Browsing articles tagged with "investment grade corporate debt issuance Archives - Mischler Financial Group"
FOMC Rate Decision Talking Points “Unchanged!”
November 2017      Debt Market Commentary   

Quigley’s Corner 11.01.17  FOMC Rate Decision Talking Points “Unchanged!”

 Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

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

FOMC Rate Decision Talking Points: Unchanged (as Expected)

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

Rates Trading Lab

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 25th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

The “QC” Geopolitical Risk Monitor

 

As you all know, Mischler Financial Group, Inc. is our great nation’s oldest Service Disabled Veteran broker dealer and as such our veteran give-back initiatives are prolific and lay at the core of our shared ethos here at Team Mischler.  I would appreciate it if you could all take a moment to read about our 2017 Veteran’s Day Month Pledge from my CEO Dean Chamberlain just before my evening sign-off below.  It is with great appreciation that Mischler Financial is able to “give-back” the fruits of our labor throughout the year and it is all thanks to you the issuers and accounts who elect to do business with us to address the need for best-in-class capital market services and your own internal diversity/veteran procurement initiatives. It means everything to each of us here at Mischler and the non-profit organizations we support.  Thank you all very much! –RQ 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 3 issuers across 5 tranches totaling $2.50b.  The SSA space was inactive today.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate estimates:

  • The IG Corporate WTD total is 83.16% of this week’s syndicate midpoint average forecast or $21.323b vs. $25.64b.
  • MTD we’ve priced 2.59% of the syndicate forecast for October IG Corporate new issuance or $2.50b vs. $96.38b.
  • There are now 7 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points 

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues that displayed price evolution was <27.33> bps.
  • BAML’s IG Master Index widened 1 bp to +101 vs. +100.
  • BAML’s IG Master Index saw  the “AA” tied its post Crisis low of +58 for the third session in a row while the “A” class held its post Crisis low of +78 for the sixth consecutive session.
  • The Transportation industry sector set a new post Crisis low of +104.
  • 2 of the 19 major IG sectors tied their post Crisis lows as follows: Banking (+84)  and Energy (+132).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 0.95 vs. 0.94.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +142 vs. +143.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $21.1b on Tuesday versus $16.3b on Monday and $23.4b the previous Tuesday.
  • The 10-DMA stands at $18.7b.

Global Market Recap 

  • Treasury November Refunding: More supply in the front end coming in 2018 (February).
  • FOMC Statement – Upgraded growth (solid from moderate) & no change on inflation.
  • U.S. Treasuries – Closed mixed with the curve flattening the story.
  • Overseas Bonds – JGB’s unchanged to better. Bunds little changed & Gilts weaker.
  • 3mth Libor – Set at 1.38483% the highest since January 2009.
  • Stocks – Mixed heading into the close. Gave up big morning gains (reached ATH’s).
  • Overseas Stocks – Nikkei 21 year high. EM 6 year high. Europe 2 year high.
  • Economic – More positive economic data.
  • Overseas Economic – China unchanged, Japan mixed & U.K. data solid.
  • Currencies – USD better bid vs. Euro, PND & Yen but weaker vs. CAD & AUD.
  • Commodities – Crude oil traded at high since January before rolling over. Metals bid.
  • CDX IG: +0.45 to 52.60
  • CDX HY: +0.24 to 310.32
  • CDX EM: +0.55 to 174.91

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
10/30-11/03
vs. Current
WTD – $21.323b
November 2017 vs. Current
MTD – $2.50b
Low-End Avg. $24.74b 86.19% $95.28b 2.62%
Midpoint Avg. $25.64b 83.16% $96.38b 2.59%
High-End Avg. $27.65b 77.12% $97.48b 2.56%
The Low $15b 142.15% $75b 3.33%
The High $35b 60.92% $130b 1.92%

 

fomc-rate-decisionFOMC Rate Decision Talking Points: Unchanged (as Expected) 

Once again rates were left unchanged by the Fed, however there is more color on the $4.5 trillion balance sheet (b/s) unwind. Here’s all you need to know:

Policy:

  • The Fed left rates unchanged in the 1%-1.25% range, voting unanimously to so.
  • The Board left the discount rate unchanged at 1.75%.
  • Expects the economy to evolve in a way warranting gradual rate hikes.

Economy:

  • Economic activity is rising at solid rate despite recent storms.
  • Fed says storms are unlikely to alter the economy’s medium-term course.
  • Repeats risks are roughly balanced, while watching inflation closely.

Employment:

  • The labor market continued to strengthen while unemployment declined.
  • Repeats that market-based inflation compensation gauges are still low.

Inflation:

  • Inflation for items other than food and energy remained soft.
  • Repeats that it sees inflation stabilizing at around 2% in the medium-term

 

The U.S. Federal Open Market Committee November 1st Statement in its Entirety 

Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding will continue to affect economic activity, employment, and inflation in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The balance sheet normalization program initiated in October 2017 is proceeding.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Randal K. Quarles.

