Browsing articles tagged with "FOMC Rate Decision Archives - Mischler Financial Group"
Nor’easter Stella In Front of Front-Loaded Week-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.13.17  Stella Won’t Stop The Show!; Saluting Women on Wall Street

 

Investment Grade Corporate Debt New Issue Re-Cap

Shout Out to Team Citigroup for Honoring IWD (International Women’s Day!)

IG Primary & Secondary Market Talking Points –Penske Widens; Everett Spinco Saves the Day

Global Market Recap

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

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 March 8th      

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

 

So what happens on a Monday ahead of the FOMC Rate Decision, the Bank of England, the Bank of Japan, Trump’s 2018 budget, the expiration of the U.S. debt ceiling suspension, BREXIT’s triggering via Article 50 and the eagerly watched Dutch elections and the chance of up to as much as two feet of snow in the Tri-State area tomorrow? Well I suppose one could call that a lot of things but I choose to call it a “front-loaded” week as a result………

…….and today’s IG dollar DCM agreed as 8 Corporate issuers priced 17 tranches between them totaling $18.30b with a major boost from The State of Kuwait’s $8b two-part 5s/10s that brought today’s impressive all-in IG day totals to 9 issuers, 19 tranches and $26.30b.

Here are some interesting volume talking points from today’s session:

  • The WTD total is now 73% of this week’s syndicate midpoint average forecast or $18.30b $24.83b.
  • MTD, we’ve now priced 67% of the IG Corporate mid-range projection for all of March or $77.425b $114.31b.
  • Today’s all-in IG day total (IG Corporates plus SSA) of $26.30b represents the 11th highest day of all-time.
  • The session’s $26.30b is the second highest volume day of 2017 – and we have had a lot of biggies YTD!
  • After only one day, this week’s $26.30b already ranks as the 9th busiest week of 2017.
  • Today’s $11b 5-part Verizon Communications transaction is the 4th largest issue of the year.

Shout Out to Team Citigroup for Honoring IWD

 

Today, our good friends at Citibank N.A. issued a 2yr FXD/FRN in honor of International Women’s Day (“IWD”), which was last Wednesday, March 8th. IWD is a global day celebrating the social, economic, cultural and political achievements of women among others. So, today it was a privilege and an honor to step aside and watch as Team Citi once again showed why they have been and continue to be a leading force for diversity in our IG dollar DCM.  Congratulations to the continued collective team efforts of everyone at Team Citi! The nation’s oldest Service Disabled Veteran broker dealer sends its five-star salute to each of you and as well as to all the women in our world and lives. The seven featured Women-Owned diversity broker dealer/investment banks on today’s Citibank N.A. “IWD” deal were:

  • L. King & Associates
  • CAPIS Institutional Services, Inc.
  • Lebenthal & Company LLC.
  • MFR Securities, Inc.
  • Siebert, Cisneros Shank & Cop., L.L.C.
  • Telsey Advisory Group
  • Tigress Financial Partners

Why would the financial industry’s oldest minority broker-dealer owned/operated by Service-Disabled Veterans  tout competing minority broker-dealers?  Well, I’d ask “why wouldn’t we?!”  Firstly, its the right thing to do! Second, it provides us the opportunity to showcase one of the global capital market’s leading and cutting edge D&I initiatives, while tipping our hat to the leading women in our diversity space.  So, congratulations for the glass ceilings raised and doors that Citigroup has helped open at their own financial institution through their own incredible procurement initiatives, as well as externally for all these leading women-owned firms. We extend a hardy congratulations to the respective women of D&I in our financial services industry. All for one, and one for all!

So, where do all these ideas originate?  A good place to start looking is from the top down at Citigroup.  Today I would suggest looking first in the office of one Suni Harford….

Who is Suni Harford?

suni-harford-citigroup

Suni Harford, Citigroup

Suni Harford is a Managing Director and Citigroup’s Regional Head of Markets for North America. In this capacity, Suni oversees the North American sales, trading and origination businesses of Citi’s securities and banking franchise. Citi maintains a premier position across all of its fixed income, currency, equity and commodities offerings. In addition to her current responsibilities, Suni is a member of Citi’s Pension Plan Investment Committee, and a Director on the Board of Citibank Canada. Suni is also the co-head of Citigroup’s global women’s initiative, Citi Women.

