Browsing articles tagged with "Investment Grade Corporate Bond New Issue Archives - Mischler Financial Group"
Investment Grade Corporate Bond-New Issue Re-Cap
October 2017      Debt Market Commentary   

Quigley’s Corner 10.17.17 – Debt Market Commentary; Investment Grade Corporate Bond-New Issue Re-Cap

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

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

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 October 11th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 3 issuers across 5 tranches totaling $3.65b.  The SSA space featured 3 issuers and 3 tranches for $4.50b bringing the all-in IG day totals to 6 issuers, 8 tranches and $8.15b.

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

  • The IG Corporate WTD total is 22.38% of this week’s syndicate midpoint average forecast or $5.65b vs. $25.25b.
  • MTD we’ve priced 57.60% of the syndicate forecast for October IG Corporate new issuance or $52.804b vs. $91.68b.
  • There are now 8 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • Hospitality Properties Trust increased its 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • Pacific Life Insurance Co. upsized its 50nc30 fixed-to-floating subordinated surplus notes new issue today to $750mm from $500mm at the launch.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 5 IG Corporate-only new issues was <18.00> bps.
  • BAML’s IG Master Index tightened 1bp to +103 vs. +104 tying its post-Crisis low set on 10/06.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.98.
  • Standard & Poor’s Investment Grade Composite Spread tightened 2bps to +146 vs. +148.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.3b on Thursday versus $13.8b on Friday.
  • The 10-DMA stands at $15.9b.

Global Market Recap 

  • U.S. Treasuries – Closed mixed & flatter. Yields & curve at levels not seen in many years.
  • Overseas Bonds – JGB’s unchanged to down. Gilts rallied 4-6 bps despite higher CPI.
  • Stocks – Unchanged (NASDAQ) to higher. S&P’s and Dow traded at all-time highs.
  • Overseas Stocks – Nikkei 21 year high. China closed mixed. Europe had a down day.
  • Economic – Import prices index higher. IP, Cap U & MP nothing special but NAHB was strong.
  • Overseas Economic – U.K. CPI YoY reached 3.0% – the highest since 2012.
  • Currencies – The USD outperformed 4 of the Big 5 & the 5th was unchanged (¥en).
  • Commodities – Energy small gains. Gold, copper & silver traded poorly.
  • CDX IG: -0.09 to 54.15
  • CDX HY: -1.70 316.16
  • CDX EM: -1.30 to 176.21

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
10/16 – EU imposes total ban on oil & petroleum to NOKO. 10/6 – Russian news announces NOKO is preparing to test fire a missile capable of reaching the U.S. Coast. Recall Trump’s “calm before the storm” comment.  NOKO rumored to reach out to GOP to help “figure out Trump.” On 9/24 Trump warns NOKO leadership that if rhetorical threats continue its leaders “won’t be around much longer.” NOKO claims comment is an “Act of War” and that it now has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.”
ELEVATED
“The EU”
Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government.  Worst performance for Merkel’s CDU and Christian Social Union party since 1949.  Immigration a source of tension. Right wing has a seat in German decision-making.

EU and Macron-Merkel coalition to squeeze U.K. re: BREXIT “divorce” bill. Companies prepping for messy BREXIT & 2 years of weak growth. EU wants UK to pay exit bill before any negotiations. UK withdrawal from EU takes place in 3/2019. Moody’s downgraded the UK on 9/22 to Aa2 from Aa1.

CAUTION
“U.S. political gridlock”
31 year old conservative Sebastian Kurz becomes the world’s youngest leader winning Austria’s Presidential election. He is expected to form a coalition with the resurgent far right anti-immigration party or Freedom Party. (See the “QC” dated 11-18-2015 and 11-30-2016).

10/16 – Catalonian Pres. Puigdemont defended right to claim to independence. Spain’s Pres. Rajoy can use Article 155 to suspend the Catalan gov’t. and take over in days. If not, Puigdemont’s diverse coalition may fall apart. Results of Catalonia’s Oct. 1st independence referendum vote posted 90% support for secession from Spain. National riot police cracked down at the voting booths injuring ~900 voters in the EU nation’s worst crisis in 40+ years since turning to democracy.

