Browsing articles tagged with "D&I Archives - Mischler Financial Group"
Eurobond Investors Taste the Feeling-KO Recap; Good Mood for Moody’s
February 2017      Debt Market Commentary   

Quigley’s Corner 02.27.17 –KO’s Euro-Denominated €2.5b 3-part; Good Mood for Moody’s Issuance

12 IG Corporate issuers tapped the dollar DCM today pricing 18 tranches between them totaling $11.50b.  The SSA space featured an anticipated $2b 3-year from the Bank of England bringing the all-in IG day totals to 13 issuers, 19 tranches and $13.50b.  

Investment Grade New Issue Re-Cap – The Longest Day

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates for This Week

“Taste The Feeling” – The Coca Cola Company’s Euro-Denominated €2.5b 3-part 2yr FRN, 4s and 10s Deal Dashboard

Final Pricing – The Coca –Cola Company
Coca-Cola Recognized for Commitment to U.S. Service Members, Hits Veteran Hiring Goal Early

Moody’s Corp. $800mm two-part 18mo FRNs and short 5-year Deal Dashboard

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 February 22nd    

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

 

12 IG Corporate issuers tapped the dollar DCM today pricing 18 tranches between them totaling $11.50b.  The SSA space featured an anticipated $2b 3-year from the Bank of England bringing the all-in IG day totals to 13 issuers, 19 tranches and $13.50b.
We have started the week off on strong footing having already priced 46.61% of this week’s syndicate midpoint average forecast or $11.35b vs. $25.44b.

The S&P, and Dow once again finished at new all-time record highs.  CDX IG ended today’s session at a new tight as did CDX HV.
IG Primary & Secondary Market Talking Points – Mischler Active Co-Manager at Home and Abroad

 

  • Mischler Financial served as an active 1.50% active Co-Manager on today’s Coca-Cola Company (NYSE:KO) €2.5b 3-part 2yr FRN, 4- and 7-yr Fixed tranche Senior Unsecured Notes new issue.
  • Mischler Financial also served as a 2.143% active Co-Manager on the Moody’s Corp. $800mm two-part 18mo FRNs and short 5yr
  • Transcanada Trust bumped up today’s 60NC10 new issue to $1.5b from an earlier announced $1.25b at the launch and at the tightest side of guidance.
  • The Charles Schwab Corp. upsized today’s 10yr Senior Notes new issue to $650mm from $500mm at the launch and at the tightest side of guidance.
  • RPM International Inc. increased its two-part Senior Notes new issue to $450mm from $400mm at the launch with the new 10yr coming at 5 bps better than the tightest side of guidance and the tap of the 5.25% due 6/2045 coming at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 18 IG Corporate-only new issues was <16.92> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. 1.17, the latter represents a new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread widened 2 bps to +166 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.3b on Friday versus $21.2b on Thursday and $13.5b the previous Wednesday.
  • The 10-DMA stands at $19.7b.

 

Global Market Recap

  • U.S. Treasuries – President Trump’s comments send USTs south led by the front end.
  • Stocks – Small gains at 3:15pm. Dow trying to extend winning streak to 12 days.
  • Overseas Stocks – Europe closed with more green than red. Asia had a poor day.
  • Economic – U.S. data was mixed. Dallas Fed manufacturing at highest since 2006.
  • Overseas Economic – Solid confidence releases in EU. Tame CPI in Spain & Belgium.
  • Currencies – USD better bid vs. the Pound, Yen & CAD but weaker vs. the Euro.
  • Commodities – Down day for the CRB. Wheat hit hard. Crude oil & gold little changed.
  • CDX IG: -0.30 to 62.26
  • CDX HY: -2.28 to 316.42
  • CDX EM: -0.68 to 214.53

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/2
7-3/03
vs. Current
WTD – $11.35b
February 2017
Forecasts
vs. Current
MTD – $72.50b
March 2017
Low-End Avg. $24.29b 46.73% $90.65b 79.98% $113.79b
Midpoint Avg. $25.44b 44.61% $91.96b 78.84% $114.31b
High-End Avg. $26.58b 42.70% $93.26b 77.74% $114.83b
The Low $10b 113.50% $85b 85.29% $80b
The High $43b 26.40% $120b 60.42% $140b

 

Mischler “Tastes The Feeling” – The Coca Cola Company’s Euro-Denominated €2.5b 3-part 2yr FRN, 4s and 10s Deal Dashboard

Mischler served as an active 1.50% Co-Manager on Coca Cola Co’s. €2.50b 3-part transaction

Here’s a look at today’s Coca-Cola Deal Dashboard:

KO Issue IPTs GUIDANCE PRICED Spread
Compression
2yr FRN 3mE+25
€100.20
3m€+25 MS+25 flat
4yr FXD MS +25a MS+12/15 MS+10 <15>
7yr FXD MS +35a MS+25/28 MS+23 <12>

 

Today’s 3-part transaction attracted a €8.2b final cumulative book size for an overall 3.28x bid-to-cover rate.

………and here’s a look at today’s re-opening final book sizes and oversubscription rates.

 

KO  Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
2yr FRN €1.5b €2.6b 1.73x
4yr FXD €500m €2.2b 4.4x
7yr FXD €500m €1.4b 2.80x

 

Final Pricing – The Coca –Cola Company
KO €1.5b 3mE+25 FRNs due 3/08/2019 at 100.30 

KO 500b 0.00% due 3/09/2021 @ 99.641 to yield 0.090% or MS+10  MW+15 

KO 500b 0.50% due 3/08/2024 @ 99.617 to yield 0.556% or MS+23  MW+15

 

Coca-Cola Recognized for Commitment to U.S. Service Members, Hits Veteran Hiring Goal Early

 

In 1941, Robert W. Woodruff pledged to place Coca-Cola within arm’s reach of desire wherever U.S. troops were stationed around the world. This was the origin of the company’s longstanding support of the nation’s armed services.

Today, one of the primary ways the company showcases this enduring commitment to veterans is through recruiting. In the last 12 months alone, Coca-Cola has employed more than 1,000 veterans across the company. This is part of a recruitment initiative that began after hiring more than 800 veterans in 2012.

“The company established a mission to hire 5,000 veterans over the next five years, through the end of 2017,” said Brooke Camp, program manager, Strategic Recruitment Programs and Partnerships, Talent Acquisition.

The company hit its hiring goal last month – more than a year ahead of schedule.

coca-cola-veteran-friendly-mischler

 

During Coca-Cola’s 17th annual Veterans Day Ceremony, Sandy Douglas (right),

president of Coca-Cola North America, presents Dr. J.D. Crouch II, president and

CEO, United Service Organization (USO), with a $75,000 donation alongside

Mary Lou Austin, President and CEO, USO of Georgia. The event also featured

remarks from General Lloyd J, Austin, III, the 33rd Vice Chief of Staff of the U.S.

Army and 12th Commanding General of U.S. Central Command, and a

performance by the USO Show Troupe.

Thanks to this commitment, Coca-Cola has been recognized by U.S. Veterans Magazine as a 2016 Top Veteran-Friendly Company. Additionally, Victory Media has awarded the company the designation of Military Friendly Employer, and the company was highlighted as a featured employer in the fall issue of G.I. Jobs Magazine.

“We take great honor to be nationally recognized as one of America’s top corporate supporters of veterans and military families,” said Michael Farrell, director of Talent Acquisition, Strategic Programs and Partnerships, Military, Campus and Diversity Recruitment. “Veterans consider company recognition when establishing where they want to start a civilian career or make their next job move.  It enhances our employment and even our consumer brand experience very well.”

According to Camp, hiring veterans is a no-brainer, especially in the areas of supply chain and distribution. Many vets bring transferable logistics skills that enable quick training, and they are also accustomed to 24/7 work environments.

“Our military hires bring with them a wealth of uniquely rich qualities, including discipline, diversity, character and the ability to perform under pressure, all of which have made our company stronger,” said Camp. “The Coca-Cola Company has a huge commitment to diversity and inclusion and employing talent from all backgrounds and walks of life. It takes strong leadership, teamwork and dedication to serve in our armed forces, and we value the skills, leadership and capabilities that veterans bring to the table.”

Coca-Cola recruits transitioning veterans on a regular basis, both nationwide and locally, through career fairs and transition assistance workshops in partnership with organizations including Service Academy Conference Center (SACC), Military Spouse Employment Partnership (MSEP), Military Officer Job Opportunities (MOJO) and Fort Hood’s Transition Assistance Program (TAP).

The company also leverages online recruiting tools to build visibility, awareness and promote the company’s open positions through resources like Hire Purpose, Getting Hired (for veterans with disabilities), and Military.com veteran talent portals. Additionally, Coca-Cola partners with Army PaYS, a program that helps pipeline and engage with veterans for employment after honorable discharge or completion of required active duty training, and with the Training with Industry program.

Coca-Cola’s Military Veterans Business Resource Group (MVBRG) is active with veterans in the community, too, partnering with nonprofit veterans’ organizations, including FourBlock and American Corporate Partners, to offer assistance to transitioning and unemployed veterans.

Furthermore, Patrick Haddock, president of the MVBRG, was one of VETLANTA’s originators and Coca-Cola was a founding partner. VETLANTA is a grass roots networking group that fosters the communication and collaboration of employers, veterans, and military nonprofits in the Atlanta area.

Coca-Cola’s Global Diversity and Inclusion

For more on Coca-Cola’s internal Diversity and Inclusion initiatives don’t just take my word for it please cut and paste the below link into your browser to access Coca-Cola’s 2015/2015 Sustainability Report.

http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2015/08/2014-2015-sustainability-report-gwr-pages-20-26.pdf

Today’s Moody’s Corp. $800mm two-part 18mo FRNs and short 5-year Deal Dashboard

 

MCO Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
Trading at
the Break
+/-
(bps)
18mo FRN 3mL+50a 3mL+40a (+/-5) 3mL+35 3mL+35 <15> bps 3mL+29/ <6>
short 5yr FXD +115a +100a (+/-5) +95 +95 <20> bps 94.5/ <0.5>

 

………and here’s a look at today’s re-opening final book sizes and oversubscription rates.

 

MCO  Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
18mo FRN $300mm $1b 3.33x
short 5yr FXD $500mm $2.6b 5.20x

A Mischler five-star salute to Moody’s Corp.; a longtime proponent of and partner for D&I transactions and a thank you for including Mischler in today’s $800mm two-part transaction.

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

 

Have a great evening!
Ron Quigley

 

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

Mischler IG Debt Market Comment 10-05-16 : TMCC; ECB; Economic Front
October 2016      Debt Market Commentary   

Quigley’s Corner 10.05.16 Mischler IG Debt Market Comment

 

Investment Grade New Issue Re-Cap

Good News on the U.S. Economic Front This Week

Central Banks

Positive Developments Outside of Economic Data & Central Banks

Global Market Recap

A Look at FNMA Placement Statistics
Toyota Motor Credit Corp. Makes D&I History

IG Primary & Secondary Market Talking Points

Lipper Fund Flows

New Issues Prices

Indexes and New Issue Volume

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Well, with tomorrow’s heavy calendar for economic data, it’s one last chance to pick up $6.5b in new issuance to match the syndicate midpoint average forecast for the week. We’re currently at $12.05b vs. $18.54b.  Today saw 5 IG Corporate issuers price 7 tranches between them totaling $3b with two SSA assists for an all-in IG day total of 7 issuers, 9 tranches and $4b. It’s good that I have good old reliable Tony Farren, my rates guru par excellence to rely on when I am out of the office.  Today is one of those days and I’ll tell you all about it in a moment.  First, a look at today’s market moving events reveals that Gallup’s Job Creation Index held steady in September for the fifth month in a row at +33.  That represents the highest score recorded since Gallup began tracking that metric in January 2008.

As Tony wrote today:
Good News on the U.S. Economic Front This Week

 

  • ISM manufacturing PMI moved back over 50 (51.5 from 49.4).
  • ISM non-manufacturing increased 5.7 points to 57.1 after a 4.1 point drop last month.
  • Cap goods non-defense ex-air increased for the 3rd month in a row (Aug +0.9%, July +0.8% & June +0.5%).
  • U.S. Employment Report – ??? (Friday morning).

 

Central Banks

 

  • BOJ – Last Friday the BOJ announced they will cut back on the amount of long end bonds it will be buying in an attempt to steepen the JGB curve.
  • ECB – Yesterday a Bloomberg article stated the ECB was considering tapering QE. Was it a bogus article or a trail-balloon from the ECB? Bonds in Europe have traded poorly this week.
  • Are we seeing a change in the way Central Banks are going to go about their business? If Central Banks are counting on help from the fiscal side I think they are going to be disappointed.

Positive Developments Outside of Economic Data & Central Banks

 

  • Crude oil higher – Crude oil has traded higher after an understanding was reached at last week’s informal OPEC meeting to discuss oil production cuts.
  • U.S. Congress passed a spending bill last week that averts a partial U.S. Government shut down.
  • Deutsche Bank – The sentiment concerning DB has improved substantially since the beginning of last week.
  • The hawkish Fed Speakers are warming up and starting to flex their muscles but they have a large hurdle to get over on Friday…US Employment Report!

 

Global Market Recap

 

  • U.S. Treasuries – had its 4th losing session in a row. Long end in Japan & EU hit.
  • 3mth Libor – Set at the highest yield since May 2009 (0.86794%).
  • Stocks – U.S. stocks with solid gains at 3:15pm.
  • Overseas stocks – Europe mostly down but bank stocks rallied. Asia was higher.
  • Economic – This week U.S. economic data has bolstered the Fed hawks case.
  • Currencies – USD weaker vs. 4 of the Big 5. Yen down for 7th session in a row.
  • Commodities – Good day for commodities as crude oil nearly rallies to 50.
  • CDX IG: -1.23 to 74.47
  • CDX HY: -4.64 to 402.28
  • CDX EM: -3.14 to 234.91

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

-Tony Farren

 

A Look at FNMA Placement Statistics

Thanks in advance to our own Annie “Agency” Bonner for the following information:

 

BY INVESTOR TYPE:

 

  • 40% Fund Mgr
  • 28% Commercial Banks
  • 11% Central Banks
  • 9% Insurance Companies
  • 7% Corporate/Pensions
  • 2% State/Local Govt
  • 2% Other
  • <1% Retail

BY REGION:

 

  • 81% US
  • 11% Asia
  • 6% Europe
  • 1% Other
  • 1% ??

 

Once Upon a Time Four Years Ago or “Where It All Started”

 

Four years ago Zeeshan Naqvi, now with Moody’s Investors Service Inc., and formerly with GECC Treasury/Funding, paid a visit to Mischler to deliver GE’s annual report card of diversity broker dealer performance for 2012.  GECC’s diversity initiative offered the space the most coveted rotation for minority- women- and veteran- investment bank inclusion.  On that November day Mischler was told it finished atop GECC’s diversity broker dealers across their three main criteria:

 

  • Order Book Size
  • Quality of Orders
  • Final Allocations

 

The hour long meeting took place at our offices here at One Stamford Landing in Stamford, Connecticut.  While discussing our middle markets distribution network we suggested that Zeeshan and GECC meet our accounts for a non-deal roadshow.  He thought it was a great idea and soon enough Mischler was asked to conduct the first ever non-deal roadshow by a diversity firm for an issuer that just happened to be the most prolific at the time in our IG dollar DCM.  It resulted in a wonderful luncheon in Manhattan wherein 18 Mischler institutional accounts attended to hear GE’s story. Several took last minute flights on their own coin for the occasion…….that event advanced GE’s brand in the world of diversity in our financial services industry, and has been emulated by other global brands within the financial industry ecosystem…In particular, TMCC….