Prior to her current assignment, Suni was Citi’s Global Head of Fixed Income research, where she was responsible for Citigroup’s credit analytics, research strategy and fixed income quantitative analytics efforts globally. Suni also had oversight of Citi’s premier fixed-income analytics platform, The Yield Book. From 1995-2004, Suni served as the co-head of Citi’s Fixed Income Capital Markets origination business, where she managed relationships with financial institutions.

Not that she doesn’t have enough on her plate, Suni also serves on the Board of Directors of The Depository Trust & Clearing Corporation, the Board of Directors of The Forte Foundation, a national, non-profit organization dedicated to increasing the number of women leaders in business, the Board of the Friends of Hudson River Park, and the Board of Taproot Foundation, a national organization engaged in skills-based volunteerism and pro-bono philanthropy. Suni is also passionate about awareness and support for our veteran community, and she is involved in many organizations in this regard. In addition to serving on the U.S. Chamber of Commerce Veteran’s Employment Advisory Council, Suni has worked with First Lady Michele Obama’s Joining Forces initiative. Suni also represents Citi as a founding member of Veterans on Wall Street, a coalition of major financial services firms established in 2010 to engage the broader industry in efforts to support our transitioning veterans. Having helped formalize Citi’s very successful Veterans Initiative, CitiSalutes, in 2009, Suni remains the senior business sponsor for the initiative.

For those not already aware of her pedigree, Suni joined Salomon Brothers in January 1993, after five years with Merrill Lynch & Co. where she was a Vice President in Investment Banking. Suni joined Merrill upon graduation from the Amos Tuck School of Business at Dartmouth College, where she received her M.B.A. Suni received her Bachelor of Science degree from Denison University, where she majored in physics and math.

Pretty impressive stuff right there folks. Now you know why Suni was named one of  2016’s Top 20 Most Powerful Women on Wall Street!

So, in light of International Women’s Day and today’s honorable $2b Citibank N.A. “IWD” two-part new issue a “thank you”– not only to Suni, but to all the women in our investment grade debt capital markets and in our lives in addition to those who help perpetuate a more inclusive financial services industry.

Before I conclude, a bit of Women-on-Wall Street trivia for you from the guy-in-the-corner’s personal treasure trove – 

Did you know the first ever Euro-denominated transaction ever priced in history was for the European Investment Bank?  Did you know who priced it?  It was a woman. Her name was Natalie Armentero of Banque Paribas Syndicate. You may not have heard her name in a while because, back in 1998 – over 19 years ago – she became the wife of the guy-in-the-corner and she now goes by the name of Natalie Quigley!  Yet another smart and talented lady right there who graced our investment grade GCM opening doors and setting the bar high for many other women to follow.  She also makes me one very proud and lucky guy!  Her sister Marie-Therese Armentero represented Switzerland in the 1984 and 1988 Summer Olympics while currently holding numerous world swimming records for women over 40 years of age. Good stuff right there folks. Here’s to supporting strong women the world over.

Thank you also to Morgan Forester at team Citigroup for making herself accessible for me today on this.

 

IG Primary & Secondary Market Talking Points – Uh oh! What Gives? Penske Widens!……But Then Everett Spinco Saves the Day?!

 

  • Today’s Penske Truck Leasing Co., L.P. and PTL Finance Corporation’s 10-year 144a/REGS Senior Notes new issue opened some eyes today when it launched at +160 or 5 bps wider than +155 “area” guidance despite the fact that “area” was defined as +/-5 bps.
  • However, where there is bad there is good.  Today’s Everett Spinco Inc. 3-year 144a/REGS Senior Notes tranche was guided in the  +140 “area” with the latter defined as
    +/-5 bps but launched at +130 or a nickel tighter than the tightest side of guidance!
  • The average spread from IPTs thru the launch/final pricing of today’s 17 IG Corporate-only new issues was <17.36> bps.
  • BAML’s IG Master Index was unchanged at +121.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.16 vs. 1.15.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +163.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.6b on Friday versus $20.8b on Thursday and $21.3b the previous Friday.
  • The 10-DMA stands at $20.2b.

