Browsing articles tagged with "investment grade corporate debt Archives - Mischler Financial Group"
FIGs Lead Day’s DCM Funding; Gulf Power Co “Deal-of-the-Day”- Mischler Comment
May 2017      Debt Market Commentary   

Quigley’s Corner 05.15.17 FIGs Lead DCM Funding; Southern Co’s Gulf Power Building The Future of Energy 

 

Investment Grade Corporate Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates This Week and May

Building the Future of Energy – Gulf Power Co. $300mm 3.30% Senior Notes due 5/30/2027

Answering Another Call of Duty: Southern Company’s Commitment to the Military – Pride. Duty. Honor. Discipline.

A Reiteration of Mischler’s 2017 Memorial Day Month Pledge

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending May 10th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

12 IG Corporate issuers announced deals today pricing 16 tranches between them totaling $13.50b.  There was no SSA activity in the session. The day’s highest volume deals came from two FIGs namely HSBC Holdings Plc and Wells Fargo that each printed a $3 billion transaction.  Additionally, today’s IG dollar DCM featured a total of four 2-part transactions from ANZ Banking Group Ltd., ANZ Banking Group NY Branch, BPCE and Manufacturers & Traders Trust.  However, the session’s Deal-of-the-Day belongs to Southern Company’s subsidiary Gulf Power Co. that issued a $300mm 3.30% due 5/30/2027.  You know what that means!  If it’s a Deal-of-the-Day, I’m writing about it; and if I’m writing about it, it means Mischler Financial, the nation’s oldest Service Disabled Veteran broker dealer served on the deal as an active 3.00% Co-Manager.

Let’s first run through today’s IG primary market tally and re-caps before we take the deep dive into the Gulf Power deal.

  • The IG Corporate WTD total is now over 45% of this week’s syndicate midpoint average forecast or $13.50b vs. $29.73b.
  • MTD we’ve now priced nearly 70% of the IG Corporate mid-range syndicate projection for May or $86.138b vs. $123.42b.
  • There are now 8 IG Yankee and/or SSA new issues in the IG credit pipeline.
  • The all-in IG Corporate plus SSA MTD total is now $93.538b.

 

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 16 IG Corporate-only new issues was <18.67> bps which includes the Dominion Energy Inc. remarketing.
  • BAML’s IG Master Index was unchanged at +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.12.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +162 versus +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.7b on Friday versus $17.9b on Thursday and $13.7b the previous Friday.
  • The 10-DMA stands at $16.7b.

 

Global Market Recap

 

  • S. Treasuries – Small losses in very light volume.
  • Overseas Bonds – JGB’s were mixed. Long end in EU core & semi core struggled.
  • Stocks – Bid heading into close. S&P’s and NASDAQ traded at all-time highs.
  • Overseas Stocks – Asia better, expected small loss for Nikkei. FTSE & DAX reach all-time highs.
  • Economic – Empire manufacturing weaker. NAHB housing stronger. Full calendar tomorrow.
  • Overseas Economic – Japan PPI YoY highest since November, 2014. Weaker data in China.
  • Currencies – Back-to-back down days for the DXY Index.
  • Commodities – CRB, crude oil, gold, copper & silver higher. Down day for wheat.
  • CDX IG: -0.83 to 61.78
  • CDX HY: -2.56 to 324.66
  • CDX EM: -3.40 to 190.85

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/15-5/19
vs. Current
WTD – $13.50b
May 2017
Forecasts
vs. Current
MTD – $86.138b
Low-End Avg. $28.69b 47.05% $122.27b 70.45%
Midpoint Avg. $29.73b 45.41% $123.42b 69.79%
High-End Avg. $30.77b 43.87% $124.56b 69.15%
The Low $20b 67.50% $100b 86.138%
The High $40b 33.75% $150b 57.43%

 

Answering Another Call of Duty: Southern Company’s Commitment to the Military – Pride. Duty. Honor. Discipline.

Southern Company knows that veterans are the foundation of military service and of the utility Company. After they have served their nation, Southern Company seeks and encourages veterans to turn their military training into an opportunity to serve its 4.5 million customers.