 

Toyota Motor Credit Corp.  (TMCC) Makes D&I History with Mischler-Sponsored Investor Luncheon Opportunity

 

Earlier today, TMCC’s Kate Oddo and Bill Pang conducted a non-road show investor luncheon/forum in NYC, with the goal of sharing and having open dialogue with existing and prospective institutional investors as to TMCC capital markets initiatives, and also sharing with the audience TMCC’s perspective about Diversity & Inclusion. BAML took the lead and hosted the event and Mischler was designated by TMCC as ‘co-manager’ in coordinating the day’s program, and we presented TMCC a total of 58 new accounts today.  12 accounts were represented in person with 46 dial-ins.  MFG clients that participated included insurance companies, re-insurers, managers of endowments, pensions, charitable trusts and foundations, RIA’s, SFOs, commercial banks, private wealth managers, private banks, trust company managers, fund managers for captive insurance and multi-family offices whose managed assets include some of the wealthiest people in the United States. To all of you accounts out there – you know who you are– you contributed to making history today, for moving the needle forward for D&I in an indelible way for our IG DCM, and for being there for the nation’s oldest Service Disabled Veteran broker dealer.

But most of all I and we would like to thank Toyota’s Kate Oddo and Bill Pang for their foresight to challenge us to be the best we can be with such a formidable.  This was a golden opportunity for Toyota to raise the bar for financial diversity broker dealers and investment banks.  We appreciate your meaningful focus to create a game-changing event for diversity and inclusion and for the thought leadership you both provided for Toyota, Mischler and our debt capital markets.  People have taken note of this.

IG Primary & Secondary Market Talking Points

 

  • Mischler Financial served as an active Co-Manager on today’s FNMA $3.5b 5-year Unsecured Notes new issue.  We thank the fine folks at Fannie Mae for including Mischler, nation’s oldest SDVBE in such a meaningful way.  Thanks also to all the accounts who gave us orders.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 7 IG Corporate-only new issues was 16.92 bps.
  • BAML’s IG Master Index tightened 1 bp to +141 vs. +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +138.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +187 vs. +188.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.2b on Tuesday versus $12.4b Monday and $18.2b the previous Tuesday.
  • The 10-DMA stands at $15.9b.

 Ya Gotta Believe! Go Mets!

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…)

IG Corporate Debt: PepsiCo-Good AND Better For You; Mischler Comment
October 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 10.03.16- PepsiCo: Good and Better For You

 

Investment Grade New Issue Re-Cap – New Records, Negative Rates and a Blockbuster from Pepsi

Global Market Recap

IG Primary & Secondary Market Talking Points

The PepsiCo Inc. $4.5b 6-part Deal Dashboard

A Look at Socially-Responsible PepsiCo Inc.: Good and Better For You.

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 28th

IG Credit Spreads (by Rating & Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

In the limited time I had today to thumb through a very interesting Q3 report from friends and financial news reporters John Balassi and Michael Gambale of Thomson Reuters fame, the multi-billion dollar multinational mass media and information firm, I was taken by a couple talking points about Global New Issuance that you should find noteworthy:

o   Global Debt Capital Markets activity is up 27% to $5.5 trillion through Q3.

o   Q3 U.S. Investment Grade Corporate Debt is 9%

o   Global High Yield is down 21%

o   Government and Agency offerings rose 76%

o   Emerging Markets Debt is down 23%

o   Overall Debt Underwriting fees declined 9%

However, what’s more incredible is that we are witnessing an unprecedented surge in bonds the world over that are guaranteed to lose investors’ money if held to maturity given their negative yields.  In an article written by Bloomberg Editorial’s Phil Kuntz, the total face value of negative yielding corporate and sovereign debt in the “Bloomberg Barclays Global Aggregate Index of investment grade bonds jumped to $11.6 trillion as of September 30th, up 6.1% from the prior month……….less than one seventh of the world’s negative yielding debt is owed by businesses. Finance companies issued……almost 80% ….totaling $1.3 trillion!” The number includes debt one year and out.  Corporations account for 15% of the world’s negative debt while 85% is derived from governments.  That’s not good news folks.

This pie chart displays the drama in those numbers:

mischler corporate debt comment

 

So, what’s this got to with new issuance?  Everything because the place investors go to fill their portfolios is the safe haven of better rated IG corporate debt right here is our U.S. dollar-denominated primary markets.  In what continues to be a historically low rate environment, corporations have a wonderful window of opportunity before them to secure favorable funding for M&A, expansions, lower refi levels, you name.  What’s more, investors are attracted to the relative safe haven of these credits that do, in fact offer the best balance in our world in better managing risk exposure while securing a decent return, comparatively speaking.

 

That’s our segue into this evening’s IG DCM that owned the new issues leaderboards as 3 corporate issuers priced 11 tranches between them totaling $7.15b.  But the biggest deal of the day belonged to PepsiCo’s (NYSE:PEP) $4.5b 6-part Senior Notes transaction comprised of 3- and 5-year FXD/FRNs, 10s and 30s.  It also happens to be the Deal-of-the-Day as Mischler Financial, our nation’s oldest Service Disabled veteran broker dealer was more than honored to be named an active 1.00% Co-Manager and was showcased as one of two diversity co’s on today’s deal.  So, I invite you to join me in the relative value story of this deal and PepsiCo’s Diversity & Inclusion initiatives.

But first, here’s the global re-cap and a look at all today’s primary market talking points and issuance!

 

Global Market Recap

 

o   U.S. Treasuries – Better than expected ISM manufacturing hits the front end.

o   Stocks – U.S. stocks red (3:30pm). FTSE, Nikkei & HS rallied. Europe mostly red.

o   Economic – ISM manufacturing moved back over 50. Good news for hawks on the FOMC.

o   Currencies – USD outperformed the Euro, Pound & Yen. Pound had a very bad day.

o   Commodities – Crude oil closed higher while gold, copper, silver & wheat lost.

o   CDX IG: +0.50 to 75.63

o   CDX HY: +2.30 to 403.45

o   CDX EM: -0.65 to 233.06

*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 11 IG Corporate-only new issues was 18.18 bps.
  • BAML’s IG Master Index was unchanged at +143.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +138.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +189.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.3b on Friday versus $15.8b Thursday and $13.3b the previous Thursday.
  • The 10-DMA stands at $16.2b.

 

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

 

IG Corporate New Issuance This Week
10/03-10/07
vs. Current
WTD – $7.15b
October 2016 vs. Current
MTD – $7.15b
Low-End Avg. $17.35b 41.21% $87.83b 8.14%
Midpoint Avg. $18.54b 38.57% $88.59b 8.07%
High-End Avg. $19.74b 36.22% $89.35b 8.00%
The Low $15b 47.67% $75b 9.53%
The High $26b 27.50% $125b 5.72%

 

The PepsiCo Inc. $4.5b 6-part Deal Dashboard

 

PEPSI Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
Comparable Bid
Pre-Announcement
NICs
(bps)
Trading at
the Break
+/-
(bps)
3yr FXD +55-60 +50a (+/-5) +45 +45 <12.5> PEP 1.50% ’19 T+35 (G+42)
Curve adjusted = flat
0 44/43 <1>
3yr FRN 3mL+equiv 3mL+equiv 3mL+27 3mL+27 <12.5> PEP 1.50% ’19 T+35 (G+42)
Curve adjusted = flat
0 3mL+26/24 <1>
5yr FXD +65-70 +60a (+/-5) +55 +55 <12.5> PEP 3.00% ’21 T+54 (G+55) 0 54/53 <1>
5yr FRN 3mL+equiv 3mL+equiv 3mL+53 3mL+53 <12.5> PEP 3.00% ’21 T+54 (G+55) 0 3mL+52/51 <1>
10yr +90-95 +80a (+/-5) +75 +75 <17.5> PEP 2.85% ’26 (T+67/G+71) +4 74/73 <1>
30yr +130-135 +120a (+/-5) +115 +115 <17.5> PEP 4.45% ’46 (T+112) +3 114/ <1>

 

………and here’s a look at final book sizes and over-subscription rates:

 

ETR Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
3yr FXD 250mm 450m 1.8x
3yr FRN 750mm 1,950m 2.6x
5yr FXD 250mm 600mm 2.4x
5yr FRN 750mm 2,200m 2.93x
10yr 1,000m 3,250m 3.25x
30yr 1,500m 4mm 2.67x

 

Thank You’s Galore

 

Let’s see if you’ve been reading the “QC” with a simple test question – “Where does D&I start in corporate America?”  Correct good job!  The answer is it starts from the top down.  At PepsiCo, the world’s second largest food and beverage business that means India-born and naturalized American Chairperson and Chief Executive Officer Indra Nooyi.  It is from her office that Pepsi’s D&I initiative is carried, embraced and filtered through what is among the best-in-class Diversity and Inclusion mandates that we saw in action today, as evidenced by Mischler’s opportunity to demonstrate our capital markets capabilities and to work with PepsiCo’s Treasury/Funding Department.

Mischler sends off its five-star salute this evening to all of you with thanks not only for the privilege to be involved in your transaction, but for the active roll you enabled and supported us to participate with.  As a 1.00% active Co-Manager we were able to introduce nearly one quarter of a billion dollars in volume and 80 individual orders to Pepsi’s six-part order books.  By allocating Team Mischler we then see return business from our middle markets distribution network that executes Corporate, Agency, ABS/MBS, Rates and Municipal business among others.  The sustainable growth trajectory we are on, in turn, helps fund our “giving back and pay forward set asides”  so that we can apply our shared ethos to give back to our Veteran community.  This is a circular process, and it’s how we grow our business while giving back to veteran and service disabled veteran organizations – the root of our diversity certification.  So, thank you all at Team Pepsi from all of us here at Team Mischler for being great stewards for D&I and Veteran causes.

PepsiCo Inc debtA Look at Socially Responsible PepsiCo Inc.: Good and Better For You

But let me tell you a bit more about Pepsi D&I leadership roles. Pepsi’s Supplier Diversity mandate began over 30 years ago at the company and its annual spend is approximately $1.3 billion!  Also, internally, PepsiCo recognizes individuals within the company who are active supporters of diversity and inclusion in the workplace.  Two such honors are the Harvey C. Russell Inclusion Award to honor employees for their outstanding achievements in diversity and inclusion.  Most recently, 76 associates from Pepsi’s Global business were awarded.  Additionally, Pepsi offers the Global Steve Reinemund Diversity and Inclusion Leadership Award recognizing senior Pepsi staff members who model exemplary leadership and a commitment to diversity and inclusion.

Which brings me to PepsiCo’s incredible commitment to hire U.S. military veterans, an initiative that earned it a top 25 ranking for the second consecutive year in the G.I. Jobs ranking of Top 100 Military Friendly Employers in 2013.  Pepsi is the lone food and beverage company in the top 50 companies in that category.  Also in 2013, Pepsi’s online jobs clearinghouse named, Bright.com, secured the top ranking for Pepsi among Fortune 50 companies in “most veterans hired” as a percentage of its workforce.  How awesome is that folks?  For four consecutive years Pepsi’s recycling program provided $1.5million to support Entrepreneurship Bootcamp for Veterans or “EBV” that helps veterans build their own businesses to pursue their dreams. Those are just some of the ways Pepsi is giving back.

They gave the nation’s oldest SDVBE a chance again today to prove our muster and so, it’s our job and expectation to deliver the goods and in addition to extol the virtues and tell the stories of what Pepsi does to make this world a better, more socially responsible place; Pepsi is Good and Better For You!

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

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

 

NICs, Bid-to-Covers, Tenors and Sizes

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
9/26
TUES.
9/27
WED.
9/28
TH.
9/29
FRI.
9.30
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
AVERAGES
WEEK 9/12
AVERAGES
WEEK 9/05
New Issue Concessions 2.50 bps N/A 5.69 bps 0 bps/flat N/A 2.71 bps 0.69 bps 4.66 bps 1.30 bps
Oversubscription Rates 3.71x N/.A 2.66x 4.12x N/A 3.52x 3.23x 3.47x 3.23x
Tenors 13.12 yrs 30 yrs 7.71 yrs 7.29 yrs N/A 10.51 yrs 9.36 yrs 11.28 yrs 9.42 yrs
Tranche Sizes $509mm $150mm $862mm $681mm N/A $646mm $964mm $710mm $719mm

 

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
General Motors Finc’l. Co. BBB-/BBB- FRN 10/04/2019 250 3mL+equiv 3mL+equiv 3mL+127 3mL+127 BAML/BNPP/CITI/LLOY/MIZ
General Motors Finc’l. Co. BBB-/BBB- 2.35% 10/04/2019 750 +155a +145 the # +145 +145 BAML/BNPP/CITI/LLOY/MIZ
General Motors Finc’l. Co. BBB-/BBB- 4.00% 10/06/2026 750 +260a +245a (+/-5) +240 +240 BAML/BNPP/CITI/LLOY/MIZ
PepsiCo. Inc. A1/A FRN 10/04/2019 250 3mL+equiv 3mL+equiv 3mL+27 3mL+27 BAML/CITI/GS/MIZ
PepsiCo. Inc. A1/A 1.35% 10/04/2019 750 +55-60 +50a (+/-5) +45 +45 BAML/CITI/GS/MIZ
PepsiCo. Inc. A1/A FRN 10/06/2021 250 3mL+equiv 3mL+equiv 3mL+53 3mL+53 BAML/CITI/GS/MIZ
PepsiCo. Inc. A1/A 1.70% 10/06/2021 750 +65-70 +60a (+/-5) +55 +55 BAML/CITI/GS/MIZ
PepsiCo. Inc. A1/A 2.375% 10/06/2026 1,000 +90-95 +80a (+/-5) +75 +75 BAML/CITI/GS/MIZ
PepsiCo. Inc. A1/A 3.45% 10/06/2046 1,500 +130-135 +120a (+/-5) +115 +115 BAML/CITI/GS/MIZ
Xylem Inc. Baa2/BBB 3.25% 11/01/2026 500 +200a +170a (+/-5) +165 +165 CITI/WFS(a) JPM (p)
Xylem Inc. Baa2/BBB 4.375% 11/01/2046 400 +250a +215a (+/-5) +210 +210 CITI/WFS(a) JPM (p)

 

Indexes and New Issue Volume

 

Index Open Current Change
LUACOAS 1.38 1.38 0
IG27 75.132 75.232 0.10
HV27 176.145 175.005 <1.14>
VIX 13.29 13.57 0.28
S&P 2,168 2,161 <7>
DOW 18,308 18,253 <55>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $7.15 bn DAY: $7.15 bn
WTD: $7.15 bn WTD: $7.15 bn
MTD: $7.15 bn MTD: $7.15 bn
YTD: $1,081.886 bn YTD: $1,366.37 bn

 

Lipper Report/Fund Flows – Week ending September 28th

     

  • For the week ended September 28th, Lipper U.S. Fund Flows reported an inflow of $2.334b into Corporate Investment Grade Funds (2016 YTD net inflow of $37.925b) and a net inflow of $2.011b into High Yield Funds (2016 YTD net inflow of $9.444b).
  • Over the same period, Lipper reported a net inflow of $480.7m into Loan Participation Funds (2016 YTD net outflow of $3.319b).
  • Emerging Market debt funds reported a net inflow of $209.7m (2016 YTD inflow of $6.549b).