Global Market Recap

 

  • Massive blizzard headed towards the Northeast tonight/tomorrow.
  • S. Treasuries – lost ground due to heavy corporate supply.
  • Overseas Bonds – JGB’s had small losses. Europe was all over the place.
  • 3mth Libor – Set at the highest yield (1.13122%) since April 2009.
  • Stocks – U.S. stocks were mixed and little changed.
  • Overseas stocks – Europe more green than red. Asia closed higher.
  • Economic – Not a real factor today in the U.S. or across the globe but will be this week.
  • Currencies – USD better vs. the Euro, weaker vs. the Pound, CAD and AUD and little changed vs. Yen.
  • Commodities – Crude oil small loss, gold up, copper good day and wheat had a bad day.
  • CDX IG: +0.53 to 65.08
  • CDX HY: +3.85 to 336.70
  • CDX EM: -0.28 to 216.74

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/13-3/17
vs. Current
WTD – $18.30b
March 2017
Forecasts
vs. Current
MTD – $77.425b
Low-End Avg. $24.00b 76.25% $113.79b 68.04%
Midpoint Avg. $24.83b 73.70% $114.31b 67.73%
High-End Avg. $25.67b 71.29% $114.83b 67.43%
The Low $15b 122.00% $80b 96.78%
The High $35b 52.29% $140b 55.30%

 

In Honor of Tropical Storm “Stella”

My bet is that Tropical Storm Stella renders Tuesday an inactive day which, in turn, means Thursday now becomes a massive day for issuance.   
noreaster-stella

 

 

 

 

 

 

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

 

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

 

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

 

…..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 six week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
3/06
TUES.
3/07
WED.
3/08
TH.
3/09
FRI.
3/10
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
AVERAGES
WEEK 2/06
AVERAGES
WEEK 1/30
New Issue Concessions <0.56> bps <0.47> bps 5.5 bps 3.94 bps 3.33 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps <3.44> bps <0.87> bps
Oversubscription Rates 3.19x 2.54x 2.22x 2.37x 1.92x 2.73x 3.39x 3.26x 3.76x 3.92x 3.12x
Tenors 9.93 yrs 8.68 yrs 17.99 yrs 6.58 yrs 5.21 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs 12.04 yrs 11.60 yrs
Tranche Sizes $843mm $638mm $443mm $583mm $275mm $671mm $738mm $695mm $744mm $735mm $1,311 yrs
Avg. Spd. Compression
IPTs to Launch
<21.31> bps <18.56> yrs <17> bps <25.06> bps <13.50> bps <20.00> bps <16.79> bps <18.47> bps <18.45> bps <19.60> bps <19.77> bps

 

New Issues Priced

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

Please Note: 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
Citibank N.A. A1/A+ FRN 3/20/2019 1,000 3mL+equiv 3mL+34 the # 3mL+34 3mL+34 CITI-sole
Citibank N.A. A1/A+ 2.00% 3/20/2019 1,500 +low 70s/+72.5a +67 the # +67 +67 CITI-sole
DCT Industrial Oper. Part.
(tap) New Total: $325mm
Baa2/BBB 4.50% 10/15/2023 50 +185a +175a (+/-5) +170 +170 CITI/JPM/WFS
Everett Spinco Inc. Baa2/BBB+ 2.875% 3/27/2020 500 +175a +140a (+/-5) +130 +130 BAML/MUFG/RBC
Everett Spinco Inc. Baa2/BBB+ 4.25% 4/15/2024 500 +225a +195a (+/-5) +190 +190 BAML/MUFG/RBC
Everett Spinco Inc. Baa2/BBB+ 4.75% 4/15/2027 500 +237.5-250
+243.75a
+220a (+/-5) +215 +215 BAML/MUFG/RBC
Humana Inc. Baa3/BBB+ 3.95% 3/15/2027 600 +150-155 +140a (+/-5) +135 +135 BAML/JPM/MS/USB
Humana Inc. Baa3/BBB+ 4.80% 3/15/2047 400 +180a +165a (+/-5) +160 +160 BAML/JPM/MS/USB
Ontario Teachers A1/AA 3.125% 3/20/2022 500 +112.5a +100-105 +100 +100 GS/TD
Ontario Teachers A1/AA 3.875% 3/20/2027 500 +137.5a +130-135 +130 +130 GS/TD
Penske Truck Leasing Baa2/BBB+ 4.20% 4/01/2027 500 +160a +155a (+/-5) +160 +160 BAML/JPM/PNC/WFS (a)  +1 (p)
Verizon Communications Inc. Baa1/A- FRN 3/16/2022 1,400 3mL+equiv 3mL+equiv 3mL+100 3mL+100 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 3.125% 3/16/2022 1,850 +125-130 +115a (+/-5) +110 +110 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 4.124% 3/16/2027 3,250 +175-180 +165a (+/-5) +160 +160 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 5.25% 3/16/2036 3,000 +230-235 +215a (+/-5) +210 +210 BAML/BARC/MS/RBC (a) +5 (p)
Verizon Communications Inc. Baa1/A- 5.50% 3/16/2046 1,500 +245-250 +235a (+/-5) +230 +230 BAML/BARC/MS/RBC (a) +5 (p)
Virginia Electric & Power Co. A2/A 3.50% 3/15/2027 750 +105a +90-95 +90 +90 DB/JPM/WFS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
State of Kuwait AA/AA 2.75% 3/20/2022 3,500 +100a +85a +75 +75 CITI/DB/HSBC/JPM/NBK/SCB
State of Kuwait AA/AA 3.50% 3/20/2027 4,500 +120a +110a +100 +100 CITI/DB/HSBC/JPM/NBK/SCB