The “QC” Geopolitical Risk Monitor

(more…)

Investment Grade Corporate Debt Issuance-A Common Thread
October 2017      Debt Market Commentary, Recent Deals   

Quigley’s Corner 10.24.17 – A Common Thread re Ford Motor Credit and Goldman Sachs Corporate Debt Issuance  

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points: Spotlight on Ford Motor Credit & GS

Global Market Recap

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

Rates Trading Lab

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 18th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

The “QC” Geopolitical Risk Monitor

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 3 issuers across 7 tranches totaling $9.45b.  The SSA space featured 4 issuers and 6 tranches for $7.50b bringing the all-in IG day totals to 7 issuers, 13 tranches and $16.95b. Clearly the mega deal of the day belongs to The Goldman Sachs Group, Inc. that issued a $7b three-part Senior Unsecured Global Notes transaction for which Mischler served as an active Co-Manager on the 21nc20 fixed-to-floating tranche due 10/31/2038.  That deal and more specifically that tranche is today’s Deal-of-the-Day.

Here are the day’s recaps first:

The DOW skyrocketed 168 points to close at a new all-time high of 23,441 propelled by stellar earnings from the likes of Caterpillar, 3M, GM and Fiat Chrysler.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate estimates:

 

  • The IG Corporate WTD total is 108.88% of this week’s syndicate midpoint average forecast or $23.724b vs. $21.79b.
  • MTD we’ve priced 98.36% of the syndicate forecast for October IG Corporate new issuance or $90.178b vs. $91.68b.
  • There are now 8 issuers in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Mischler Financial is proud to have been named a Selling Group member on today’s $1bn Ford Credit Auto Lease Trust Series 2017-B. Thank you Team Ford for choosing Mischler from among your diversity candidates.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate-only new issues was <18.71> bps.
  • BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
  • BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
  • 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
  • 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +144 vs. +143.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.5b on Monday versus $13.8b on Friday and $14.3b the previous Monday.
  • The 10-DMA stands at $16.4b.

 

Global Market Recap

 

  • U.S. Treasuries – USTs market continues to struggle. 10yr closed over 2.40%.
  • Overseas Bonds – JGB’s mixed & flatter. Down day in Europe.
  • 3mth Libor – Set at its highest yield (1.37064%) since January 2009.
  • Stocks – Earnings sends U.S. stocks higher. Dow at all-time high.
  • Overseas Stocks – Asia weaker expected. Japan (record winning streak). Europe better.
  • Economic – All 3 Markit PMI’s were better but Richmond manufacturing was weaker.
  • Overseas Economic – Japan data weaker. Europe data mixed but solid overall.
  • Currencies – USD better bid vs. 4 of the Big 5 bit the DXY Index was little changed.
  • Commodities – CRB traded at high since May. Crude & gasoline up. Gold down.
  • CDX IG: -0.20 to 52.73
  • CDX HY: -0.44 to 308.86
  • CDX EM: +0.34 to 174.84

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
10/23-10/27
vs. Current
WTD – $23.724b
October 2017 vs. Current
MTD – $90.178b
Low-End Avg. $20.75b 114.33% $90.96b 99.14%
Midpoint Avg. $21.79b 108.88% $91.68b 98.36%
High-End Avg. $22.83b 103.92% $92.42b 97.57%
The Low $15b 158.16% $110b 81.98%
The High $30b 79.08% $75b 120.24%

 

The Goldman Sachs Group, Inc. $2.5b 21nc20 Fixed-to-Floating Senior Unsecured Global Notes

 

Today’s Goldman Sachs transaction was a $7bn three-part comprised of a 5nc4 fixed-to-floater as well as a 5yr FRN both due 10/31/2022.  Mischler proudly served as an active Co-Manager on today’s longest tranche of that issuance – the 21nc20 fixed-to-floating due 10/31/2038 so I am writing about that tranche this evening.

It’s important to note that in speaking with today’s accounts they like the pro-U.S. growth sentiment and rates that are helping to boost markets especially for bank and finance issuers.  Broader corporate tax reform will certainly lead to additional M&A activity ahead which is good for banks/finance. Several international accounts expressed their view that U.S. banks as flight to relative safety underscore an overall bullish sentiment in the sector.  Other investors were attracted by some additional yield compared to the risk-reward in European banks and Asian banks.  We’ve seen some front-loaded supply in the sector post Q3 earnings but the demand for GS paper has been consistently strong.

  • BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
  • BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
  • 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
  • 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.

 

Use of proceeds on today’s transaction will be used for general corporate purposes.

For relative value we looked to the outstanding GS 3.691% due 6/05/2028 6nc5 fixed-to-floating that priced on May 31st that was quoted today T+119 (G+120) pre-announcement.

Curves on comparable FIGs show an average 11- to 21-year spread differential of <13> bps. Applying that to the GS 11nc10 pegs fair value at T+106 nailing NIC on today’s new 21nc20 F-t-F as 2 bps.

 

GS Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
21nc20 F-t-F
10/31/2038
+120-125 +110a (+/-2) +108 +108 <14.5> bps 2 bps 106/104 <2>

 

………and here’s a snap shot of today’s final book size and oversubscription rate:

 

GS Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
21nc20 F-t-F
10/31/2038
$2.5b $5bn 2.00x

 

Final Pricing – The Goldman Sachs Group, Inc. f-t-f Perp NC5 Preferred

GS $2.5b 4.017% 10/31/2038 21nc20 fixed-to-floating @ $100.00 T+108 (Back-end: 3mL+137.3)

 

Have a great evening!