 

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 33.25 bps wider versus their post-Crisis lows!

 

ASSET CLASS 9/30 9/29 9/28 9/27 9/26 9/23 9/22 9/21 9/20 9/19 1-Day Change 10-Day Trend PC
low
IG Avg. 143 143 143 143 142 141 141 142 142 142 0 +1 106
“AAA” 84 84 84 84 83 82 82 83 83 83 0 +1 50
“AA” 87 87 87 86 86 85 85 86 85 85 0 +2 63
“A” 113 114 114 114 113 112 112 113 113 113 <1> 0 81
“BBB” 185 185 185 185 184 183 183 185 184 185 0 0 142
IG vs. HY 354 366 371 375 374 369 368 380 382 383 <12> <29> 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 38.95 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 9/30 9/29 9/28 9/27 9/26 9/23 9/22 9/21 9/20 9/19 1-Day Change 10-Day Trend PC
low
Automotive 122 121 121 121 119 119 119 121 120 120 +1 +2 67
Banking 133 136 134 134 131 131 131 133 132 133 <3> 0 98
Basic Industry 186 187 187 187 187 186 186 188 189 189 <1> <3> 143
Cap Goods 106 107 105 106 105 104 104 104 104 104 <1> +2 84
Cons. Prod. 111 111 111 112 110 110 110 111 111 111 0 0 85
Energy 191 191 192 193 193 191 191 192 192 192 0 <1> 133
Financials 169 167 167 167 166 165 165 167 167 167 +2 +2 97
Healthcare 120 119 119 119 118 118 118 119 118 118 +1 +2 83
Industrials 144 144 144 145 143 143 143 144 144 144 0 0 109
Insurance 162 163 163 163 163 162 162 163 162 163 <1> <1> 120
Leisure 140 141 140 141 141 141 142 142 142 142 <1> <2> 115
Media 165 164 165 165 164 164 164 166 165 165 +1 0 113
Real Estate 153 151 151 151 151 151 151 151 151 150 +2 +3 112
Retail 119 119 119 119 118 118 119 120 119 120 0 <1> 92
Services 133 136 135 135 134 134 135 135 135 135 <3> <2> 120
Technology 121 124 124 124 123 123 123 124 124 124 <3> <3> 76
Telecom 163 165 165 165 162 162 162 164 164 164 <2> <1> 122
Transportation 141 138 138 139 139 138 139 139 139 139 +3 +2 109
Utility 141 142 141 141 140 140 140 141 140 141 <1> 0 104

  (more…)

Corporate Bond Issuers Back Up the Trucks In Advance of Delivering New Deals
September 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 09.22.16- Corporate Bond Issuers Back Up The Trucks in Advance of Delivering Big Tranche(s) of Fresh Paper

 

Investment Grade New Issue Re-Cap – Backing up the Trucks

Global Market Recap

Deal-of-the Day: All That Glitters IS Gold..Man Sachs

Goldman Sachs Raising the Bar for Diversity and Inclusion Again, and Again
IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 14th

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

corporate bond issuersLast evening at 9:13PM I closed my “QC” commentary with this: “Folks, Q3 is about over.  You hear that sound?   That’s the sound of trucks?  They’re backing up to print between now and Election Day – BIG TIME. 12 IG issuers are in the pipeline with a whole lot of M&A deals getting closer.”  Well, today did not disappoint. Treasuries were better bid, yields fell, equity markets rallied the world over thanks to yesterday’s FOMC and BoJ dovishishness as issuers took note to quickly back up their trucks to print.  All told beforehand right here in the little ole “QC”.  Just in case any of you aren’t sure what I meant when I say “back up the truck” perhaps this visual might be of assistance because it’s what I mean when I say that:

All right, now we’re understand each other, let’s get to today!

Today’s IG dollar DCM saw those trucks line up and take charge once again featuring 9 IG Corporate issuers across 20 tranches totaling $17.05b.  Adding in one lone SSA visitor to the mix, the all-in IG day totals were 10 issuers, 21 tranches and $18.05b.

What’s more is that we blew right through the IG Corporate syndicate midpoint average forecast calling for $30.38b this week ….to the tune of over 25% having priced $38.013bMTD it’s more of the same people.  Syndicate estimates expected a September total of $116.02b and we’re now over 12% above that amount sitting pretty at  $130.218b. This week isn’t over and we have yet another full week left next week.  The record for September IG Corporate only issuance is $153.32b set in 2013.

Don’t forget that all-in IG issuance including SSA volume is now at $150.568.  The September all-in record, also set in 2013, is $192.14b. That’s’ $41.572b away.

12 deals remain in the pipeline while 14 M&A deals are on the M&A docket for some point before year end or early 2017…..and those are ones I know about!

………..What do you say?  Are we all up for shattering yet another record?  That’s the spirit!  I think so too!  Issuers line up, ready, aim, FIRE!

Today’s largest transaction was Air Liquide’s $4.5b 5-part Senior Unsecured Notes transaction with proceeds used to repay a portion of the bridge loan credit facility associated with its acquisition of Airgas that completed on May 23rd among others.  However, that’s not to say there weren’t other large new issues.  Team Mischler’s “Deal-of-the-Day” belongs to The Goldman Sachs Group, Inc. $3.5b two-part 5NC4 FXD/FRN for which we were honored to be a part of.

 

Global Market Recap

 

o   U.S. Treasuries – Solid session for USTs. Tremendous session for the long end in Europe.

o   Stocks – Stocks were led higher by NASDAQ. Strong in Europe & Asia closed higher.

o   Economic – U.S. data was mixed. Data in China & France was positive.

o   Currencies – USD lost ground vs. 4 of the Big 5. The Yen was the lone loser.

o   Commodities – Back to back strong days for the commodity market.

o   CDX IG: -2.49 to 76.01

o   CDX HY: -9.50 to 381.91

o   CDX EM: -4.62 to 227.04

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

-Tony Farren

 

Deal-of-the Day: All That Glitters IS Gold..man Sachs

 

Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
5NC4 FRN 3mL+equiv 3mL+equiv 3mL+117 3mL+117 <20> bps 3.5 112/110 <3>
5NC4 FXD +140a +125a (+/-5) +120 +120 <20> bps 3.5 117/115 <3>

Mischler Financial is always privileged and honored to be named an active Co-Manager for The Goldman Sachs Group, Inc.  Today we served as a 0.5% active Co-Manager on today’s $3.5b two-part 5NC4 FXD/FRN Senior Unsecured Global Notes new issue. Hop on into the “QC” and let me show you around the new dashboard for my relative value study.

So relative value, as we all know is part art and part science but today’s fair value study is much more creative shall we say.  Always careful to tell the right story in the best way I can, this evening’s deal review will walk you through the “logic” art and science.

J.P. Morgan issued a 5NC4 back in August that many concluded priced about 12 bps behind where a bullet would issue.  What happened at the break, however, changed the logic as it tightened 10 bps points.  Given the same structure, let’s look at today’s Goldman deal in as straight-line approach as we can.  Let’s compare it to the outstanding GS 5-year – the 2.625% due 4/25/2021  – that was G+114 at yesterday’s close. That implies today’s new issue that priced at T+120 came with a 6 bp concession. The trick is valuing the 1-year optionality.  What is that worth?  Additionally, the same structured JPM 2.625% due 8/15/2021 (A3/A-) was also G+114 this morning pre-announcement.  Goldman’s deal is A3/NA) so, factoring let’s say a nickel or 5 bps for the S&P ratings differential one could argue that fair value on today’s new print is +119 or 1 bp NIC.  I could also take an average of the two approaches and call it 3.5 bps NIC.  One thing is for sure, now that both JPM and GS have issued this structure, we’ll likely see more of its kind ahead.  I can also tell you that the session closed with Goldman’s new 5NC4 fixed rate tranche framed in a 117/115 market or, not coincidentally, 3 bps tighter and effectively absorbing the 3 bps NIC.  The FRNs traded at 3mL+112/ or 5 tighter on the bid side.  All good stuff.

When markets re-open, like they did today, post FOMC and BOJ doldrums, we all like to see big banks pave the way by leading the way and setting the tone. Goldman did just that, but it didn’t stop there.

………and here’s a look at final book sizes and the oversubscription rate:

 

GS Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
FRN 1,250 $2.5b 2x
FXD 2,250 $8b 3.56x


Goldman Sachs Raising the Bar for Diversity and Inclusion Again, and Again

I’m actually having difficulty finding new creative ways to thank the “Fine” crew over at the firm with the Midas touch.  Goldman Sachs’ D&I private eye is Jonny Fine.  He’s nurturing an entire syndicate culture under his watch which is the mandate from the inner sanctum at Goldman Sachs.  Today I had no fewer than 5 hands on deck with me for questions, answers, updates, posts, bulletins, announcements, color…..you name it, they are always there for us on deal day or not, the nation’s oldest SDVBE.  There are just a couple of firms out there that shape their D&I promotions with actionable results on deal day. Goldman is tops. They get it by reviewing and scrutinizing our distribution capabilities. I/we learned years ago to vet only the highest caliber middle market accounts.  It’s a lot of work; it’s a lot of late nights on the DCM front.  Without divulging too much, word-of-mouth as to what we do here at Mischler has resulted in top 25 issuers asking us to put together non-deal roadshows for them. Trust me they are large well-known issuers to all of you.  Other tier I issuers, if you will, have been so impressed with our distribution that they are forming partnerships with us to bring our middle markets accounts to sell “other” products to them, away from new issues.  All because they are hearing about our quality investor base.

Firms like Goldman Sachs and Citigroup, to name another are demanding and they expect results. However, when delivered they help us become the best we can be. They then take us to the next level resulting in the aforementioned opportunities. We take what we do seriously and we WILL NEVER take it for granted. When we are rewarded for that hard work, we apportion some of that toward our give back initiatives to those who served, those who sacrificed, and/or their families and children.  It’s all very circular and one feeds the other. We grow our business; we help wounded veterans, we hire and train veterans returning home after active duty. Case in point: Jonathan Herrick another resident former US Marine who personifies what we’re trying to accomplish here in the bigger picture. We train them to keep them here and make them part of our corporate culture. Quality middle market accounts, such as those MFG client investment managers who count on Mischler’s symbiotic relationships with the 6-pack lead underwriters, like those on today’s Goldman Sachs transaction, represent the best incremental distribution network on the Street.  I’d put these institutional accounts up against anyone else’s and call them the best.  They are here throughout the U.S., Europe, Asia. They are banks, insurance companies, re-insurers, they manage endowments and foundations, they are pension funds, they are RIAs, commercial banks, private wealth managers, SFOs, MFOs, captive insurance, etc.  Thanks to firms like Goldman Sachs among others, we reward their high quality patronage and that’s when they begin transacting treasuries, or equities; ABS and MBS business, agencies and municipals both primary and secondary.

All of it began with a soldier, it grew further thanks to earning a minority certification, and as it flourished it’s been supported by a great operations/back office unit that is as buttoned up as our own front line.  Capital continues to grow with each and every DCM opportunity and we do have award winning debt capital markets coverage and fabulous distribution. So, we get it.  And we really do thank Team Goldman.  Our success is a direct result of what Team Goldman Sachs has done to help us become the best we can be. That is genuine and is delivered from every single employee here to all of you at GS.

Thank you Jonny Fine, James White, Jessica “Jess” Stern and the Fine folks at Team GS Syndicate from Tony Shan to Matt Jackson – you guys are the best, and today’s two new additions Elizabeth Plunkett and Jason Ghilarducci.  The two are learning from the best in the business at 200 West Street.  Leave it on the floor every night and be proud that you’re not only at a great firm,  but you are all part of doing amazing things for social responsibility while working on Wall Street. That IS something to brag about.

IG Primary & Secondary Market Talking Points

 

  • Arch Capital Group Ltd., upsized today’s $25 par PerpNC5 non-cumulative preferred, Series “E” transaction to $450mm from $250mm at the launch and at the tightest side of guidance.
  • For the week ended September 21st, Lipper U.S. Fund Flows reported an inflow of $2.122b into Corporate Investment Grade Funds (2016 YTD net inflow of $35.591b) and a net outflow of $273.5m from High Yield Funds (2016 YTD net inflow of $7.433b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 20 IG Corporate-only new issues was 22.13 bps.
  • BAML’s IG Master Index was unchanged at +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +139.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +190.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.3b on Wednesday versus $19.1b Tuesday and $17b the previous Wednesday.
  • The 10-DMA stands at $15.4b.

 

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

 

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

Corporate Debt Market: 3M Day for Innovation; Mischler Comments
September 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 09.14.16 A Day for Innovation Courtesy of 3M

 

Investment Grade New Issue Re-Cap

Global Market Recap

Deal Dashboard and Drill-Down for The 3M Company’s 3-pPart 5s/10s/30s New Issue

IG Primary & Secondary Market Talking Points

New Issues Priced

New Issue Volume

Lipper Report/Fund Flows – Week ending September 7th

Investment Grade Corporate Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

8 IG Corporate issuers printed 12 tranches between them totaling $7.1b with a lone SSA assist from AFDB’s expected $1b 3-year bringing the overall IG day totals to 9 issuers, 13 tranches and $8.1b.

We have now priced 82% of the syndicate midpoint average forecast for this week or $30.295b vs. $36.91b and 71% of the monthly estimates or $82.755b vs. $116.02b.

 

Global Market Recap

 

  • U.S. Treasuries – USTs put in a strong performance led by the 3yr.
  • Overseas Bonds – JGB’s mixed with steeper curve (big move). Europe rallied.
  • Stocks – U.S. stocks mixed at 3:30pm but heading south into the close.
  • Overseas Stocks – Europe closed mostly red. Asia did close red.
  • Economic – U.S. import price index as expected.
  • Overseas Economic – China good, Japan mixed, EU weak IP & U.K. solid employment.
  • Currencies – The USD underperformed 4 of the Big 5.
  • Commodities – Crude oil’s struggles continued. Copper had a very good day.
  • CDX IG: +0.11 to 77.04
  • CDX HY: +1.05 to 416.75
  • CDX EM: +5.80 to 260.25

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

-Tony Farren

 

Deal Dashboard and Drill-Down for The 3M Company’s 3-pPart 5s/10s/30s New Issue

 

 3M Corp-new-debt-issuance

Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
3M 5yr +55-60 +45a (+/-2) +43 +43 <14.5> +1.5 42/ <1>
3M 10yr +80-85 +70a (+/-2) +68 +68 <14.5> +3 67/ <1>
3M 30yr +105-110 +95a (+/-2) +93 +93 <14.5> +4 92/ <1>

 

Mischler Financial was privileged and honored to be selected to serve as an 0.50% active Co-Manager for The 3M Company (NYSE:MMM) today on what represents our inaugural transaction with the American multinational conglomerate corporation based in Maplewood, Minnesota.