 

Indexes and New Issue Volume

 

Index Open Current Change
IG27 64.547 64.853 0.306
HV27 131.025 131.490 0.465
VIX 11.66 11.35 <0.31>
S&P 2,372 2,373 1
DOW 20,902 20,881 <21>
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $18.30 bn DAY: $26.30 bn
WTD: $18.30 bn WTD: $26.30 bn
MTD: $77.425 bn MTD: $100.475 bn
YTD: $340.508 bn YTD: $440.458 bn

 

Lipper Report/Fund Flows – Week ending March 8th      

     

  • For the week ended March 8th, Lipper U.S. Fund Flows reported an inflow of $3.482b into Corporate Investment Grade Funds (2017 YTD net inflow of $29.433b) and a net outflow of $2.119b from High Yield Funds (2017 YTD net outflow of $743m).
  • Over the same period, Lipper reported a net inflow of $1.208b into Loan Participation Funds (2017 YTD net inflow of $9.308b).
  • Emerging Market debt funds reported a net inflow of $154.368m (2017 YTD inflow of $1.387b).

 

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: (more…)

March-In Like a Lion..Out Like A Lamb, a Bull or a Bear? Mischler Equities Insight
March 2017      Equities Market Commentary   

Mar 09 11 pm EST– March comes in like a lion and goes out like a lamb. Traders are hoping March does not come in like a bull and goes out like a bear.

larry-peruzzi-mischler-equitiies

Larry Peruzzi

On March 1, the Dow, S&P 500 and NASDAQ comp all closed at record highs, over the next 6 trading sessions the S&P declined on 4 of 6 days and had very small gains on the 2 other days.

On Thursday, the bull market celebrated its 8th year with gains of between 1bp and 8 bps in U.S indices. After 8 years, markets seem to be both tired and excited. Valuations are starting to be questioned but expectation of job growth and tax relief has few ready to sell; but an equally few are ready to jump in.

So, markets feel as though we are currently in a stalemate. Friday’s February employment report is truly the first report that will be more affected by the present administration rather than the former. It is being closely watched, and anticipation about the Feb report explains why the equities markets move this week has been muted. Investors have been calling for, and patiently waiting for, policy details. Friday’s report should give us something to digest for now.

Although the market moves this week have been narrow, news has been abundant. We have seen a new proposed health care bill, a new immigration policy effort, U.S shale production increase, a global bond rout, U.S dollar at highest levels in 2 months, South Korean President ousted from office and an EU summit all kept us busy. Monday’s Factory orders exceeded expectations, Wednesday’s ADP employment change exceeded estimated by a healthy 112K and Thursday import prices showed inflation seems to be under control.

After Friday’s employment report, I think that the next two most important events this week were: 1) WTI crude oil falling back below $50 (WTI is down 8.3% for March). This has always been a double edge sword. More money in consumers’ pocket, but decline in the energy sector is a drag on the economy and indices. 2) A largely overlooked surge in Household Net Worth, with both a positive revision to 3Q and a better than expected gain in 4Q. Simply put, more wealth equals more spending, which equals more jobs and growth. But we need to watch that inflation as well.