Ron Quigley

 

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.
10/23
AVERAGES
WEEK 10/16
AVERAGES
WEEK 10/09
AVERAGES
WEEK 10/02
AVERAGES
WEEK 8/25
AVERAGES
WEEK 8/18
AVERAGES
WEEK 9/11
New Issue Concessions 1.33 bps 0.41 bps <0.38> bps 1.18 bps 1.38 bps 0.62 bps 1.40 bps
Oversubscription Rates 2.23x 2.89x 3.03x 3.50x 3.31x 3.18x 3.27x
Tenors 6.20 yrs 8.85 yrs 9.77 yrs 12.00 yrs 8.50 yrs 8.21 yrs 9.84 yrs
Tranche Sizes $793mm $804mm $906mm $608mm $645mm $483mm $674mm
Avg. Spd. Compression
IPTs to Launch
<12.75> bps <16.81> bps <19.81> bps <18.40> bps <20.19> yrs <18.40> bps <18.91> bps

  

Rates Trading Lab

 

Most of today’s trading was confined to a tight range with yields slowly migrating higher as the curve steepened. Then came the news that John Taylor had reportedly won a straw poll on a show of hands when President Trump asked GOP Senators about their Fed pick. Market got hit with the belly leading the sell-off and 5yrs traded at 2.044%, 10yr at 2.4225% and 30yr 2.934%. Stops were hit in futures as TY touched 124-18 before bouncing. Taylor had a big day in the betting pools, for what it’s worth, solidifying his second place standing. https://www.predictit.org/Market/3306/Who-will-be-Senate-confirmed-Fed-Chair-on-February-4%2C-2018 Lost in the fray were reports that the trio of Corker, McCain and Paul might not support a tax cut program if not revenue neutral and that Jeff Flake bowed out of the Arizona Republican race, but not before saying that “[w]ithout fear of the consequences and without consideration of the rules of what is politically safe, we must stop pretending that the conduct of some in our executive branch are normal. They are not normal. Reckless, outrageous and undignified behavior has become excused as telling it like it is when it is actually reckless, outrageous and undignified.” Meanwhile, stocks carried on, with records falling once again and the financial networks straining to contain their giddiness.

 

Thoughts:

Today’s price action was a textbook case of why this market is becoming so difficult to trade. I understand that a Taylor chairmanship and its potentially consequential rules-based policy metrics is a decidedly hawkish event. Countering that, however, is more stagnation on the legislative front. Senators Corker and Flake are now question marks in the Republican camps along with the fiscal conservatives. I know we have broken through established support levels and that it may trigger a further sell-off on that basis alone, but I think this is a counter-trade. Whatever happens, it will happen fast. Machines can hit bids and lift offers faster than you can blink.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-30 99-19+ 99-22 99-10 97-23
RESISTANCE LEVEL 99-27+ 99-14 99-14+ 99-00 97-12+
RESISTANCE LEVEL 99-25 99-102 99-08+ 98-23+ 96-28
         
SUPPORT LEVEL 99-22+ 99-052 99-02+ 98-15+ 96-11
SUPPORT LEVEL 99-196 99-01+ 98-28+ 98-07+ 95-30
SUPPORT LEVEL 99-17+ 98-31 98-24+ 98-01 95-24

 

New Investment Grade Corporate Debt Issues Priced

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

(more…)

Week’s IG Corporate Bond Issuance: Cooling Off Period; April Showers Bring May Flowers
April 2017      Debt Market Commentary   

Quigley’s Corner 04.21.17; This Week: A Cooling-Off for New IG Corporate Bond Issuance; April Showers Bring May Flowers!

 

Investment Grade New Issue Re-Cap – Back-to-Back Blanks for the IG Dollar DCM

The Best and the Brightest”  Fixed Income Syndicate Forecasts and Sound Bites for Next Week 

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for Next Week

Indexes and New Issue Volume

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 19th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

What with the French Election this Sunday combined with today being a Friday session there was no new issuance to speak of in the IG dollar DCM. That’s now two consecutive days without IG issuance.  I was out for two Fridays so, today is the first “Best & Brightest” edition since March 31st.  Next week looks to be a relatively subdued one given continued blackouts and the fact that most all the big FIGs have already issued.  As corporates exit and Treasuries rally with yields set to pull down further, all this leads up to what should be a VERY ROBUST May.  The average for next week across the top 24 syndicate desks surveyed is $19.46b.  The high was one desk that thinks we’ll see $30b and the low came from two desks that both said $10-15b or an average of $12.5b. But why let me tell you?  I’m here for them. Please allow me to introduce you to the people who price YOUR deals.  They’re all waiting below with their numbers and thoughts for next week’s IG Corporate issuance.  So, without further ado folks…..let’s get to it!

Please remember to read the bold italicized question I posed to the Best & the Brightest as it contains this week’s complete data download that should be helpful to you.

 

The Best and the Brightest”  Syndicate Forecasts and Sound Bites for Next Week 

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 22 are in the top 25 in that same table.  The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 82.36% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016 !!  More importantly, however, you are helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was prefaced as follows:

“Good morning and Happy Friday!