For the 3M 5-year relative value study I looked at the outstanding MMM 2.00% due 8/07/2020 that was T+20 (G+36) and the 3M 2.00% due 6/26/2022 T+60 (G+47).

The average of those two G-spreads is 41.5 inferring a 1.5 bp NIC on today’s new 3-year. 

Looking at the 10-year, the MMM 3.00% due 8/07/2025 was seen T+49 (G+55) bid before today deal hit the tapes, pegging NIC as 13 bps versus today’s T+68 final pricing However, relative value, as we know, is part art and part science.  Looking at indirect comps away we looked at:

  • CL 3.25% due 03/15/24 T+31 (G+46) + 10 bps for the 8s/10s curve adjustment gets you to G+56.
  • Kimberly-Clark (A2/A) “KMB” 2.75% due 2/15/2026 were T+69 bid (G+72).
  • Unilever “UNANA” 2.00% due 7/28/2026  67 G+67.

The average of those three G-spreads is G+65 implying a much narrower and likely 3 bps new issue concession on today’s new 3M 10-year.

 

The 30-year looked to the “MMM” 3.875% due 6/15/2044 that was T+89 bid inferring a 4 bps NIC on today’s new T+93 30yr pricing.  What’s more, today’s new MMM 30-year priced at the tightest 30-yr spread of 2016 tying with the KMB 3.20% due 7/30/2046 and the Trustees of Dartmouth 3.474% due 6/01/2046 both of which printed at T+93.  So, congratulations to 3M’s Treasury/Funding team and today’s joint leads on securing this 2016 record.

Price evolution tightened an impressive 14.5 bps from IPTs across each tranche on what seemed a moderate volume day for issuance in relation to recent days.
All three tranches closed the session 1 bp tighter on the bid side.

 

………and here’s a look at final book sizes and the oversubscription rate:

 

MMM Tranche Tranche Size Final Book
Size
Bid-to-Cover
Rate
MMM 5yr 600 $1.7b 2.83x
MMM 10yr 650 $2.3b 3.54x
MMM 30yr 500 $1.4b 2.8x

 

Diversity & Inclusion Story

 

3M is committed to providing small and diverse suppliers equal access to business opportunities. For 3M purposes, a diverse supplier is any supplier who qualifies for one or more of the following classifications: Minority-owned business, Women-owned business, Small Business (including Small Disadvantaged, HUBZone, Woman, and Veteran/Service Disabled Veteran).  Mischler Financial Group, Inc., the nation’s oldest Service Disabled Veteran broker dealer is proud to have been offered an active role today to introduce new high quality incremental/tertiary tier II and III accounts to its investor profile. These opportunities are critically important for us to grow our platform in a meaningful and sustainable way by granting our middle markets accounts access to the IG primary credit markets who then return to trade corporate secondaries, USTs, Municipals, ABS, MBS, agencies and equities with our expanding platform.

Let me tell you what 3M has done on the D&I front –  in 2014 alone, 3M spent $1.5 billion dollars with small businesses, representing 27% of its total U.S. domestic spend. 3M purchased $200 million dollars with diverse suppliers, which represents 3.6% of total U.S. domestic spend.  The Company continues to reassess elements of its approach, working across the industry, as well as the financial services industry, to glean best practices. So, it is quite apparent that 3M remains committed to supporting small business and diverse suppliers and their positive impact on the economic viability of communities while reflecting 3M’s diverse customer base.

For the world’s largest manufacturer of adhesives, I can safely say that when 3M implements a D&I program, it will stick to it!

Where does this wonderful mandate originate?  As I always say, social responsibility starts from the top down in any company both large and small.  At 3M it is mandated from the desk of 3M Chairman, President and Chief Executive Officer Inge G. Thulin. As a fellow Swede maybe he’d find it nice to know that we here at Mischler recently hired a fellow Swede named Jonathan Herrick who as a U.S. Marine served three tours overseas, two in Afghanistan and one in Iraq.  We are committed to our mandate and happy to relay our Swedish/American connection story here in the “QC” but the mandate doesn’t stop there!

……….. 3M’s SVP and CFO Nicholas C. Gangestad embraces it and makes sure it’s in the corporate DNA of his Treasury/Funding team, and that means Matt Ginter, Treasurer, VP, Investor Relations; Sarah Grauze, Assistant Treasurer; Jon Kirchoff, Debt Capital Markets Manager and Jen Haase, Capital Markets.  Thank you all for your thoughtful inclusion of Team Mischler and the opportunity to demonstrate our capital markets capabilities.


Although we are very familiar with the impressive group of joint leads today (BAML, Citigroup, MS and Goldman Sachs), we were asked to liaise with Team Citigroup Origination and Syndicate on today’s transaction.  It goes without saying that Team Citigroup is a formidable and well experienced group  wherein Diversity and Inclusion initiatives are concerned.  It’s always a pleasure working with Peter Aherne’s Origination A-Team of Patrice Altongy and Morgan Forester and Syndicate’s Kevin O’Sullivan and Alisha Mingo! It’s tough to find a better and more experienced crew for these types of diversity transactions than that one.  We appreciate all you do for D&I stewardship in the financial services industry as a whole; for what you do for D&I on your own internal transactions as well as the important role D&I initiatives play in your corporate pitches.  You remain a historic game changer for the platform in our IG dollar DCM and in many respects we feel we’re part of your team as a result.  So, thank you all very much!

 

IG Primary & Secondary Market Talking Points

 

  • Telus Corp. upsized today’s 10-year Senior Notes new issue to $600mm from $500mm at the launch and at the tightest side of guidance.
  • Ares Capital Corp. increased its 5-year Senior Notes new issue to $600mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was 23.17 bps.
  • BAML’s IG Master Index was unchanged at +142.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +191 versus +191.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.8b on Tuesday versus $12.6b Monday and $12.6b the previous Tuesday.
  • The 10-DMA stands at $13.9b.

 

Syndicate IG Corporate-only Volume Estimates for September

 

IG Corporate New Issuance This Week
9/12-9/16
vs. Current
WTD – $30.295b
September 2016 vs. Current
MTD – $82.755b
Low-End Avg. $35.83b 84.55% $115.45b 71.68%
Midpoint Avg. $36.91b 82.08% $116.02b 71.33%
High-End Avg. $38.00b 79.72% $116.59b 70.98%
The Low $30b 100.98% $80b 103.44%
The High $46b 65.86% $150b 55.17%

 

 

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 and Head of Fixed Income Syndicate (more…)

Investment Grade Debt Issuance-Full Steam Ahead
August 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 08.08.16-Investment Grade Issuance – Not a “Sleepy Summer Monday”; $11bil Floated

 

Investment Grade New Issue Re-Cap – “It’s Just Another Manic Massive Monday!”

Global Market Recap

IG Primary & Secondary Market Talking Points

CenterPoint Energy Deal Drill Down: A Case Study in Fortune Co. Diversity & Inclusion Goals

Ford Motor Credit Corp: Banking on the Little Engine That Can and Does

Mischler’s “Give Back” Component

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Market Trade Lab

Economic Data Releases

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Issuer)

New Issue Pipeline

M&A Pipeline

Last week it was the $19.75 b 7-part Microsoft deal, today it was a slew of issuers’ – 13 to be exact – who priced 19 tranches between them totaling $11.80b. UMS added a $2.75b two-part in the SSA space to bring the all-in IG day total to 14 issuers, 21 tranches $14.55bn.  We have now priced 51% of this week’s syndicate midpoint average estimate for IG Corporates after just one session or $11.8b vs. $22.8b.  What’s more is we priced just over 99% of the forecast for all of August or $60.75b vs. $61.13b.

But of all the deals that priced today, CenterPoint Energy Houston Electric, LLC and Ford Motor Credit Co. LLC are the deals of the day because Mischler Financial Group, Inc. was involved in both.  Let’s take them in alphabetical order and start with CenterPoint Energy Houston Electric, LLC. But first here’s a look at the Global Recap –

 

Global Market Recap

 

  • U.S. Treasuries – Mixed & little changed but a strong bounce off the morning low prices.
  • Overseas Bonds – JGB’s sold off, Bunds basically unchanged & Gilts rallied (record low yields)
  • 3mth Libor – First trade over 0.80% since 5/15/09 (0.80650%).
  • Stocks – S&P’s & NASDAQ opened at all-time highs but rolled over.
  • Overseas Stocks – Europe, Japan, Hong Kong & China rallied.
  • Economic – Fed’s labor market conditions index was the strongest YTD.
  • Europe – Weak data in China but stronger data in Japan & Germany.
  • Currencies – U.S. better vs. PND/Yen, little changed vs. Euro/AUD & weaker vs. AUD.
  • Commodities – Crude rallied because OPEC said so (wish everything was that easy!).
  • CDX IG: +0.65 to 71.37
  • CDX HY: -0.02 to 392.36
  • CDX EM: -5.37 to 241.56

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

-Tony Farren


IG Primary & Secondary Market Talking Points

 

  • HCA Inc. upsized today’s 1srt Lien Senior Secured notes new issue to $1.2bn from $1bn.
  • CubeSmart LP increased today’s 10-year Senior Unsecured Notes new issue to $300mm from $250mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 19 IG Corporate new issue was 12.53 bps.
  • BAML’s IG Master Index tightened 2 bps to +149 versus +151.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 12 bps to +191 versus +203.  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 Friday versus $16.4b Thursday and $13.9b the previous Friday.

CenterPoint Energy Deal Drill Down

 centerpoint-energy

Firm market tone carried over from last week so today’s early back-drop pointed toward an unquestionable “go” on the morning call with the issuer, CenterPoint Energy Houston Electric, LLC.  Dow futures pointed to a +25 opening with the IG index 1.25 bps tighter, a CT10-year at 1.587% and a nice pop for oil. Last week’s Dominion prints were 3 to 5 bps tighter and last Friday’s Southwestern Public Service 30-year was 1 bp tighter as well.   The recommendation was clearly to go ahead with today’s new CNP 10-year GMBs.

Price evolution started with the announcement of a CenterPoint Energy Houston’s $300mm “will not grow” 10-year General Mortgage Bond new issue due 9/01/2026 with IPTs in the T+100 “area.”  Additionally, on the “Go/No Go” call this morning, CFO Bill Rodgers announced that CNP had no interest in turning itself into a REIT which opened the doors for dozens of major institutional investors to fly into today’s deal.  The spread level reeled in much tighter to T+85a guidance level with “area” defined as +/-2.  The deal launched and priced at the tightest side of guidance or T+83. 

Here’s a look at price compression from early morning initial price thoughts through guidance and the launch and final pricing of today’s deal. 

CNP Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
10yr T+100a  +85a (+/-2) +83 +83 <17> bps <5> 80/78 <3>

 

………and here’s a look at final book sizes and the oversubscription rate:

 

CNP Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
10yr $300mm $1bn + 3.33x

 

CenterPoint Energy Houston Fair Value Study

 

  • In terms of relative value leads pointed to the outstanding CNP 30-year or the 4.50% due 4/01/2044 that was T+118 late Friday.  A nice large block traded at that level late last Friday.  With the 10s/30s curve worth 30 bps that lands fair value on today’s new 10-year at T+88 versus today’s T+83 final spread level for a negative 5 bps concession! Market tone has been really strong of late and the issuer was all over the leads and vice versa to capitalize on timing the transaction for this morning with the caveat that it be priced by 1:30 ahead of all the potential visitors to the session’s IG DCM.  Syndicate desks all agreed this week’s calendar would be front-loaded. Sure enough CNP was the first deal to price today at 1:30.  What’s more CFO Bill Rodgers announced on this morning’s “Go/No Go” call that CNP had decided not to pursue becoming a REIT.  With that resolved and off the table, all CNP spreads reacted by tightening. It all made for a perfect environment in which to price CNP’s new 10-year GMB.
  • Paper was framed in an 80/78 market after being freed to trade or 3 bps tighter on the bid side.  Truly a phenomenal transaction.

This is what makes companies happy, Public Utility Commissions happy, rate payers happy – all while creating a more meaningful and value-added proposition for social responsibility. There’s only everything right and nothing wrong with that. Congrats all around.

 

CenterPoint Energy Houston Electric LLC – Final Pricing

CNP $300mm 2.40% due 9/01/2026 @ $99.884 to yield 2.413% or T+83. MW+15

 

Diversity & Inclusion at the Heart of CNP

Let me begin by saying this is NOT, repeat NOT a utility new issue deal review and D&I study for the sake of saying thank you.  Rather this is a piece to illustrate what it is when a utility company, or any company for that matter in Corporate America does everything right in creating a formidable and lasting Diversity and Inclusion mandate. I’ll point the differences and add-ons that make today’s CenterPoint Energy Houston 10-year new issue another in a long list of issuers who are making a concerted effort to bring genuine differentiation to their D&I program versus others.  It also serves to raise the bar for D&I in our IG dollar DCM for ALL issuers.  That is the best way I can thank CNP for today’s opportunity in which Mischler was invited to demonstrate our capital markets capabilities, and on a larger scale, it is what this daily is meant for – to show time and time again the good things that corporate America is doing for social responsibility by creating unique diversity programs that start from the top down, permeating a company’s corporate DNA.

First I’d like to start way back when Bill “Buck” Rogers, a West Point grad was at American Water when my CEO, Dean Chamberlain and I visited him in Southern New Jersey.  He had his entire Treasury/Funding team in a conference room.  He shared stories of West Point and when he was a senior utility banker at Merrill Lynch.  He said, “I like your newsletter.  I think it’s very good.  We’re thinking of embarking on our first D&I transaction and I want to do something different, something lasting, something meaningful.  I want you to think if you were the CFO of this company why a D&I mandate is productive and useful? How is it additive? Why do we want new investors to our program? Why would a Public Service Commission care?  What’s it say about the Company and who would you use and why?  He then said, “I have my own ideas but I’d like you to tell us in your words!”

Well, I must say, that’s why I call a golden opportunity.  I touched upon all his points and a few months later AWK issued its first D&I transaction. Lo and behold all the minority firms I recommended were vetted by the Company, among others and the four firms, including Mischler, served as Co-Managers.  It was a tremendous success for AWK.

At this point you’re probably wondering to yourselves, “but today’s deal is CNP not AWK” what’s up with the guy-in-the-corner?”  Well, for one thing Bill Rogers is now CFO at CenterPoint Energy.  Among the first things he and his Treasury/Funding team tackled was to construct a landmark D&I initiative that resulted in an annual banker’s meeting in Houston that included not only their bulge bracket and loan lending institutional bankers but welcomed by invitation the best-in-class diversity broker dealers in the financial services industry.  That, right there spoke volumes from the onset about what CNP was developing resulting in last January 16th’s  first D&I new issue for CNP – a 5yr transaction and what continued today on today’s 10-year deal.