Looking ahead to next week investors will have plenty to digest. As this market moves more toward a dual factor market (taxes and jobs), we will be reminded of the other factors able to move the market. We get a good view on inflation with Tuesday’s PPI report for February and Wednesday CPI report for February. Wednesday’s retail sales figures will give us a clearer picture as to how much of the surge in household wealth has pushed through the economy. With recent weakness in the retailers, we will be watching the sales numbers closely. Later in the day on Wednesday, the FED will release its FOMC rate decision, in which a 25bps hike is widely expected. Fed Funds rate is actually pricing in a 100% probability of a rate increase; the accompanying comments will be of more importance than the action.

With Thursday’s February Housing Starts and building permits release we get a better idea of the health of real estate.  Mild weather in February should help this number. The week concludes with Michigan sentiment reading. With the stock market near all-time highs, surge in household wealth and cheaper oil and gas prices in store, consumers should have reason to be optimistic.  With the S&P 500 PE ratio continuing to creep up to 21.8, companies’ earnings need to be able to sustain these prices when 1Q earnings roll around next month, otherwise we could some profit taking on the rise.

But it all starts with Friday’s employment number.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch March 09 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

(more…)

Trump’s Tweet-Driven Policy Approach Propels Stock Prices; Can This Continue?
January 2017      Equities Market Commentary   

Peruzzi’s Perch – Jan 26 2017- Forget About Fed Policy and Rates- Equities Markets Are All About Trump Tweets (Still?!)

larry-peruzzi-mischler-equitiies

Larry Peruzzi

U.S. equity markets close the week in record territory, as the Dow Jones finally crosses the 20,000 Maginot line on Wednesday. Fueled by business friendly policy and rhetoric out of Washington, relatively inexpensive energy, improving corporate earnings and low rates the Dow recorded 2nd fastest 1,000-point move in history (42 days). What was a FED/rate driven market, which was preceded by the Oil driven market, has been replaced by a Presidential policy/tweet-driven market.

This week we saw rallies in cement and steel stocks when President Trump signaled he was forging on with his boarder wall as well as rallies in energy stocks when the Keystone and Dakota XL pipelines were reopened. Across the border Mexican stocks even lost 1.4% on Thursday after Mexican President Enrique Peña Nieto canceled a scheduled meeting at the White House. Fed watching has been replaced by Tweet watching and so far, the equity markets like what it is seeing. Historically when markets cross into record territory we normally see a brief pause while analyst access valuations. Additional positive news was received after the close on Thursday as earning from Microsoft, Intel and Alphabet beat estimates. As of Thursday 161 of the S&P 500 names have reported with 120 (74.5%) reporting a positive surprise and 38 (23.6%) reporting a negative surprise.

Next week 24 S&P 500 companies are scheduled to report earnings. The reporting firms are dominated by retailers.  It will also be an important week economically with Dallas Fed activity on Monday, Chicago Purchasing managers on Tuesday, a FOMC rate decision on Wednesday (no change expected), productivity and labor cost on Wednesday and the ever important January employment report closing out the week on Friday. The FED Funds rate, despite Chairwoman Yellen calls for increased magnitudes of rate increases, is not expected to change. Fed funds are only pricing a 14.5% probability of a rate hike for Wednesday’s FOMC meeting. Friday’s employment reported should see a lot of attention. A positive report is sure to be met by the suddenly customary round of tweets and promotion.  It may however be a tad bit early to put much emphasis on the report. The April, May and June reports should be much better harbinger of the effectiveness of the Trump agenda toward job creation. With the Dow Jones now over the 20,000 level, after 6 failed attempts in December and January, we will be looking for signals on the strength and sustainability of the bullish sentiment. There are some concerns over Trump’s protectionism and the recent decline in the U.S dollar has made some foreign investors nervous. Global markets are in rally mode but with European referendums this spring, trade agreements being rewritten and rising political tension there is uneasiness about it.

Asian Markets are expected to be quite as the Lunar New Year holiday commences Friday. Chinese markets will remain closed until next Friday. 2017 is the year of the Rooster. The Rooster is almost the epitome of fidelity and punctuality. Investors would be well served by being loyal to facts and details on their trades and in being punctual, as we have entered a market environment never seen before.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch January 26 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

To receive Peruzzi’s Perch, please contact Larry Peruzzi, Managing Director, International Equities via email: lperuzzi@mischlerfinancial.com or via phone.