First, here are this week’s IG new issue volume talking points:

  • The U.S. six-pack banks posted overall positive earnings. This week five of those for banks – ex-GS who did not yet print – represented 59% of this week’s IG Corporate issuance or $14.75b vs. $25.04b.
  • MTD we’ve priced 63.6% of the syndicate IG Corporate mid-range projection for April or $58.192b vs. $91.50b.
  • The all-in MTD total (IG Corporates plus SSA) now stands at $69.092b.
  • The YTD IG Corporate only volume is now $451.277b.
  • YTD we have officially priced $575.243b in all-in IG Corporate and SSA issuance.

Here are this week’s five key primary market driver averages from the 21 IG Corporate-only deals that priced:

  • NICS:  3.57 bps
  • Oversubscription Rates: 2.00x
  • Tenors:  6.10 years
  • Tranche Sizes: $1,138mm
  • Spread Compression from IPTs to the Launch: <14.73> bps


Here’s how this week’s performance data compares against last week’s:

  • Average NICs widened 3.11 bps this week to 3.57 bps vs. 0.46 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, reduced by1.48x to 2.00x vs. 3.48x. 
  • Average tenors shortened by a meaningful 4.04 years to 6.10 years vs. 10.14 years.
  • Tranche sizes increased by $347mm to $1,138mm vs. $791mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 22 IG Corporate-only new issues widened 4.58 bps to <14.73> bps vs. <19.31> bps.
  • Standard and Poor’s Investment Grade Composite Spreads widened 2 bps to +165 vs. +163.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 1.19 vs. 1.17. 
  • Week-on-week, BAML’s IG Master Index widened by 3 bps to +125 vs. +122. 
  • Spreads across the four IG asset classes widened 2bps to 18.00 bps vs. 16.00 bps as measured against their post-Crisis lows.. 
  • The 19 major industry sectors also widened by 3.53 bps to 23.16 vs. 19.63 also against their post-Crisis lows.
  • For the week ended April 19th, Lipper U.S. Fund Flows reported an inflow of $1.446b into Corporate Investment Grade Funds (2017 YTD net inflow of $43.426b) and a net outflow of $362.223m from High Yield Funds (2017 YTD net outflow of $4.271b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 22 deals that printed, 14 tightened versus NIP for a 63.75% improvement rate while 6 widened (27.25%) and 2 were flat (9.00%).

 

Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $25.04b
  • All-in IG (Corps + SSA): $25.54b

This Sunday is the first round of the French presidential election.  Congress returns to work on Monday in the continuing saga of Dysfunction Junction to address the debt ceiling, another rumored stab at repealing and replacing Obama Care, and any signs of tax reform. According to a very high end military official, the Korean peninsula has now reached  its most intense point since the Korean War.  Syria, Turkey, Russia loom large and a terror event that took place last evening in Paris, resulting in the death of a police officer in the heart of the city, are some of the major global event risk factors playing out in our inextricably global-linked world economy. 

Please let me know your thoughts and numbers for next week’s IG Corporate new issue volume.  Thank you in advance for your time. 

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

 

Below please find the replies to this week’s QC canvass of fixed income syndicate bookrunners and 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…)

Corporate Bond Issuers Stand Down-But Not For Long
November 2016      Debt Market Commentary   

Quigley’s Corner 11.16.16- What’s a Corporate Bond Issuer To Do Now?

 

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

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

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 November 9th   

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

6 IG Corporate issuers tapped the dollar DCM today pricing 13 tranches between them totaling $9.15b and bringing the WTD total to nearly 85% of this week’s syndicate midpoint average forecast or $25b vs. $29.45b.  The SSA space hosted BNG’s $600mm 3-year for an all-in IG day total of 7 issuers, 14 tranches and $9.75b.

We do know that both Abbott Labs (NYSE: ABT) and Chevron Phillips Chemical Company LLC wrapped their respective investor calls today so they are both clear to “go” from that perspective in terms of issuance.  In the current environment, I’m not so sure issuers want to print sizeable deals on a Friday or hold back jumbo deals over the weekend.  What’s that mean? Simple. Both could price tomorrow in which case we could see a $20bn or more day tomorrow in our IG dollar DCM.  Stay tuned.

Global Market Recap

 

  • S. Treasuries – USTs hit overnight but rallied during NY hours and were led by the 30yr.
  • Overseas Bonds – JGB’s very weak. Core EU little changed and Peripherals hit hard.
  • Stocks – U.S. stocks mixed at 3:30pm, Europe down, Nikkei higher and China unchanged.
  • Economic – U.S. PPI was lower than expected/last and IP and Cap U were weaker.
  • Currencies – USD mixed vs. Big 5. DXY Index strongest 2003 and ADXY weakest since 2009.
  • Commodities – Crude oil with a small loss, gold little changed and copper sold off.
  • CDX IG: +1.31 to 75.30
  • CDX HY: +4.98 to 415.03
  • CDX EM: +8.97 to 271.81

*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 13 IG Corporate-only new issues that displayed price evolution was 18.35 bps.
  • BAML’s IG Master Index tightened 1 bp to +135 vs. +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 2 bps to +128 vs. 1.30.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +180 vs. +181.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.3b on Tuesday versus $18.2b Monday and $15b the previous Tuesday.  That’s the 5th highest Tuesday session since 2005 and the 2nd highest Monday session since November 2005.
  • The 10-DMA stands at $17.4b.