Much like Exelon’s breakthrough banker’s meeting back in the Fall of 2014, CNP’s presentation was perhaps the best organized I’ve been a part. I still have the CNP three-ring binder on my desk.  In it is a comprehensive CenterPoint Energy Overview, Presentations, Financial Information, Recent Press Releases, all CenterPoint Contacts and Supplemental Materials.  Fast forward to a few weeks ago when I received a call from CNP Treasury leadership – Carla Kniepp, Bob Mcrae and Brett Jerasa the Treasurer, Assistant Treasurer and Manager respectively to vet us as a potential member of their diversity rotation.  Last Wednesday I received yet another communication from the triad asking me to put together a two slide presentation including an overall market update, sector update and credit opinion along with indicative pricing with comparables.  Although the last two weeks have been phenomenally busy for Team Mischler, the offer and opportunity to be treated as a joint lead even though we served on today’s deal as an active Co-Manager, was something I relished.  The ask actually meant the ultimate compliment and conveyed the value the issuer saw in our opinion and pricing methodology, daily debt capital markets coverage and distribution capabilities.  Trust and respect are critical foundations to success. So, we got to work.

If the story segued from that point today’s relative value study, it would represent the quickest and most formidable diversity and inclusion initiative I’ve ever seen take place in our DCM. However, what makes the story even better is that it didn’t stop there.  Rather I received this e-mail from the CNP Director of Corporate Finance, Brett Jerasa over this weekend:

Ron,

 

In order to help your sales efforts on Monday, here is a brief overview of CenterPoint Energy Houston Electric’s credit thesis. This is the same messaging we use for Fixed Income investors and the Ratings Agencies. I’ve also attached the earnings press release from this morning.

Thank you,
Brett

 

Now, most lead lefts and underwriters know what Mischler does when it comes to distribution and so do many of America’s Fortune 250 companies.  We pride ourselves on our gold nugget middle-market distribution network and placement opportunities, and I always write here that each and every one of them is a BlackRock to me.  To be given talking points for our sales efforts ratchets up the proposition from our perspective.  Note that Brett wrote, “it is the same messaging we use for Fixed Income investors and the ratings Agencies.”  I wrote him back over the weekend and said, “Brett, I have to say this is a first, believe it or not.  The credit thesis you attached is brilliant and very helpful. I will definitely use that in my marketing efforts……”Just another way to move the needle forward for D&I!”

Who gets our five-star salute?  I’m proud to say Bill “Buck” Rogers, Chief Financial Officer and Executive Vice President; Carla Kniepp, Vice President and Treasurer; Bob Mcrae, Assistant Treasurer, Financing and Brett Jerasa, Manager, Treasury. Thank you all very much for today’s opportunity.  You should not only feel good about today’s financing for your company and its shareholders, but equally so for what you’ve done today for social responsibility which best reflects those ratepayers – the people who turn on and off the light switches in Houston Texas.  My hope is that today’s Lone Star State story spreads as fast as you helped inaugurate it within and outside of CNP.  I’ve never quite seen anything like it before.

Next grateful appreciation once again for “all of those little BlackRock accounts” who have trusted in our mandate and our promise to get on deals and chip away at securing allocations for you.  Thanks for the UST business you’ve expanded into with me, ABS and MBS business and Municipal bond business, and thanks for the equity trading you’ve executed and agency participations. You are touching every spoke within our special operations unit here.  It takes all of us to bring about the best outcome: from onboarding MSDA and MAAUs five years ago when I first landed here; to introducing the platform to so many wonderful issuers; nurturing those relationships to get on their deals and adding business lines as our trajectory allows.  From the core of you who followed me here and signed up based on our past experiences and then others added on as our DCM universe expanded and grew. Our efforts in DCM coverage have opened doors to ECM relationships and share buybacks allowing our equity experts to prove their muster as well.  So from all of us here at team Mischler a resounding “thank you.”

 

Ford Motor Credit Co. LLC Believes in and Banks On The Little Engine That Could –

Thanks go out to FMCC’s David Lupu, Head of Global Debt Capital Markets for awarding the nation’s oldest SDVBE today’s Selling Group role on Ford’s $1b two-part 3-year FXD/FRN.

The deal announced with IPTs suggesting the +120 “area before guidance tightened a dime to +110 a +/-5 after which it launched and priced at the tightest side of guidance or T+105.  Relative value pointed directly at the Ford 2.021% due 5/03/209 that were T+100 (G+103) nailing NIC on today’s new FXD/FRN at 2 bps vs. the +105 final pricing.

Order books were split as follows:  $2.1b on the fixed rate tranche for a bid-to-cover rate of 3x and a $750mm FRN book or 2.5-times oversubscribed.

The fixed notes went out 3 bps tighter showing a +102 bid while the FRNs were 1bp improved with bids of 3mL+82.

We thank of course Dave Lupu of Ford, “the Golden ones” as I refer to them at GS Syndicate, who I was asked to liaise with, as well as a very good guy named Mr. Michael Shapiro at Societe Generale.  SocGen served as B&D
Ford Motor Credit Co., LLC – Final Pricing

F $300mm FRNs due 8/12/2019 @ $100.00 or 3mL+83
F $700mm 1.897% due 8/12/2019 @ $100.00 to yield 1.897% or T+105

 

Mischler’s “Give Back” Component

 

Ours are not merely issuer meetings focused solely on renewables, green energy, spreads, the market and new investors rather they go beyond our latest company updates, add-ons and build-outs.  You know what?  That’s exactly how it can and should work folks!  My CEO, Dean Chamberlain, a West Point graduate and Service Disabled Veteran himself – will be carrying around his metal shoulder for the rest of his life as a reminder of his service to our country – and he’s proud of it.  So are we of him!  During our meetings he’s right there to discuss market mechanics, the drill downs, our and out platform but when the question of honoring or helping United States Veterans comes up, meetings take on a whole new meaning.  It’s something to witness.  That “give back” component of Mischler Financial Group, Inc. is more than a feel good for those asking – it’s one of the many rewards for working here.

Mischler-Veterans-Education-Challenge

Avis and Bruce Richards, Founders of VetEdChallenge, MFG Analyst Jonathon Herrick, CEO Dean Chamberlain

 

In 1994, Mischler Financial Group became the securities industry’s first, fully-certified Service Disabled Business Enterprise.   Our original business plan envisioned our filling a void in the financial industry in connection with both mounting legislative initiatives (federal and state) and the increasing focus on the part of public plan sponsors and corporate issuers to broaden diversity and inclusion goals through the mandated inclusion of minority-owned service providers.

Since that time, and through the leadership and inspiration of both our Founder & Chairman Walter Mischler (SDV) a U.S Military Academy at West Point grad (Class of ’69) and CEO Dean Chamberlain (USMA Class of ’85), our firm has grown exponentially.  We now employ approximately 50 financial industry professionals across five major-city offices and we provide aggressively-competitive capital markets services to a discerning institutional community that includes the country’s top Fortune corporations, the leading public plan sponsors and leading investment managers.

However much we’ve grown and benefited from the hard work of our team and the support and trust of those who we do business for and the contemporaries who we work with across the financial services arena, we have remained adamant about our firm’s unwavering dedication to “doing good by giving back” to the disabled military veteran community and their respective families.

Our support of the SDV community includes our taking a lead role in a broad variety of philanthropic programs, advocacy initiatives and mentoring of service-disabled military veterans who are determined to overcome all obstacles.

Since 1994, we have directly and indirectly raised hundreds of thousands of dollars for critical SDV support programs including, among others, The Fisher House Foundation, The Children of Fallen Patriots Foundation, Bob Woodruff Foundation, The Semper Fi Fund, Veterans Education Challenge, Lead the Way Fund and Wounded Warrior Project.

So, when we’re on your deals, we’ll do our best to serve you the right way and you’ll have our promise and commitment that some of those fees will go to one of these funds or others like them, to help those who were prepared to give or gave the ultimate sacrifice. That commitment is part of our shared ethos here at Team Mischler.

 

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

 

IG Corporate New Issuance This Week
8/08-8/12
vs. Current
WTD – $11.80b
August 2016 vs. Current
MTD – $60.75b
Low-End Avg. $21.76b 54.23% $60.48b 100.45%
Midpoint Avg. $22.80b 51.75% $61.13b 99.38%
High-End Avg. $24.93b 47.33% $61.78b 98.33%
The Low $15b 78.67% $45b 135.00%
The High $30b 39.33% $75b 81.00%

 

 

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.

NICs, Bid-to-Covers, Tenors and Sizes

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
8/01
TUES.
8/02
WED.
8/03
TH.
8/04
FRI.
8/05
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 7/25
AVERAGES
WEEK 7/18
AVERAGES
WEEK 7/11
New Issue Concessions 1.16 bps 2.08 bps 11.28 bps <1> bps N/A 3.17 bps 1.23 bps 3.95 bps 0.82 bps
Oversubscription Rates 2.48x 2.77x 2.61x 3.90x N/A 2.86x 3.63x 3.42x 4.73x
Tenors 15.70 yrs 13.54 yrs 9.17 yrs 5.72 yrs N/A 11.57 yrs 13.45 yrs 7.95 yrs 9.58 yrs
Tranche Sizes $1,671mm $750mm $958mm $528mm N/A $1,020mm $875mm $1,482mm $887mm

 

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
Air Lease Corporation BBB-/A- 3.00% 9/15/2023 750 +low 200s (202.5) +185a (+/-5) +180 +180 BAML/CITI/JPM/MIZ
Ameriprise Financial Inc. A3/A 2.875% 9/15/2026 500 +hi 130s (+137.5) +130-135 +130 +130 CITI/JPM/WFS
Archer-Daniels-Midland Co. A2/A 2.50% 8/11/2026 1,000 +110a +98a (+/-3) +95 +95 BNPP/HSBC
Berkshire Hathaway Finance Aa2/AA FRN 8/15/2019 250 3mL+equiv 3mL+equiv 3mL+26 3mL+26 BAML/GS/JPM/WFS
Berkshire Hathaway Finance Aa2/AA 1.30% 8/15/2019 1,000 +60-65 +50a (+/-2) +48 +43 BAML/GS/JPM/WFS
Berkshire Hathaway Inc. Aa2/AA FRN 8/15/2018 250 3mL+equiv 3mL+equiv 3mL+15 3mL+15 BAML/GS/JPM/WFS
Berkshire Hathaway Inc. Aa2/AA 1.15% 8/15/2018 500 50-55 +45a (+/-2) +43 +43 BAML/GS/JPM/WFS
Boston Properties LP A-/BBB+ 2.75% 10/01/2026 1,000 +140a +125a (+/-2) +125 +125 BAML/DB/JPM/MS/USB
CenterPoint Energy Houston A1/A 2.40% 9/01/2026 300 +100a +85a (+/-2) +83 +83 BAML/DB/RBC
CubeSmart LP Baa2/BBB 3.125% 9/01/2026 300 +hi 100s (+187.5) +165a (+/-5) +160 +160 BARC/JEFF/WFS
Ford Motor Credit Co. LLC Baa2/BBB FRN 8/12/2019 300 3mL+equiv 3mL+equiv 3mL+83 3mL+83 CITI/CA/GS/MS/SG/RBC
Ford Motor Credit Co. LLC Baa2/BBB 1.897% 8/12/2019 700 +120a +110a (+/-5) +105 +105 CITI/CA/GS/MS/SG/RBC
HCA Inc. Ba1/BBB- 4.50% 2/15/2027 1,200 4.625%a 4.625%a 4.50% +294 BAML/BARC/CITI/CS/DB/GS
JPM/GS/RBC/STRH/UBS/WFS
ING Bank A1/A+ FRN 8/15/2019 250 3mL+equiv 3mL+equiv 3mL+61 3mL+61 CS/ING/JPM/MS/WFS
ING Bank A1/A+ 1.65% 8/15/2019 450 +87.5a +85a (+/-2) +83 +83 CS/ING/JPM/MS/WFS
ING Bank A1/A+ FRN 8/15/2021 250 3mL+equiv 3mL+equiv 3mL+88 3mL+88 CS/ING/JPM/MS/WFS
ING Bank A1/A+ 2.05% 8/15/2021 600 +hi 90s (+97.5) +95a (+/-2) +93 +93 CS/ING/JPM/MS/WFS
NXP BX/NXP Funding LLC Ba2/BBB- 3.875% 8/31/2022 1,000 3.875%a N/A 3.875% 3.875% BAML/MS
TransCanada Trust Baa2/BBB 5.875% 8/15/2076 1,200 6.125%a 5.875-6.00%
(5.9375%)
5.875% +428.6 DB/JPM

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
United Mexican States A3/BBB+ 4.125% 1/21/2026 750 +165a +150a (+/-5) +145 +145 BAML/BBVA/CS
United Mexican States A3/BBB+ 4.35% 1/15/2047 2,000 +225a +210a (+/-5) +205 +205 BAML/BBVA/CS

 

Lipper Report/Fund Flows – Week ending August 3rd     

 

  • 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).
  • Over the same period, Lipper reported a net inflow of $60.438m from Loan Participation Funds (2016 YTD net outflow of $5.328b).
  • Emerging Market debt funds reported a net inflow of $613.318m (2016 YTD inflow of $4.330b).

(more…)

AAPL 7bil Debt Deal Sweetened By Diversity; Mischler Comment
July 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 07.28.16 – An AAPL A Day…

 

Investment Grade New Issue Re-Cap

Apple Inc. Inks $7b 5-part

Tim Cook Talks About Commitment to D&I
Global Market Recap

IG Primary Market Talking Points

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab-All Eyes on Tokyo

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

It was an active day that finally put to rest all the rumors and chatter of an Apple multi-tranche new issue.  The Cupertino, California-based multinational technology company (NASDAQ:AAPL) priced a $7b 5-part that anchored today’s total of 6 IG Corporate issuers, 10 tranches and $9.625b in new supply.  As a result, the WTD IG Corporate-only volume of $28.00b eclipsed the syndicate midpoint average estimate of $20.48b by 37%.  SSA added one $1b deal bringing the all-in IG day totals to 7 issuers, 11 tranches and $10.625b.  The July MTD all-in IG Corporate only issuance total officially surpassed syndicate estimates for this month by 6% or $96.75b vs. $91.17b.

As for the IC Corporate plus SSA MTD total, we’re at a strong $127.987b.

and now onward we go to THE Deal-of-the-Day!

 

Apple of My Eye – Apple Inks $7b 5-part

All issuers are important to us here at Mischler Financial, the nation’s oldest Service Disabled Veteran broker-dealer.  However, it is really an accomplishment to secure repeat business.  Additionally to secure repeat business from the world’s largest publicly-held company as measured by market capitalization means that much more.  Today Mischler, whose Capital Markets team is on a roll, was honored to have been selected as an active diversity Co-Manager on today’s Apple Inc. $7.00b 5-part 3-year FXD/FRN, 5s, 10s and 30-year Senior Notes new issuance.

