bosses making love in a life boat capsule at sea:

M: 007?
Russian General Gogol: Triple X!!
Minister of Defense: Bond! What do you think you’re doing?
Bond: Keeping the British end up, sir.

Have a great evening!
Ron Quigley

 

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

(more…)

Muni Bond Inflows Increase; Risk On Re Intermediate Maturities-Mischler Comment
May 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 05.15.17 looks back to last week’s metrics and provides a lens focused on pending municipal bond offerings scheduled for the upcoming week.  Muni bond inflows increased last week, supported by a risk-on view toward intermediate maturities within the municipal debt market. As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $8.9billion. This week volume is expected to be $8.8 billion. The negotiated market is led by $1.08 billion for Los Angeles Unified School District, California. The competitive market is led by $231.6million for the City of Phoenix Civic Improvement Corp, Arizona 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

municipal-bond-offering-week-051517To 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 $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, 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. Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

(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…)

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…)