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

 

IG Corporate New Issuance This Week
11/14-11/18
vs. Current
WTD – $25.00b
November 2016 vs. Current
MTD – $41.461b
Low-End Avg. $28.32b 88.28% $90.70b 45.71%
Midpoint Avg. $29.45b 84.89% $92.11b 45.01%
High-End Avg. $30.59b 81.73% $93.52b 44.33%
The Low $20b 125.00% $71b 58.40%
The High $40b 62.50% $110b 37.69%

 

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

 

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.
11/14
TUES.
11/15
AVERAGES
WEEK 11/07
AVERAGES
WEEK 10/31
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
New Issue Concessions 2.85 bps 2.79 bps <3.60> bps <0.87> bps <0.51> bps 3.31 bps
Oversubscription Rates 2.38x 3.23x 4.26x 3.32x 2.61x 3.05x
Tenors 11.05 yrs 10.74 yrs 13.31 yrs 11.33 yrs 7.77 yrs 9.16 yrs
Tranche Sizes $991mm $707mm $692mm $491mm $818mm $1,137mm
Avg. Spd. Compression
IPTs to Launch
<14.5> bps <21.57> bps <22.96> bps <17.87> yrs <17.42> bps  

 

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
AEP Transmission Co. LLC A2/A- 3.10% 12/01/2026 300 +110a +90-95 +90 +90 BARC/CS/JPM/SCOT(a)
BAML/MIZ/RBS/STRH(p)
AEP Transmission Co. LLC A2/A- 4.00% 12/01/2046 400 +140a +115-120 +115 +115 BARC/CS/JPM/SCOT(a)
BAML/MIZ/RBS/STRH(p)
American Honda Fin. Corp. A1/A+ FRN 11/19/2018 750 3mL+equiv 3mL+31a (+/-3) 3mL+28 3mL+28 BNPP/DB/JPM/MS
American Honda Fin. Corp. A1/A+ 1.50% 11/19/2018 450 +low-mid 60s
+63.75
+55a (+/-3) +52 +52 BNPP/DB/JPM/MS
ANZ Banking Group Ltd./NY Aa3/AA- FRN 9/23/2019 850 3mL+equiv 3mL+equiv 3mL+66 3mL+66 ANZ/GS/JPM/WFS
ANZ Banking Group Ltd./NY Aa3/AA- 2.05% 9/23/2019 900 +90-95 +85a (+/-5) +80 +80 ANZ/GS/JPM/WFS
ANZ Banking Group Ltd./NY Aa3/AA- FRN 9/23/2021 400 3mL+equiv 3mL+equiv 3mL+87 3mL+87 ANZ/GS/JPM/WFS
ANZ Banking Group Ltd./NY Aa3/AA- 2.55% 9/23/2021 850 +100-105 +95a (+/-5) +90 +90 ANZ/GS/JPM/WFS
HollyFrontier Corp. (tap)
New Total: $1bn
Baa3/BBB- 5.875% 4/01/2026 750 +hi 300s/+387.5a +362.5 the # +362.5 +362.5  
HSBC Holdings Inc. A2/A+ 4.375% 11/23/2026 1,500 +235a +215-220 +215 +215 HSBC-sole
Mastercard Inc. A2/A 2.00% 11/21/2021 650 +70a +50a (+/-5) +45 +45 BAML/CITI/HSBC/MIZ/USB
Mastercard Inc. A2/A 2.95% 11/21/2026 750 +100a +80a (+/-5) +75 +75 BAML/CITI/HSBC/MIZ/USB
Mastercard Inc. A2/A 3.80% 11/21/2046 600 +120a +100a (+/-5) +95 +95 BAML/CITI/HSBC/MIZ/USB

 

  (more…)

The Perfect Storm-for Investment Grade Corporate Debt Issuance
September 2016      Debt Market Commentary   

Quigley’s Corner 09.07.16-Investment Grade Corporate Debt Issuance Storm

 

Investment Grade New Issue Re-Cap – “Heavens to Mergatroyd”

Global Market Recap

Fed Beige Book Headlines and Text

New Issues Priced

Investment Grade Spreads (by Rating/Industry)

Lipper Report/Fund Flows – Week ending September 1st      

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

 

 

After the IG dollar DCM posted the busiest day of the year yesterday with 14 issuers pricing 29 tranches for $21.075b, today could only pale in comparison, right?  WRONG! Investment Grade Corporate Debt Issuance truly is the only game in town in what is a perfect storm for issuers to secure low funding as investors clamor in their search for yield in better rated Corporate debt.  Today’s tally – 15 IG Corporate issuers priced 24 tranches totaling $18.975bn while the SSA space featured 5 issuers, 5 tranches and $6.1b bringing the all-in IG day total to 20 issuers, 29 tranches and $25.075b.

The WTD IG Corporate only volume total now stands at $40.05b or 34.5% of the syndicate midpoint average estimate for all of September!  After only two active print days thus far this month, all-in (IG Corporate plus SSA) September volume is $46.15b.

Of course it’s not just about investors seeking yield and companies issuing cost efficient debt, it’s also about the state of our inextricably global-linked world economy.  Tomorrow all eyes and ears will once again be on and tuned into what ECB President Mario Draghi says and how he says it. Although the June BREXIT impact on the EU will need more time to influence now start showing up in the EU’s numbers as everything in their economic toolbox to raise inflation has faltered.