Here’s a look at price compression from early morning initial price thoughts through guidance and the launch and final pricing.  The five tranches posted a cumulative average contraction of 18 bps from start to finish. Here’s a look at how it all evolved:

 

AAPL Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
3yr FRN 3mL+equiv 3mL+equiv 3mL+14 3mL+14 <18> bps +1 N/A N/A
3yr FXD +50a +32-35 +32 +32 <18> bps +1 32/30 flat
5yr +70a +50-53 +50 +50 <20> bps <1> 50/49 flat
10yr +115a +100a (+/-2) +98 +98 <17> bps +3 98/96 flat
30yr +180a +165a (+/-2) +163 +163 <17> bps +2 162/160 <1>

 

………and here’s a look at final book sizes and oversubscription rates:

 

AAPL Issue Tranche Size Books Sizes
At-the-Top
Final Book
Size
Bid-to-Cover
Rate
3yr FRN $350mm $900mm $700mm 2x
3yr FXD $1.15b $2.9b $2.4b 2.09x
5yr $1.25b $4.6b $4.3b 3.44x
10yr $2.25b $6.8b $6.5b 2.89x
30yr $2.0b $7.6b $7.2b 3.6x

 

  • In terms of relative value leads looked at the outstanding AAPL 4.65% due2/23/2046 that was T+161 pegging concession as negative 2 bps on today’s new 30-year that priced at T+163.
  • For 10-year far value, the AAPL 3.25% due 2/23/2026 was T+92 (G+95) pre-announcement versus today’s final 10-year pricing at T+98 landing NIC at 3 bps.
  • The 5-year comps used was the AAPL 2.25% due 2/23/2021 seen T+45 bid or G+51 inferring a negative 1 bp NIC on today’s 5yr pricing at T+50.
  • Finally the 3-year looked at the AAPL 1.70% due 2/22/2019 that was T+27 (G+31) or a 1bp NIC versus today’s new T+32 3-year pricing.

 

Proceeds of today’s offering will be used for general corporate purposes, including repurchases of Apple Inc. common stock and payment of dividends under its program to return capital to shareholders, funding for working capital, capital expenditures, acquisitions, and repayment of debt, according to regulatory filings.

 

Apple Inc. Final Pricing Details

 

AAPL $350m FRNs due 8/02/19 @ $100.00 or 3mL+14

AAPL $1.15bn 1.10% due 8/2/19 @ $99.90 to yield 1.134% or T+32 MW T+10

AAPL $1.25bn 1.55% due 8/4/21 @  $99.861 to yield 1.579% or T+50 MW T+10

AAPL $2.25bn 2.45% due 8/4/26 @ $99.727 to yield 2.481% or T+98 MW T+15

AAPL $2bn 3.85% due 8/4/46 @ $99.735 to yield 3.865% or T+163 MW T+25

 

From the Top Down – Apple Inc.’s Tim Cook Talks About the Company’s Commitment to D&I

With a market cap of $560 billion that’s just too steep even for the guy-in-the-corner to take on in telling the great Diversity and Inclusion story at the world’s most valuable company.  So, instead, I turn to the head chef himself, none other than Tim Cook, CEO of Apple Inc.  It cuts to the heart of what I mean when I consistently write here in the “QC” that “D&I starts from the top down!”  What better company to illustrate that in practice for all of Mischler’s issuer relationships to read than with the world’s largest company.  And “Yes” I own an iPhone and an iPad……my wife owns an iPhone……2 to be exact…….my daughter owns an iTouch and an iPad.  So, we are loyal customers and fans alike.  Stock?  Of course there is also Apple stock in the Quigley family portfolio.  Take it away Tim:

A message from Tim Cook…AAPL-debt-issuance-mischler

Apple has always been different; a different kind of company with a different view of the world. It’s a special place where we have the opportunity to create the best products on earth — products that change lives and help shape the future. It’s a privilege we hold dear.

Diversity is critical to innovation and it is essential to Apple’s future. We aspire to do more than just make our company as diverse as the talent available to hire. We must address the broad underlying challenges, offer new opportunities, and create a future generation of employees as diverse as the world around us. We also aspire to make a difference beyond Apple.

This means fostering diversity not just at Apple but throughout our entire ecosystem, from the customers we welcome in our stores to the suppliers and developers we work with. We are committed to fostering and advancing inclusion and diversity across Apple and all the communities we’re a part of. As one example, we’re proud that our spending on women- and minority-owned businesses exceeded $650 million last year.

We want every person who joins our team, every customer visiting our stores or calling for support to feel welcome. We believe in equality for everyone, regardless of race, age, gender, gender identity, ethnicity, religion, or sexual orientation. That applies throughout our company, around the world with no exceptions.

Last year we reported the demographics of our employees for the first time externally, although we have long prioritized diversity. We promised to improve those numbers and we’re happy to report that we have made progress. In the past year we hired over 11,000 women globally, which is 65 percent more than in the previous year. In the United States, we hired more than 2,200 Black employees — a 50 percent increase over last year — and 2,700 Hispanic employees, a 66 percent increase. In total, this represents the largest group of employees we’ve ever hired from underrepresented groups in a single year. Additionally, in the first 6 months of this year, nearly 50 percent of the people we’ve hired in the United States are women, Black, Hispanic, or Native American.

As you can see, we’re working hard to expand our recruiting efforts so we continue hiring talented people from groups that are currently underrepresented in our industry. We’re supporting education with programs like the Thurgood Marshall College Fund to help students at historically black colleges and universities find opportunities in technology. ConnectED is bringing our technology to some of the most economically disadvantaged schools and communities in the United States, so more people have the opportunity to pursue their dreams. We’re also hosting hundreds of students at our annual developer conference, and we’re setting up new programs to help students learn to code.

We are proud of the progress we’ve made, and our commitment to diversity is unwavering. But we know there is a lot more work to be done.

Some people will read this and see our progress. Others will recognize how much farther we have to go. We see both. And more important than these statistics, we see tens of thousands of Apple employees all over the world, speaking dozens of languages, working together. We celebrate their differences and the many benefits we and our customers enjoy as a result.

Tim Cook

CEO, Apple Inc.

Deals that Open Doors for Diverse Financial Firms

 

Included among Apple’s Diversity Network Associations is Apple Veterans Association.  Apple launched its Supplier Diversity Program in 1988, and it’s been growing and thriving ever since. Through the program, the Company works with a variety of organizations to identify new suppliers whose values match their own. And in just the last year, Apple spent over $3 billion with more than 6000 small and diverse suppliers.  Those suppliers extend to the financial services industry. What transpired on today’s new 5-part Apple transaction was an inflection point for Team Mischler, the nation’s oldest Service Disabled Veteran broker dealer.  We were able to introduce nearly three dozen new accounts to Apple’s investor profile.  We were rewarded with allocations that touched virtually every single account.  That, in turn, creates investor confidence as well as credibility for our broker-dealer.  We take what we do seriously and we strive to be the best with each opportunity that we are given.

Apple works with many of the world’s leading financial institutions, but Apple also wants strong ideas and points of view that can only come from small, diverse firms. The Company feels it lends a broader financial picture and makes the corporation more informed by relying on these firms for some of its most crucial transactions. Today, Mischler Financial Group, Inc. (Service Disabled Veteran-owned); Lebenthal & Co., LLC (woman-owned); and Loop Capital Markets LLC and The Williams Capital Group, L.P. (both African American–owned) were active co-managers on Apple’s $7 billion bond offering.

There are many people to thank for today’s stellar opportunity to serve Apple Inc. First and foremost is Team Apple Inc. Treasury/Funding and that means Mike, Matt and Eric.  As a result, Team Apple is the recipient of Mischler Financial’s Official 5-Star Salute!

As for the joint lead that was appointed by the issuer to liaise with today’s diversity banking group, it was déjà vu all over again folks.  Goldman Sachs once again handled the D&I component of today’s transaction.  Suffice it to say I will hold back on the “kudos”, “good work”, “plaudits”, “hats off” etc, lest someone at Goldman aggressively starts pursuing me to head all public relations for the House of Gold!!  (Haha!) Suffice it to say, congrats and thank you’s to Jonny Fine, Gaurav Mathur, Tony Shan, Dan Miree, Matt Jackson and Salina Lee who I worked with today, via e-mail, phone, Bloomberg and chats.  As the saying goes “Make new friends, but keep the old; those are silver but these are gold.” Thank you Team GS!

Global Market Recap

 

  • S. Treasuries – Mixed & little changed. JGB’s closed mixed & the long end in Europe bid.
  • 3mth Libor – Set at highest yield since May 2009 (0.75650%).
  • Stocks – U.S. stocks mixed. Europe led down by bank stocks. Nikkei struggled.
  • Economic – U.S. data a bit weaker but not a factor.
  • Overseas Economic – Europe data better with higher German CPI.
  • Economic Tomorrow – Big calendars in Japan, Europe & the U.S.
  • Currencies – USD mixed vs. the Big 5 with the DXY Index weaker.
  • Commodities – Crude down while natural gas, gold, silver & copper closed higher.
  • CDX IG: +0.36 to 73.81
  • CDX HY: +4.86 to 401.99
  • CDX EM: +5.44 to 266.42

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

-Tony Farren

 

IG Primary Market Talking Points

 

  • Canadian National Railway Co. upsized its 30-year Senior Notes new issue today to $650mm vs. $500mm at the launch and at the tightest side of guidance.
  • Split-rated Eagle Materials Inc. increased today’s 10-year Senior Notes new issue to $350mm vs. $300mm at a tighter launch and after having skipped guidance.
  • 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).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 9 IG Corporate new issues only was 20.06 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 – $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%

 

 

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…)

Better Matters For Verizon Corporate Debt Issuance; Mischler Commentary
July 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 07.27.16-Better Matters (NYSE:VZ)

 

Investment Grade Corporate Debt New Issue Re-Cap

“Better Matters!”  New Lowest 6 “BBB”-Rated IG Corporate Coupon in History

Verizon Communications Inc’s. Commitment to D&I and Our Nation’s Veterans

Global Market Recap

New Issues Priced

Lipper Report/Fund Flows

Investment Grade Credit Spreads (by Rating/Industry)

IG Secondary Market Trade Lab

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

I have been waiting a long time for an issuer, any issuer for that matter, to price a new issue the day of an FOMC Rate Decision.  The street has been unreasonably overcautious for no reason at all in avoiding treatment of FOMC Rate days as potential print days.  The Fed isn’t doing anything anytime soon and what’s more, when you take the highly dysfunctional Fed-speak out of the picture it’s a no brainer to “go” on those days.  Today’s Fed meeting has no press conference to follow it and no Q&A with Yellen.  So, congratulations to Verizon Communications Inc. Treasury/Funding and its leads for announcing and pricing today’s blockbuster 5-part 3yr FXD/FRN, 5s, 10s and 30-year new issue. That right there is an example of issuer and DCM confidence and leadership.

Today’s IG Corporate tally was 1 issuer, 5 tranches and a total of $6.15b.  SSA took advantage pricing 3 taps and a new $3b 3-year from the Kingdom of Belgium bringing the all-in IG day totals to 5 issuers, 9 tranches and $10.09b.  WTD, we’ve now priced 90% of this week’s IG Corporate syndicate midpoint average forecast or $18.375b vs. $20.48b.

Mischler was named an active Co-Manager on today’s Verizon transaction so without further ado let’s get to the deal drill down and diversity and inclusion piece:
“Better Matters!” – Verizon’s Smart and Daring Dip into the DCM on FOMC Rate Decision Day Pays Off Big Time!

 better-matters-verizon-mischler

Today’s lone IG Corporate new issue from Verizon Communications Inc. owned the proverbial leaderboard today announcing a $6.15b five-part 3yr FXD/FRN, 5s, 10s and 30-year Senior Note transaction.  Each tranche was defined as benchmark sized early on.  Looking at the below price evolution across the five issuances, the average spread compression from IPTs to the launch/final pricing was a strong 22.00 bps. Strong demand saw the final cumulative order books close at $29.4b or 4.78x oversubscribed.  Voracious investor appetite for better rated IG corporate credits for more yield and safety drove the spread compression today.

 

VZ Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
3yr FRN 3mL+equiv 3mL+equiv 3mL+37 3mL+37 <20> bps <1> 3mL+36/35 <1>
3yr FXD +75a +60a (+/-5) +55 +55 <20> bps 0 54/53 <1>
5yr +95a +80a (+/-5) +75 +75 <20> bps 0 74/72 <1>
10yr +140a +120a (+/-5) +115 +115 <25> bps <2> 114/112 <1>
30yr +215a +195a (+/-5) +190 +190 <25> bps <2> 189/187 <1>

 

…..and here’s a look at final book sizes and oversubscription rates:

 

VZ Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
3yr FRN $400 $800mm 2x
3yr FXD $1,000 $4.1b 4.1x
5yr $1,000 $6b 6x
10yr $2,250 $9.5b 4.22x
30yr $1,500 $9b 6x

 

In terms of relative value I looked at the outstanding VZ 4.862% due 8/21/2046 that was T+192 pegging concession as negative 2 bps on today’s new 30-year that priced at T+190.
For the 10-year the VZ 3.50% due 11/01/2024 was T+97 pre-announcement or G+107.  Adding 10 bps for the 8s/10s curve gets you to T+117 versus today’s new 10-year pricing at T+115 comes to yet another negative 2 bp concession.
The 5-year comps I used were the VZ 3.45% due 2021 that was T+65 (G+69) and the VZ 3.00% due 11/01/2021 T+84 (G+81). Those two are 8 months apart, so taking an average of G+69 and G+81 is G+75 landing you at a July fair value.  Hence, the 5yr VZ priced flat or without a concession.
Lastly the three-year looked to the VZ 2.55% due 6/17/2019 T+54 bid (G+54) for a 1bp NIC versus today’s new T+55 3-year pricing.

Conclusion, Verizon’s finance and treasury teams should be very happy with how things went on this FOMC Rate Decision day.  Janet Yellen and Company, eat your heart out! The world doesn’t stand still anymore on Rate Day.

Proceeds from today’s transaction will be used for general corporate purposes, including to repay at maturity on September 15, 2016, $2.25 billion aggregate principal amount of its floating rate notes due 2016, plus accrued interest on the notes.

 

Verizon Final Pricing Details

VZ $400mm FRNs due 8/15/2019 @ $100.00 or 3mL+37
VZ $1,000b 1.375% due 8/15/2019 @ $99.991 to yield 1.378% or T+55 MW+10

VZ $1,000b 1.75% due 8/15/2021 @ $99.564 to yield 1.841% or T+75 MW+15

VZ $2,250b 2.625% due 8/15/2026 @$99.745 to yield 2.654% or T+115 MW+20

VZ $1,500b 4.125% due 8/15/2046 @$99.947 to yield 4.128% or T+190 MW+30

 

Verizon Communications Inc’s. Commitment to D&I and Our Nation’s Veterans

 

Verizon is committed to fostering an inclusive environment. They care about diversity in both its employees and its suppliers. Diversity and inclusion is how Verizon achieves success. By celebrating diversity across all spectrums, including but not limited to race, national origin, religion, gender, sexual orientation, gender identity, disability, veteran/military status, and age, Team Verizon is a stronger company and culture that takes pride in its talented and diverse team of people who focus on its customers, every day. Their combined intelligence, spirit and creativity make Verizon a great place to work, learn and grow. But Verizon’s commitment to our nation’s veterans – those who are prepared to make the ultimate sacrifice so that we can all do the things that we do – is something that sets Verizon apart with Team Mischler, the nation’s oldest Service Disabled Veteran broker-dealer.