(more…)

What’s Next: FOMC Rate Decision+ 18 Economic Data Releases
December 2016      Debt Market Commentary   

Quigley’s Corner 12.13.16 -Baked In FOMC Rate Decision+ 18 Major Economic Releases

 

Investment Grade New Issue Re-Cap – FOMC Tomorrow and then We’re Back to Zero for the 2017 IG Primary Markets

Global Market Recap

IG Primary & Secondary Market Talking Points

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending December 7th     

IG Credit Spreads by Rating & Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

No new issues priced today ahead of tomorrow’s all-important FOMC rate decision in which the Fed will likely announce a rate hike of 0.25%. We have no less than 18 major economic data releases tomorrow which should help us read the tea leaves for table-setting come January. The first month of each year is historically a prolific one. January 2017 will be no different. We could see $130-140b price…….and likely more when factoring in SSA issuance! So welcome and enjoy the holiday reprieve while we have it because we’ll be starting all over again and “back to zero” before you can blink in a couple of weeks.

 

Global Market Recap

 

  • S. Treasuries – Closed mixed & flatter. The 30yr auction was well received.
  • Overseas Bonds – Bonds in Europe were very well big. JGB’s closed mixed.
  • 3mth Libor – Set at the highest yield (0.96344%) since May 2009.
  • Stocks – S&P, Dow and NASDAQ traded at all-time times.
  • Overseas Stocks – Europe rallied (banks) & Asia closed with gains.
  • Economic – U.S. small business optimism at a 2-year high.
  • Overseas Economic – Better data in China & Europe. Germany & U.K. CPI remained low.
  • Currencies – USD stabilized after a poor session yesterday.
  • Commodities – Crude oil unchanged. Gold, copper & silver down. CRB small gain.
  • CDX IG: -0.68 to 67.41
  • CDX HY: -4.59 to 353.11
  • CDX EM: -1.92 to 243.65

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index tightened 1 bp to +132 vs. +133.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.26 vs. 1.27.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +172 vs. +173.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.5b on Monday versus $15.7b on Friday and $14.0b the previous Monday.

 

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

 

IG Corporate New Issuance This Week
12/12-12/16
vs. Current
WTD – $2.75b
December 2016
Forecasts
vs. Current
MTD – $38.955b
Low-End Avg. $4.74b 2.75% $40.87b 95.31%
Midpoint Avg. $6.00b 45.83% $41.52b 93.82%
High-End Avg. $7.26b 37.88% $42.17b 92.38%
The Low $0.1b/”0” 2,750.00% $30b 129.85%
The High $10b 27.5% $60b 64.92%

 

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

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

 

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

 

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
12/12
AVERAGES
WEEK 12/05
AVERAGES
WEEK 11/28
AVERAGES
WEEK 11/21
AVERAGES
WEEK 11/14
New Issue Concessions <1.83> bps 4.26 bps 3.53 bps 4.5 bps 3.62 bps
Oversubscription Rates 2.15x 3.68x 3.38x 2.99x 2.78x
Tenors 6 yrs 9.21 yrs 10.84 yrs 12.14 yrs 11.28 yrs
Tranche Sizes $688mm $760mm $711mm $929mm $1,039mm
Avg. Spd. Compression
IPTs to Launch
<15.75> bps <22.24> bps <17.60> bps <16.07> bps <17.69> bps

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.26 1.26 0
IG27 68.095 67.827 <0.268>
HV27 136.005 135.56 <0.445>
VIX 12.64 12.72 0.08  
S&P 2,256 2,271 15
DOW 19,796 19,911 115  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $0.00 bn DAY: $0.00 bn
WTD: $2.75 bn WTD: $2.75 bn
MTD: $38.955 bn MTD: $44.905 bn
YTD: $1,283.717 bn YTD: $1,623.651 bn

 

Lipper Report/Fund Flows – Week ending December 7th     

     

  • For the week ended December 7th, Lipper U.S. Fund Flows reported an inflow of $2.583b into Corporate Investment Grade Funds (2016 YTD net inflow of $41.047b) and a net inflow of $2.034bm into High Yield Funds (2016 YTD net inflow of $6.973b).

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

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

 

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

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

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

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

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week ending September 14th

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

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

Economic Data Releases

Rates Trading Lab

 

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

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

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

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

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

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

Here’s the re-print:

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

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

 

Here is Germany:

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

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

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

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

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

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

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

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

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

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

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

 

Global Market Recap

 

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

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

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

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

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

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

o   CDX IG: -0.96 to 75.0

o   CDX HY: -3.96 to 406.18

o   CDX EM: -7.20 to 253.19

 

IG Primary & Secondary Market Talking Points

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

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

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