How much can issue in September? Well, we each have our own opinion, but we also have our respective corrals of long-time, trusted “go to” market participants, sources and cognoscente, whose opinions we value and who provide great sounding boards, queries and insights along with quality daily humor, etc.  Included in my stable is Bloomberg’s formidable old school tag team of Ed Baldinger and Bob Elson.  (Pssst! Don’t be fooled though…….we all know Lisa Loray is the girl behind the curtain when it comes to the dynamic duo!) Anyway, Bob reached out today asking me, “I’m just curious but has anybody come back and changed their $125b estimate for September to something higher? Like 180b?…….Do I hear $200b?”  That’s what’s going on folks.  Here’s my response, “Yeah exactly. No one did.  But my “Best & Brightest” survey is for IG Corporates only. Across the last 3 years, September SSA issuance has averaged $29.71b so add that to the IG Corporate midpoint average forecast of $116.59b and we get $145.73b. But I get your point.  Tomorrow I am not so sure this machine churns out product at the current two-day pace as there is an important ECB meeting.  However, “if” corporations issue ahead of what can only be further negative EU economic news then I think $180b “all-in” (IG Corps plus SSA) is not out of the question!”

I then consulted with another long-time seer, sage, savant and friend, Ken Jaques of Informa Globalmarkets and asked him what he thought..  His quick reply – “I think we’ll see $165b – $170b!”  I’m just saying folks.  Bankers bank.  I get the bulge bracket syndicate desks have visibility argument but here we have – LISTEN UP – a cumulative total of 161 years of experience between Ed, Bob, Ken and I. Hey, it’s gotta count for something right?

Additionally, scroll down and take a look at the “New Issue Pipeline.”  There are 12 imminent deals waiting in the queue not to mention M&A related financings that have to get done.

Global Market Recap

 

o   U.S. Treasuries – Closed mixed & little changed. Big day for new issue corporates……AGAIN!

o   Overseas Bonds – JGB’s in rally mode. Long end trades with a bid in Europe.

o   Stocks – U.S. stocks mixed & little changed at 3:30pm. DAX is now positive YTD.

o   Economic – The Fed’s Beige Book was a non-event. JOLTS were strong.

o   Currencies – USD outperformed 4 of Big 5. The Yen was the lone winner vs. the USD.

o   Commodities – Crude oil was high while gold & silver were lower.

o   CDX IG: +0.78 to 71.94

o   CDX HY: +3.87 to 387.80

o   CDX EM: -5.15 to 230.83

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

-Tony Farren

 

Fed Beige Book Headlines and Text

 

o   The Fed reports modest economic growth as inflation remains “slight.”

o   Contacts in several districts expect modest price gains.

o   FOMC says moderate upward wage pressures increased further.

o   Labor market conditions still tight in most districts.

o   Most Fed districts reported “modest” or “moderate” growth pace.

o   Says consumer spending is little changed in most Fed districts.

o   Sights manufacturing activity rose slightly in most districts.

o   Credit demand appeared to expand at a moderate pace.

o   Auto sales fell somewhat but are still high while tourism is flat.

o   Fed says real estate markets grew moderately, commercial real estate expanded further.

o   Demand for energy related products and services weakened.

o   Fed said the election is damping the real estate outlook in several districts.

o   Fed releases Beige Book covering the period from July to late August.

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 22 IG Corporate new issues was 18.48 bps.
  • Including today’s lone $25 par preferred, the average spread compression from IPTs thru the launch/final pricing of today’s 23 IG Corporate new issues was 18.22 bps.
  • IADB executed a rare re-launch to upsize today’s 5yr Global Notes new issue to $2.1b from $2b.
  • TJX Companies Inc. increased today’s Senior Unsecured Notes new issue from $750mm to $1b.
  • Protective Life Global Funding bumped up its 3-year new issue to $350mm from $300mm or overall two-part 3s/5s transaction to $650mm from $600mm and at the tightest side of guidance.
  • BAML’s IG Master Index widened 1 bp to +140 versus +139.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +189 versus +188.  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 Tuesday versus $5.6b Friday and $15.4b the previous Tuesday.
  • The 10-DMA stands at $13.3b.

 

Syndicate IG Corporate-only Volume Estimates for September

 

IG Corporate New Issuance September 2016 vs. Current
MTD – $40.05b
Low-End Avg. $115.45b 34.69%
Midpoint Avg. $116.02b 34.52%
High-End Avg. $116.59b 34.35%
The Low $80b 50.06%
The High $150b 26.70%

 

 

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

 

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

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.
9/05
TUES.
9/06
AVERAGES
WEEK 8/29
AVERAGES
WEEK 8/22
AVERAGES
WEEK 8/15
AVERAGES
WEEK 8/08
New Issue Concessions Labor Day 2.00 bps 5.47 bps 1.86 bps <4.18> bps 1.83 bps
Oversubscription Rates Labor Day 3.20x 2.18x 3.73x 4.40x 3.56x
Tenors Labor Day 9.59 yrs 4.47 yrs 8.94 yrs 11.43 yrs 9.05 yrs
Tranche Sizes Labor Day $727mm $820mm $661mm $697mm $732mm

 