 

Just let these facts speak for themselves:

  • Verizon employs nearly 13,000 veterans
  • The Military Times Best for Vets: Employers 2015 rankings voted Verizon as the Number 1 company in the United States for veterans.
  • Verizon is ranked as a top military spouse-friendly company by Military Spouse magazine
  • Verizon was named one of U.S. Veteran Magazine’s “Top Veteran-Friendly Companies.”

With a clear focus on and concerted effort toward a smooth transition for our veterans from the military to civilian life, Verizon offers career services to veterans and their spouses.  VZ provides mentoring programs, hosts career fairs and extends discounts to veterans and their families.  The Company also offers benefits like its Enhanced Military Leave program and flexibility during deployments and relocations. But Verizon does so much more.  It offers guidance on constructing a military background into a civilian resume on its website through helpful advice.  It includes a Q&A that helps match a veteran’s military role with corresponding civilian functions and offers counsel on how to convert a military experience into civilian responsibilities.
Verizon gets it!  They do not hire veterans because it’s the right thing to do rather they do it because veteran leadership and skill sets make it a better company.  Evan Guzman, Verizon’s head of military programs said “there is rarely a position within the military that we can’t find a place for within Verizon.  85% of military jobs have a direct civilian counterpart at Verizon.” Heck, Verizon’s military recruitment team boasts seven full-time dedicated employees!  I think you are beginning to get the picture that Verizon is yet another great story not only about making bold and wise leading funding decisions in our Debt Capital Markets like today but they are also leading a corporate charge in America to welcome our nation’s heroes when they come back home.  Yet another great story about Corporate America that should be told to Main Street.  The more people know, the more they’ll have confidence in the free market enterprise system.  Kudos to team Verizon!

It’s one thing to be on a Verizon transaction but quite another to extoll just how significantly their veteran give-back initiatives permeate their corporate DNA.  So, please indulge me as I’d like to call out those seven fully dedicated employees who work to give our veterans a firm footing upon homecoming:

 

  • Evan Guzman, Head of Military Programs & Veteran Affairs
  • Tommy Jones, Program Manager Veteran Recruitment & Operations
  • Rodney Greenwood, Military Recruiter – Central Region
  • Nick Relacion, Military Recruiter – Eastern Region
  • Joseph Rocha – Military Recruiter – Western Region
  • Brittney Becker – Team Coordinator
  • Monica Orecchio – Military Spouse Recruiter.

There you see that! Telling the story AND introducing the people.  It’s not just about subscribers and quality cable services rather it’s a corporate culture with a focus on social responsibility.
In conclusion, there’s no better way to end this piece than to employ Verizon’s corporate slogan – “Better Matters!”

 
New Lowest 6 “BBB”-Rated IG Corporate Coupon in History!

Verizon’s 10-year tranche set a new record as the all-time lowest 6 “BBB”-rated coupon in DCM history!  That’s right the 10-yr 2.625% coupon now sits atop the all-time lowest 10-year coupons in that category.  Formerly both the Republic of Colombia and Brazil were tied at 2.625% BUT they are both sovereign credits NOT IG Corporates.  Federal Express, Dr. Pepper, Ameren Corp. and PPG Industries were officially bounced down one notch in a four-way tie for second at 2.70%. It was our immense pleasure to relay that news to Verizon which couldn’t have happened with a request for a call.

Shout outs along with Mischler’s five-star salute go to each of Verizon Treasury team leaders. We appreciate that you selected Mischler Financial Group from among the diversity firms you have to choose from and to provide us the opportunity to prove our capabilities.
Thanks also to the “Golden Boys” at GS Syndicate who we liaised with on today’s 5-part book builds.  That begins with the maestro himself Mr. Jonny Fine. What else is there left to say about the guy who heads Syndicate, is a Managing Director and Goldman Partner as well as a voting member of Goldman’s all-important Finance Committee.  Oh, he also guides the diversity mandate at team Goldman.  Goldman’s mandate is piloted by Fine for execution and he consistently does that through his stellar team beginning with his newest hire, the polished pro, John Sales, who was brought on board the Golden crew from Barclays Syndicate.

 

And, a first time and very personal shout out from the guy-in-the-corner to our new veteran hire Jonathan Herrick.  He’s been with us now for two months and I have to say each and every day I am grateful to see how this military veteran seizes the opportunity to focus, learn and deliver each and every day.  He’s been a great addition to our special operations unit here as our desk analyst and take it from me folks, he knows what work ethic means.  After three tours fighting for us in the danger, dust and dirt of Afghanistan, Jon Herrick has wasted no time becoming a stalwart member of Mischler’s capital markets crew.

 

Global Market Recap

 

  • FOMC Statement: A little give & take but the bottom line is the FOMC is on hold.
  • S. Treasuries – Strong session for USTs led by the 5yr.
  • Overseas Bonds – Gilts, Bunds & JGB’s (not the 30yr) rallied.
  • 3mth Libor – Set at highest yield since May 2009 (0.75150%).
  • Stocks – NASDAQ rallied and the Dow and S&P were little changed.
  • Overseas Stocks – Europe & Japan rallied while Chinese stocks had a poor day.
  • Economic – U.S. data was slightly weaker but the focus was on the FOMC Statement.
  • Currencies – USD better vs. the Yen, CAC & AUD but lost ground vs. Euro & Pound.
  • USD – Closed mixed vs. the Big 5 but did lose ground after the FOMC Statement.
  • Commodities – CRB, crude oil (low since April) & copper down while gold & silver rallied.
  • CDX IG: -0.84 to 73.74
  • CDX HY: -1.55 to 400.00
  • CDX EM: -1.29 to 259.84

*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 22.00 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 – $18.375b
July 2016 vs. Current
MTD – $87.125b
Low-End Avg. $19.39b 94.77% $90.09b 96.71%
Midpoint Avg. $20.48b 89.72% $91.17b 95.56%
High-End Avg. $21.57b 85.19% $92.26b 94.43%
The Low $10b 183.75% $60b 145.21%
The High $30b 61.25% $125b 69.70%

 

 

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.

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.
7/25
TUES.
7/26
AVERAGES
WEEK 7/18
AVERAGES
WEEK 7/11
AVERAGES
WEEK 7/04
AVERAGES
WEEK 6/27
New Issue Concessions 2.89 bps 0.90 bps 3.95 bps 0.82 bps 0.73 bps 10.67 bps
Oversubscription Rates 3.57x 2.61x 3.42x 4.73x 3.82x 4.05x
Tenors 10.90 yrs 24.67 yrs 7.95 yrs 9.58 yrs 9.72 yrs 10.87 yrs
Tranche Sizes $710mm $850mm $1,482mm $887mm $770mm $1,229mm

 

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.

Please note that OM Asset Management plc tapped it’s 10-year for an additional $25mm yesterday, July 26th.  It is included below for informational purposes only.  The volume tables near page bottom have been updated to reflect it.  Thanks! -RQ

 

IG

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Verizon Comm. Inc. Baa1/A- FRN 8/15/2019 400 3mL+equiv 3mL+equiv 3mL+37 3mL+37 BAML/DB/GS/MIZ(a) +2(p)
Verizon Comm. Inc. Baa1/A- 1.375% 8/15/2019 1,000 +75a +60a (+/-5) +55 +55 BAML/DB/GS/MIZ(a) +2(p)
Verizon Comm. Inc. Baa1/A- 1.75% 8/15/2021 1,000 +95a +80a (+/-5) +75 +75 BAML/DB/GS/MIZ(a) +2(p)
Verizon Comm. Inc. Baa1/A- 2.625% 8/15/2026 2,250 +140a +120a (+/-5) +115 +115 BAML/DB/GS/MIZ(a) +2(p)
Verizon Comm. Inc. Baa1/A- 4.125% 8/15/2046 1,500 +215a +195a (+/-5) +190 +190 BAML/DB/GS/MIZ(a) +2(p)
OM Asset Management plc
(tap) on 7/26
New total: $275mm
Baa2/BBB- 4.80% 7/27/2026 25 N/A N/A N/A T+325 BAML/CITI/RBC/WFS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
IFC (tap)
New total: $2,000mm
Aaa/AAA FRN 12/15/2020 190 3mL+13a N/A N/A 3mL+13 BARC/HSBC
NWB (tap)
New total: $1,250mm
Aaa/AAA 1.50% 4/16/2018 500 MS+10a MS+10a N/A +29.6 BAML/DB/TD
Rentenbank (tap)
New total: $850mm
Aaa/AAA FRN 1/12/2022 250 N/A N/A 3mL+27 3mL+27 NOM/RABO/RBC
The Kingdom of Belgium Aa3/AA 1.125% 8/03/2019 3,000 MS+16a MS+15a MS+15 33.8 BARC/CITI/SCOT

 

Lipper Report/Fund Flows – Week ending July 20th     

 

  • For the week ended July 20th, Lipper U.S. Fund Flows reported an inflow of $894.421m into Corporate Investment Grade Funds (2016 YTD net inflow of $19.323b) and a net inflow of $321.724m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.872b).
  • Over the same period, Lipper reported a net inflow of $68.984m from Loan Participation Funds (2016 YTD net outflow of $5.373b).
  • Emerging Market debt funds reported a net inflow of $918.406m (2016 YTD inflow of $2.335b).

 

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 34.25 bps wider versus their post-Crisis lows!

 

ASSET CLASS 7/26 7/25 7/22 7/21 7/20 7/19 7/18 7/15 7/14 7/13 1-Day Change 10-Day Trend PC
low
IG Avg. 147 146 147 148 148 148 149 149 150 152 +1 <5> 106
“AAA” 80 79 80 80 79 80 79 79 80 80 +1 0 50
“AA” 85 85 84 85 85 86 86 86 86 88 0 <3> 63
“A” 115 115 115 116 116 117 117 117 118 120 0 <5> 81
“BBB” 193 192 193 194 194 195 196 196 197 200 +1 <7> 142
IG vs. HY 398 393 392 393 392 397 395 393 394 406 +5 <8> 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 43.79 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 7/26 7/25 7/22 7/21 7/20 7/19 7/18 7/15 7/14 7/13 1-Day Change 10-Day Trend PC
low
Automotive 118 118 120 121 122 122 122 123 124 126 0 <8> 67
Banking 137 137 139 140 140 141 140 140 141 143 0 <6> 98
Basic Industry 196 195 195 196 197 198 198 199 202 204 +1 <8> 143
Cap Goods 107 107 107 107 107 108 108 109 109 111 0 <4> 84
Cons. Prod. 110 110 110 110 110 110 110 110 111 112 0 <2> 85
Energy 201 198 197 198 198 199 201 201 203 207 +3 <6> 133
Financials 172 174 176 177 177 178 179 180 181 184 <2> <12> 97
Healthcare 117 116 116 117 117 118 119 119 121 122 +1 <5> 83
Industrials 148 147 147 148 148 149 149 150 151 153 +1 <5> 109
Insurance 172 172 173 174 174 175 175 176 177 179 0 <7> 120
Leisure 152 153 153 154 153 154 154 155 155 156 <1> <4> 115
Media 171 170 170 172 173 173 173 174 174 176 +1 <5> 113
Real Estate 162 162 163 164 164 164 165 166 166 167 0 <5> 112
Retail 118 117 117 118 118 118 119 119 120 121 +1 <3> 92
Services 142 143 144 144 144 145 146 146 146 147 <1> <5> 120
Technology 131 131 131 131 131 132 131 131 132 134 0 <3> 76
Telecom 169 168 167 168 169 169 168 168 168 169 +1 0 122
Transportation 144 144 145 145 145 146 146 147 148 149 0 <5> 109
Utility 147 147 147 148 148 149 149 149 150 151 0 <4> 104

 

IG Secondary Trading Lab

 

  • BAML’s IG Master Index widened 1 bp to +147 versus +146.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 2 bps to +196 versus +194.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.8b on Tuesday versus $14.7b Monday and $18.0b the previous Tuesday.
  • The 10-DMA stands at $15.8b.
  • The top three most actively traded IG-rated issues were led by ABIBB 3.65% due 2/01/2026 with client sales twice that of purchases.
  • WFC 2.10% due 7/26/2021 finished second with client and affiliate flows representing 90% of the volume.
  • COF 3.75% due 7/28/2026 placed third with client sales four-times purchases.

 

New Issue Pipeline

Please note that for ratings I use the better two of Moody’s, S&P or Fitch.

 

  • Adani Transmission Limited (Baa3/BBB-) mandated Barclays, DBS Bank and Standard Chartered Bank as Joint Global Coordinators and those same three banks as well as Emirates NBD Capital, MUFG, Nomura and Societe Generale CIB as joint book runners and leads for its upcoming dollar-denominated 144a/REGS 10-year Senior Secured Notes new issue.
  • The Government of Trinidad & Tobago (Baa3/A-) mandated Deutsche Bank and First Citizens Bank to arrange fixed income investor meetings that kicked off Monday, July 25th in preparation for a dollar-denominated 144a/REGS offering that could soon follow their conclusion.  The meetings took place in L.A. and London on the 25th, New York and London on Tuesday the 26th and wrapped up in New York and Boston on the 27th.
  • Empresa Nacional de Petroleo or “ENAP” (Baa3/BBB-), the state-owned Chilean hydrocarbon company mandated Citigroup and J.P. Morgan to arrange fixed income investor meetings in the U.S., Chile and Europe that began on Monday, July 25th in preparation for a 10-year dollar-denominated 144a/REGS Senior Unsecured Notes new issue that could soon follow its conclusion.
  • The Export Bank of India (Baa3/BBB-) mandated Bank of America/Merrill Lynch, Barclays, Citigroup, J.P. Morgan and Standard Chartered Bank as joint leads and book runners to arrange fixed income investor meetings in the U.S., Asia and Europe that began on Thursday, July 21st in preparation for a 144a/REGS Senior Notes new issue that could soon follow its conclusion.
  • Woori Bank (A2/A-) hired Bank of America/Merrill Lynch, Citigroup, Commerzbank, Credit Agricole CIB, HSBC and Nomura to arrange fixed income investor meetings in the U.S., Europe and Asia that began on Monday, July 11th and continued thru Wednesday, July 20th.  Last May, Woori set up a $7b GMTN program.
  • National Grid plc (Baa1/A-) asked J.P. Morgan to arrange fixed income investor meetings that took place on Wednesday, June 1st making stops in Boston, New York and concluded on June 3rd in New Jersey and Philadelphia.  The Company’s Group and U.S. Treasurers were in attendance.

 

M&A Pipeline – $212.62 Billion in Cumulative Enterprise Value!

Please note that for ratings I use the better two of Moody’s, S&P or Fitch.