Steve Bannon’s war on the GOP’s “imperialist” political class targets Senate Majority Leader Mitch McConnell among others to unite Republicans behind Trump to get things done in Washington.

GOP tax overhaul plan would double deduction and create 3 tax brackets vs. 7. Bringing Corporate rate to 20% might return trillions of dollars to the U.S. that corps are keeping overseas.  Consensus GOP support to pass legislation still in doubt. Partisan politics.

Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up. On 9/26 Yellen admitted Fed inflation model may have been “mispecified” & “misguided.”

October MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. October MTD thru 10/16 – there were 43 terrorist attacks. Killing 541 people and wounding 638.

Cybercrime, ransomware, viruses & hacking are winning cyber wars. Recent attacks have hit four continents, law firms, food companies, power grids, pharma and governments.

Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3). Economy sliding into abyss. Regional immigration issue w/many fleeing elsewhere.

MODERATE
“China”
China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. National Congress of the Chinese Communists Party held on Oct. 18th. Most decisions are made prior to it but it’s historically pivotal regarding leadership changes & reshuffling as elders retire.

Venezuela – Maduro dictatorship firmly in control. U.S. Tsy freezes Maduro family assets. Risk of VZ default. Isolated by int’l community. 4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3). Economy sliding into abyss. Regional immigration issue w/many continuing to flee abroad. Increased domestic crime.

MARGINAL
“More about monetary policy than recession”
Fed signals 1 more rate hike in 2017; 3 in 2018. Dot plots unchanged for 2017 & ’18; lower for ’19 & longer-term. Hurricane’s Harvey, Irma and Maria appearing in economic data; “could” push hike to 2018. $4.5 trln b/s unwind begins at Oct. 31st mtg & absence of inflation are concerns. Bullish corp. cdt. forecast for 20yr maturities and out; widening front end spreads ahead; optimism re: tax reform could mean return to US of $1trln currently offshore.  Issuers not so worried about rates. . Shifts/adjustments in monetary policy are more of a concern than chance of a 2018 recession.

 

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

 

IG Corporate New Issuance This Week
10/16-10/20
vs. Current
WTD – $5.65b
October 2017 vs. Current
MTD – $52.804b
Low-End Avg. $24.21b 23.34% $90.96b 58.05%
Midpoint Avg. $25.25b 22.38% $91.68b 57.60%
High-End Avg. $26.29b 21.49% $92.42b 57.13%
The Low $15b 37.67% $110b 48.00%
The High $36b 15.69% $75b 70.41%

 

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 six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/16
AVERAGES
WEEK 10/09
AVERAGES
WEEK 10/02
AVERAGES
WEEK 8/25
AVERAGES
WEEK 8/18
AVERAGES
WEEK 9/11
AVERAGES
WEEK 9/05
New Issue Concessions 0.00 bps <0.38> bps 1.18 bps 1.38 bps 0.62 bps 1.40 bps 2.12 bps
Oversubscription Rates 2.05x 3.03x 3.50x 3.31x 3.18x 3.27x 2.70x
Tenors 20.00 yrs 9.77 yrs 12.00 yrs 8.50 yrs 8.21 yrs 9.84 yrs 11.10 yrs
Tranche Sizes $1,000mm $906mm $608mm $645mm $483mm $674mm $731mm
Avg. Spd. Compression
IPTs to Launch
<15.00> bps <19.81> bps <18.40> bps <20.19> yrs <18.40> bps <18.91> bps <16.80> yrs

 

New Issues Priced

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Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank
July 2017      Debt Market Commentary   

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

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

Investment Grade New Issue Re-Cap

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

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

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

 

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

 

Today’s IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

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

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

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

·          Italian debt-to-GDP ratio is 133% – world’s 3rd highest. €17bn gov’t. bail out of two Italian banks.

·          Closing in on ISIS is very problematic as it is scatterring across a wider MENA region and Europe.

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

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

MODERATE ·          Trump/Putin meet at G-20 Summit in Hamburg last week. Move toward mutual cease fire in Syria; to identify de-escalation zones; discussed hacking controversy and agreed to improved relations.

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

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

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

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

 

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