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
Associated Banc-Corp. Baa3/BB 5.375% PerpNC5 100 N/A 5.50%a 5.375% $25 Pfd BAML/UBS
Dr. Pepper Snapple Group Baa1/BBB+ 2.55% 9/15/2026 400 +125a +110a (+/-5) +105 +105 CS/JPM/MS
Mizuho Financial Group A1/A- FRN 9/13/2021 1,250 3mL+equiv 3mL+equiv 3mL+114 3mL+114 GS/JPM/MIZ
Mizuho Financial Group A1/A- 2.273% 9/13/2021 1,000 +135a +120a (+/-5) +115 +115 GS/JPM/MIZ
Mizuho Financial Group A1/A- 2.839% 9/13/2026 1,000 +150a +135a (+/-5) +130 +130 GS/JPM/MIZ
Nationwide Bldg. Society Baa1/A- 4.00% 9/14/2026 1,250 +275a +255a (+/-5) +250 +250 BAML/BARC/CITI/JPM/UBS
New York Life Glcl. Fdg. Aaa/AA+ 1.25% 9/14/2021 750 + low 70s
+72.5
+65a (+/-3) +62 +62 BARC/GS/JPM
Nissan Motor Acceptance A3/A- FRN 9/13/2019 500 3mL+equiv 3mL +equiv 3mL+52 3mL+52 CITI/HSBC/MIZ/MUFG
Nissan Motor Acceptance A3/A- 1.55% 9/13/2019 500 +95-100 +73a (+/-3) +70 +70 CITI/HSBC/MIZ/MUFG
Nissan Motor Acceptance A3/A- 1.90% 9/14/2021 500 +105-110 +85a (+/-3) +82 +82 CITI/HSBC/MIZ/MUFG
Nonghyup Bank A1/A+ 1.875% 9/12/2021 500 +100a N/A N/A +85 CITI/CA/HSBC/JPM
Protective Life Glbl. Fdg. A2/AA- 1.555% 9/13/2019 350 +85a +72a (+/-2) +70 +70 BARC/MS/USB
Protective Life Glbl. Fdg. A2/AA- 1.999% 9/14/2021 300 +high 90s
+97.5
+90a (+/-2) +88 +88 BARC/MS/USB
PSE&G Co. Aa3/A 2.25% 9/15/2026 425 + low 90s
+92.5
+75-80 +75 +75 CS/MUFG/WFS
Royal Bank of Scotland Group plc BBB-/BBB+ 3.875% 9/12/2023 2,650 +275a +255a (+/-5) +250 +250 BAML/BNPP/MS/RBS
Shell International Finance Aa2/A FRN 9/12/2019 500 3mL+equiv 3mL+equiv 3mL+35 3mL+35 CITI/GS/JPM
Shell International Finance Aa2/A 1.375% 9/12/2019 1,000 +70a +55a (+/-2) +53 +53 CITI/GS/JPM
Shell International Finance Aa2/A 1.80% 9/12/2021 1,000 +85a +75a (+/-5) +70 +70 CITI/GS/JPM
Shell International Finance Aa2/A 2.50% 9/12/2026 1,000 +125a +110a (+/-2) +108 +108 CITI/GS/JPM
Shell International Finance Aa2/A 3.75% 9/12/2046 1,250 +175a +160a (+/-5) +155 +155 CITI/GS/JPM
TJX Companies Inc. A2/A+ 2.25% 9/15/2026 1,000 +87.5 +80a (+/-2) +80 +80 BAML/DB/JPM/WFS
Valero Energy Corp. Baa2/BBB 3.40% 9/15/2026 1,250 +200a +190 the # +190 +190 BARC/BARC/JPM/MS
MIZ/MUFG/RBC/WFS
W.P. Carey Inc. Baa2/BBB 4.25% 10/01/2026 350 +300a +280a (+/-5) +275 +275 BARC/CITI/JPM

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Dexia Credit Local Aa3/AA 1.875% 9/15/2021 1,250 MS +79a MS +80a MS +79 +80.45 DB/GS/HSBC/JPM
Export Dev. Bank of Canada Aaa/AAA 1.00% 9/13/2019 1,000 MS +3a RG: MS +2a
MS +3a
MS +1 +19.35 BMO/CITI/JPM/RBC
IADB Aaa/AAA 1.25% 9/14/2021 2,100 MS +23a MS +23a MS +22 +23.1 BAML/JPM/NOM/RBC
Instituto de Credito Oficial Baa2/BBB+ 1.625% 9/14/2018 500 MS +70a MS +65-70 MS +65 +90.1 GS/JPM/SG
Kommuninvest Aaa/AAA 1.125% 9/17/2019 1,250 MS +15a MS +14a MS +14 +32.05 CITI/DAIW/HSBC/NORD

 

Lipper Report/Fund Flows – Week ending September 1st      

 

  • For the week ended September 1st, Lipper U.S. Fund Flows reported an inflow of $224.536m into Corporate Investment Grade Funds (2016 YTD net inflow of $30.097b) and a net outflow of $386.754m from High Yield Funds (2016 YTD net inflow of $9.55b).
  • Over the same period, Lipper reported a net inflow of $61.364m from Loan Participation Funds (2016 YTD net outflow of $4.745b).
  • Emerging Market debt funds reported a net outflow of $51.481mm (2016 YTD inflow of $5.432b).

 

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 30.0 bps wider versus their post-Crisis lows!