 

  • Zimmer Biomet (Baa3/BBB) completed its offer to purchase all outstanding shares of LDR stock on Wednesday, July 13th.  Zimmer announced on June 7th that it agreed to purchase medical device maker LDR Holding Corp. for $37 per share in cash for a total transaction value of $1b. Zimmer expects to maintain its IG rating and to issue $750mm in Senior Unsecured Notes in order to repay the credit facility. Goldman Sachs is acting as advisor to Zimmer Biomet.
  • ITC Holdings Corp. announced on Thursday, June 23rd that its shareholders approved the purchase by Fortis Inc. (A-/S&P). Fortis Inc. (A-/S&P) announced on Tuesday, February 9th that it would acquire ITC Holdings for $11.3b in a cash and stock transaction.  The terms stipulate that ITC shareholders will receive $22.57 in cash and .7520 Fortis shares per ITC share. Fortis will also assume approx. $4.4bn of consolidated ITC indebtedness. The cash portion of the deal will be financed through the issuance of about $2bn of Fortis debt and the sale of up to 19.9% of ITC to one or more infrastructure-focused minority investors. Fortis expects to maintain a solid IG credit rating. Fortis expects to raise $2bn of new debt to fund the deal that is expected to close sometime in late 2016.
  • This past February, Algonquin Power & Utilities Corp. (NR/BBB) announced it will acquire The Empire District Electric Company (N/A) in a $3.4b CAD or $2.4b USD equivalent all cash transaction and today, Thursday, June 16th, Empire’s shareholders overwhelmingly voted in support of the merger to the tune of 95%.  Regulatory approvals are the next step before finalizing the sale expected sometime in Q1 2017. The merger assumes $900mm in USD debt.
  • Microsoft (Aaa/AAA) and LinkedIn Corp. (BB+/NR) announced on June 13th that they have entered into a definitive agreement in which MSFT will purchase LKND for $196 per share for a total transaction valued at $26.2b.  The deal is expected to close sometime in 2016 and pending LinkedIn shareholder approval.
  • Symantec (Baa3/BBB-) announced on June 13th that it entered into an agreement to purchase Blue Coat (Caa2/CCC) for $4.56b in cash. The deal will close sometime in Q3 2016.  Both company boards approved the deal. The transaction will be funded with available cash and $2.8b of new debt. J.P. Morgan is the lead adviser to Symantec.  Bank of America/Merrill Lynch, Barclays and Wells Fargo are also advisers.
  • Shire PLC announced in January 2016 that it will acquire Baxalta Inc. (Baa2/BBB) for approximately $32.2 billion in cash and stock.  Shire secured an $18b bank facility to finance the cash portion and will refinance it in debt. The deal creates the single largest maker of rare disease drugs in the world. This deal could come at any time.
  • Air Liquide SA (NR/A+) announced it has completed the acquisition of Airgas Inc. (Baa2/BBB).  Air Liquide announced on November 17th that it would acquire Airgas Inc. (Baa2/BBB) for $13.4b in which Airgas will be a wholly-owned subsidiary of its new parent. The transaction will be financed bridge loans that are expected to be refinanced through equity, Euro cash and euro as well as dollar-denominated debt issuance.  The deal involves $12b of a bridge facility thru Barclays and BNP Paribas.  The bridge will be refinanced post-closing through a combination U.S. dollar-denominated and Euro bond issuances.
  • Exelon Corp. (Baa2/BBB-) debt financing plans remaining for 2016 include, $750 million at Baltimore Gas & Electric (A3/A-) ($300 million maturing on October 1) and $450 million at PECO Energy (Aa3/A-) ($300 million maturing on October 15).
  • On Friday, April 29th the Alere Inc. (Caa1/CCC+) Board of Directors rejected a request by Abbott Labs (A2/A+) to terminate their merger agreement in return for around $40mm for transaction expenses. Abbott cited concerns about various Alere representations in their merger agreement including a delayed 2015 Form 10-K filing as well as government investigations. Abbott Labs (A2/A+) had announced on Monday, February Baa1/BBB+1st, that it would acquire Alere Inc. (Caa1/CCC+) for $5.8b in which “ABT” would pay $56 per share of ”ALR.”  The deal was to be financed with debt.  ABT expects a strong IG rating despite the new debt. The deal is subject to “ALR” shareholder as well as regulatory approvals.
  • Abbott Labs (A2/A+) announced on Thursday, April 28th that it will buy St. Jude’s Medical Inc. (Baa2/A-) in a cash-stock deal valued at $25b to reinforce the medical devices maker’s stake in cardiovascular care. Abbott will fund the cash portion of the transaction with new medium- and long-term debt. Bank of America/Merrill Lynch and Evercore are acting as advisors to Abbott. The deal is expected to close by Q4 2016.
  • Sherwin Williams (A2/A-) announced on Monday, March 21st that it will purchase Valspar Corp. (Baa2/BBB) for $9.3b or $113 per share.  The acquisition will help Sherwin-Williams gain access to big-box retailers like Lowe’s where Velspar has access. It will also provide overseas expansion opportunities.  Sherwin Williams will finance the merger with available cash, existing credit facilities and new debt.  The deal should close sometime before the end of Q1 2017.
  • TE Connectivity (A-/A-) announced it will buy medical device maker Creganna Medical for $895mm in cash.  The deal will be funded with available cash and debt.
  • Dominion Resources Inc. “D” (Baa2/BBB+) announced on Monday, February 1st, that it will acquire Questar Corporation “STR” (A-/S&P) for $4.4b in cash.  “D” agreed to pay “STR” shareholders $25 per share and assume its debt. The deal will be funded with equity, convertibles and debt and is expected to close by the end of 2016. RBC and Mizuho are providing financing and acting as financial advisors to Dominion.  The deal is subject to shareholder and regulatory approvals.
  • This morning in Charlotte, shareholders of Piedmont Natural Gas (A2/A) voted to approve the Company’s acquisition by Duke Energy (A3/BBB+).  66.8% of voting shares supported the acquisition.  In late October Duke Energy, (A3/BBB+) the nation’s largest utility announced that it will buy Piedmont Natural Gas (A2/A) for $4.9b in cash.  Both companies are partners in the $5b Atlantic Coast Pipeline.  The purchase, pending regulatory approval, will add one million new rate payers to Duke Energy’s customer base.  The deal is expected to close as early as July.
  • UPS (Aa3/A+) announced in July 2015 that it entered into a definitive purchase agreement to acquire Coyote Logistics, a technology-driven, non-asset based truckload freight brokerage company for $1.8b from Warburg Pincus.  The transaction will be financed with available cash resources and through existing and new debt arrangements and is expected to close within 30 days.
  • Anthem Inc. (Baa2/A) in July 2015, proposed to purchase Cigna Corp. (Baa1/A) for $54b or $188 per share furthering the consolidation in the healthcare sector. The deal is expected to close sometime during the second half of 2016. The merger would involve 53mm members and will include $22b in new debt and loans.
  • Amphenol Corporation (Baa1/BBB+) announced on June 29th 2015 that it made a binding offer to acquire 100% of FCI Asia Pte. Ltd. for $1.275b. Funding will be made thru cash and debt and is expected to close by the end of 2015.

 

New Issue Volume

 

Index Open Current Change
IG26 74.577 73.45 <1.127>
HV26 192.545 194.975 2.43
VIX 13.05 12.83 <0.22>
S&P 2,169 2,166 <3>
DOW 18,473 18,472 <1>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $6.15 bn DAY: $10.09 bn
WTD: $18.375 bn WTD: $23.315 bn
MTD: $87.125 bn MTD: $116.362 bn
YTD: $801.566 bn YTD: $1,034.102 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
MBA Mortgage Applications July 22 —- <11.2%> <1.3%> —-
Durable Goods Orders June <1.4%> <4.0%> <2.3%> <2.8%>
Durables Ex Transportation June 0.3% <0.5%> <0.3%> <0.4%>
Cap Goods Orders Nondef Ex Air June 0.2% 0.2% <0.4%> <0.5%>
Cap Goods Ship Nondef Ex Air June 0.4% <0.4%> <0.5%> —-
Pending Home Sales MoM June 1.2% 0.2% <3.7%> —-
Pending Home Sales NSA YoY June 3.0% 0.3% 2.4% —-
FOMC Rate Decision (Upper Bound) July 27 0.50% 0.50% 0.50% —-
FOMC Rate Decision (Lower Bound) July 27 0.25% 0.25% 0.25% —-

 

Rates Trading Lab

 

Market’s tone was turned positive post-FOMC. Though the statement was interpreted with more of a hawkish bias, the fact remains that the Fed needs to see all ducks in a line before pulling the next trigger. Foreign markets were better bid all day and we were lagging, so bond bulls are in charge at the moment. Still some hurdles for them and the market, however. 7yr auction tomorrow will be at levels that are currently 8bp richer than the 5yr note that tailed. BOJ looms as well. Nevertheless, I think it will be hard to see higher yields so long as Bunds are bid as they are. Demand for fixed income remains voracious. Today’s $6.15bbn Verizon deal (Mischler was a co-manager) was announced with 3yr IPT of +75, 5yr +95, 10yr +140 and 30yr +215. It priced at 3yr+55, 5yr +75, 10yr+115 and 30yr +190 and was very well oversubscribed. 5y/30y found support at 110bp and I would trade the 110-120bp range we have seen over the past 2 weeks.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-30+ 100-13+ 100-217 101-22+ 108-06+
RESISTANCE LEVEL 99-282 100-10 100-14+ 101-17 107-13
RESISTANCE LEVEL 99-26+ 100-07 100-10+ 101-07+ 106-20+
         
SUPPORT LEVEL 99-23+ 100-02 100-04 100-29 105-15+
SUPPORT LEVEL 99-216 99-296 99-30 100-23 104-16+
SUPPORT LEVEL 99-19+ 99-26+ 99-26+ 100-14 104-01+

 

Tomorrow’s Calendar

 

  • China Data: Nothing Scheduled
  • Japan Data: Japan Foreign Bond Buying
  • Australia: Import/Export
  • EU Data: EU-Jul BCI/Conf GE-Jul CPI/Unem
  • S. Data: Claims, Cons Comf.Jun Trade
  • Supply: Italy 5, 7,10y, U.S. 7y
  • Events: Nothing scheduled
  • Speeches: Couere

(more…)

Don’t Cry For Me, Crimea; Duke Energy Deal: Powered by Diversity; Mischler Comments
March 2014      Debt Market Commentary, Recent Deals   

Quigley’s Corner 03.03.2014 –Don’t Cry For Me, Crimea; Duke Energy Deal: Powered by Diversity

My wife and I had dinner at a great Croatian Restaurant in New Rochelle on Saturday evening called Dubrovnik Restaurant.  It is the first authentic Croatian Restaurant in Westchester.   Conversation was intriguing, compelling and informative in light of events in Ukraine and Crimea and the fact that the couple with us were a Croatian woman and her Russian husband.  The grilled calamari and roasted lamb as well as exceptional white wine made in Croatia helped me to keep my mouth shut and my one good ear open as conversation turned to events in Ukraine, Crimea and the former Union of Soviet Socialist Republics.  It helped make the discussion that much more meaningful knowing one had survived the Croatian War of Independence while the other was born into the Brezhnev era and is amazed at the changes that have taken place in his homeland. As Ivan said, “to understand the Russian POV one has to understand Russia.”  He continued, “The Balkan states have all been boiling over with independence for decades.” He said, “Russians feel they are at a political phase in which an orderly transition to independence is governed and dictated by law.  Once that is upheld negotiations can take place.  However, most Russians feel this is not what happened in Ukraine” according to Ivan.  He went on to say that once an orderly political protocol was broken it antagonized anti-Ukrainian sentiment within Russia and Putin now has his reason to move troops along the borders in the event of civil war…….we are always suspect power hungry leaders masquerading under a veil of democratic independence.”  Ivan does think civil war could “likely come” knowing the psyche of his people and that it “could get very ugly”……to say the least.  It’s unfortunate to have to say it but it’s true, –  there will be a continued significant flight to quality of safe havens which means the U.S. of A.  Europe’s recovery is currently at the point we were at a couple of years ago so investors aren’t exactly sending cash into French or German banks.  The money flows into Switzerland and the U.S.  folks.

Another one of my friends/accounts is actually traveling overseas this week and is currently in the Ukraine.  Not only did I have a nice order from him but today on our Duke Energy deal but I asked him if he could find the time to scribe some impressions for me of his time in the world’s newest “hot spot.” Here’s what he wrote:  “Life here in Ukraine is “normal”. People go to their jobs, students attend their classes and people are not panicking. My wife and I arrived yesterday March 2nd  to Kiev Borispol Airport at 12pm, then we drove 30 minutes to eat in a local restaurant. People are friendly here and they don’t seem worried about the situation. After lunch in Kiev we drove to Romny, which is 3 hours to the North East side of Kiev. It was a great ride, we enjoyed the beautiful landscape and we didn’t see any signs of military at all. Here in Romny, people believe that what’s happening in Crimea is a full blown occupation, and they all also believe that Russia is trying to antagonize Ukraine into a war. All, however, believe in a peaceful resolution to the current crisis.”  This is all about Vlad folks.  He’ll antagonize….poke and prod in what is a highly sensitive situation.  It’s about secession and or civil war. Should Ukraine turn West with the EU it will automatically move the NATO alliance BMD’s along its eastern border and that much closer to Russia.  Ivan agrees 100% that Russians believe the West would never attack unprovoked BUT Vlad knows something more powerful – the waft of nearby democracy will drift deeper and deeper into the Motherland.  That’s what he doesn’t want.      

Investment Grade New Issue Re-Cap

DEFENSE! DEFENSE! DEFENSE!

Some feedback I heard from accounts today was that with expectations for more issuance ahead, they did not want to take risks with many senior participants out to day in New York due to the snowstorm that impacted some living in New Jersey.  Connecticans, however, escaped unscathed as did those on Long Isalnd and living in Manhattan!  It was also noted in the same breadth that with those seniors out, the delicate situation in the Ukraine/Crimea is too fluid to take chances and they pointed to this morning’s stock market that opened down triple digits.  They had no interest in having to mark down a position in their portfolios and thereby decided to sideline themselves for the day. What with the newest global headache, it’s no wonder we saw three utilities print four tranches today.  That’s called D-E-F-E-N-S-E and those companies timed their deals impeccably.   However, there is a considerable flight to quality taking place that I wrote about last week that is further compressing spread product.  So, it was no wonder, from my standpoint, why we saw utilities front and center in today’s session.  The end result – 6 IG Corporate issuers printed 10 tranches totaling $5.20 billion to start off March issuance. 

Word out is that tomorrow will be B-U-S-Y!!!!

Utilities “Duke” it out to light up the leaderboards

Con Edison hit the tapes first followed by Public Service Colorado but it was the two-part for Duke Energy Progress Inc. that is my featured “Deal-of-the-Day!”  Why?  Simply because my CEO and I were in Charlotte on Friday to visit with Duke Energy and lo and behold Mischler Financial Group, Inc., the nation’s largest and oldest Service Disabled Veteran broker-dealer was featured as a Co-Manager.  It’s our inaugural transaction with Duke.  That’ll earn the rights each every time!  In advance of today’s drill-down, it goes without saying that Duke Energy Progress Inc’s Treasury/Funding team is the recipient of today’s Mischler five-star salute for giving us the chance to prove ourselves.

Now to the r/v study… (more…)