 

ASSET CLASS 9/06 9/05 9/02 9/01 8/31 8/30 8/29 8/26 8/25 8/24 1-Day Change 10-Day Trend PC
low
IG Avg. 140 139 139 139 139 138 138 138 139 140 +1 0 106
“AAA” 81 80 80 80 80 76 76 77 77 77 +1 +4 50
“AA” 82 82 82 82 82 81 81 81 82 81 0 +1 63
“A” 110 109 109 109 109 108 108 108 109 109 +1 +1 81
“BBB” 183 183 183 183 183 181 182 182 183 183 0 0 142
IG vs. HY 369 370 370 373 371 369 372 366 375 373 <1> <4> 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 36.58 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 9/06 9/05 9/02 9/01 8/31 8/30 8/29 8/26 8/25 8/24 1-Day Change 10-Day Trend PC
low
Automotive 115 115 115 115 114 113 113 113 114 114 0 +1 67
Banking 128 128 128 128 128 126 126 126 127 128 0 0 98
Basic Industry 187 187 187 187 187 184 185 184 186 187 0 0 143
Cap Goods 102 101 101 102 101 100 101 101 102 102 +1 0 84
Cons. Prod. 109 109 109 109 109 107 107 107 108 108 0 +1 85
Energy 189 189 189 190 189 187 188 187 189 189 0 0 133
Financials 165 164 164 164 164 163 165 163 166 167 +1 <2> 97
Healthcare 116 115 115 115 115 114 114 114 115 114 +1 +2 83
Industrials 141 141 141 141 141 140 140 140 141 141 0 0 109
Insurance 163 162 162 162 162 162 162 161 163 164 +1 <1> 120
Leisure 140 141 141 140 141 140 141 142 143 143 <1> <3> 115
Media 163 163 163 163 163 162 162 163 164 163 0 0 113
Real Estate 147 148 148 149 149 148 148 149 150 150 <1> <3> 112
Retail 117 116 117 116 116 115 115 116 116 116 +1 +1 92
Services 135 134 135 135 135 133 133 134 136 135 +1 0 120
Technology 120 120 120 120 120 121 122 123 124 124 0 <4> 76
Telecom 161 160 161 160 161 160 160 160 161 161 +1 0 122
Transportation 139 138 138 139 139 138 138 138 139 140 +1 <1> 109
Utility 140 139 139 139 139 140 140 140 142 142 +1 <2> 104

 

New Issue Volume

 

Index Open Current Change  
IG26 71.162 71.635 0.473
HV26 166.84 165.17 <1.67>
VIX 12.02 11.94 <0.08>  
S&P 2,186 2,186 0
DOW 18,538 18,526 <12>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $18.975 bn DAY: $25.075 bn
WTD: $40.05 bn WTD: $46.15 bn
MTD: $40.05 bn MTD: $46.15 bn
YTD: $965.568 bn YTD: $1,227.455 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
MBA Mortgage Applications Sept. 2 —- 0.9% 2.8% —-
JOLTS Job Openings July 5630 5871 5624 5643

 

Rates Trading Lab

 

Market held support today and we pretty much traded in tandem with Europe. Curve is showing its seasonal bias to steepen evince itself as the long end seemed to be for sale at every pop.

 

ECB takes center stage tomorrow at 7:45AM EDT. It won’t be easy for them, as they have to balance mixed confidence indicators since the Brexit referendum, ongoing uncertainty about the future relationship between the U.K. and the EU, as well as the outlook for the U.S. and the Fed rate glide-path. This week’s disappointing German data comes too late for the updated set of staff projections, but will support the doves. However, the ECB doesn’t have many QE options left lest it risks more market dislocation. We’ll probably get dovish talk from Draghi and perhaps extension of the time frame for QE coupled with some tweaks, like a possible removal of the deposit rate as the lower limit for purchases to alleviate the increasing shortage of bonds but also push short term rates even lower. It does seem certain that the ECB will highlight the need for structural reforms to boost Eurozone growth. European yields have fallen and equities have moved higher in anticipation of more accommodation despite officials trying to limit expectations, so risk is at least an initial correction in both bond and stock markets, though effects here would be muted to an extent given the outperformance of Europe.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-282 100-106 100-11+ 100-08+ 101-17
RESISTANCE LEVEL 99-25+ 100-062 100-05+ 99-31+ 101-01
RESISTANCE LEVEL 99-24+ 100-03+ 100-01+ 99-26 100-31
           
SUPPORT LEVEL 99-212 99-28+ 99-24 99-13 100-02
SUPPORT LEVEL 99-192 99-226 99-16 99-02 99-25
SUPPORT LEVEL 99-18 99-196 99-12 98-29 99-12

 

Tomorrow’s Calendar

 

o   China Data: Trade Balance, Import/Export, Trade Balance, Foreign Direct Investment

o   Japan Data: BoP Current Account Balance/Adjusted, Trade Balance BoP Basis, GDP, Japan Foreign Bond Buying

o   Australia: Trade Balance

o   EU Data: German-Q2 ULC U.K.-Aug RICS

o   U.S. Data: Claims, Cons Comf, Jul Cons Cred

o   Supply: Irish 10y (€1.0bn), Italy auction details, U.S. auction details

o   Events: ECB & Press Conf.

o   Speeches: Nakaso, Lowe, Jansson, Lane (more…)