Veterans are a natural fit for Southern Company because the cultures of the military and the utility industry are very similar – both exemplify dedication, commitment to safety, teamwork and excellence in all they do. This is why many veterans who have joined Southern Company are not just participants, but leaders, in the company.

Veterans currently account for 10% of Southern Company’s employees. The company’s military recruitment and development efforts have earned Southern Company a designation as the highest-ranked utility on G.I. Jobs’ Top 100 Military Friend Employers list for six consecutive years. The company has also been recognized as a Top 10 Company for Veterans by DiversityInc., a Most Valuable Employer by CivilianJobs and a Best for Vets Employer by Military Times EDGE.

Additionally, Southern Company is a founding partner of Troops to Energy Jobs program, supports the Joining Forces initiative, participates annually in more than 30 military recruitment events and partners with military transition centers across the country. Today, Southern Company and its subsidiaries including Gulf Power co. are the only electric utilities in the nation to partner with the U.S. Army, U.S. Navy, U.S. Marine Corps and U.S. Air Force to develop innovative energy projects both on and off base.

Navy Veteran Helps Recruit Top Veteran Talent

jamal-jessie southern co

Jamal Jessie

Veteran and Southern Company military recruiter Jamal Jessie says he views the U.S. Military as the best military in the world, so when he transitioned from a 20-year career with the U.S. Navy to civilian life in 2015, it only made sense to work for one of the best companies for veterans.

It was Southern Company’s ranking among GI Jobs Top 100 Military Friendly Employers that led Jamal there.

As Jamal tells it, “As a recruiter for the Navy, my scope of responsibility was vast. The leadership opportunities and the opportunity to build relationships set me up for success not only in the Navy but also now at Southern Company. I connected with and built relationships with people within the Navy and in the community, and that’s similar to what I do now – meeting with people on bases to attract top talent for Southern Company.”

May is National Military Appreciation Month, and citizens nationwide are encouraged to celebrate those who have served our country or are serving our country. Because the military and our industry’s cultures are similar – exemplifying dedication, commitment to safety, teamwork and excellence – we actively recruit military personnel who are transitioning out of service.  In fact, veterans account for 10 percent of our company’s 32,000 employees.

Without knowing it, Jamal had been preparing for his recruiting position for years. He joined the Navy after graduating from high school. Jamal spent his first 10 years in communications and was deployed at-sea four times. He then went on to serve as a full-time recruiter for 10 more years until he retired in 2014.

“Veterans play a huge part in our safety and in our lives, every day,” Jamal says, “and Southern Company gives us the opportunity to do the same thing here.”

When it comes to recruiting, Jamal says, “We are looking for the best of the best.” He partners with our operating companies and business units, developing strategies to recruit talent for specific positions. He travels to military bases where he fosters relationships and talks to military personnel who are transitioning from military to civilian working life to find that talent.

“We speak the same language, we have trust,” he says. “Southern Company values the veteran. We understand the teamwork and the training that veterans bring to our organization. The skills match is a huge advantage for both veterans and Southern Company.”

A Reiteration of Mischler’s 2017 Memorial Day Month Pledge.

Consistent with Mischler Financial Group’s annual initiative to commemorate Memorial Day and honor those who made the ultimate sacrifice while serving in our US military, this year we have dedicated a percentage of the month’s commission revenue to two organizations that are near and dear to our hearts and minds.

As we have done in prior Memorial Day and Veterans Day observances, Mischler is pleased to continue our support of Army Ranger Lead The Way Fund, the non-profit dedicated to raising funds to support disabled U.S. Army Rangers and the families of Rangers who have died, have been injured, or are currently serving in harm’s way.

As part of our May 2017 profit pledge, Mischler is equally proud to support the American Cancer Society via our sponsorship of the ACS 12th Annual Financial Services Cares Gala, which will be held June 22 at the New York Hilton Hotel. This year’s gala, which is expected to raise more than $1 million, will pay tribute to former KPMG Chairman & CEO Eugene O’Kelly, who passed away from cancer in 2005 and whose estate remains an ardent supporter of ACS cancer research grants.

Each of us here at Mischler, whether personally, through family members and/or friends and acquaintances, are all-too-familiar with the cancer’s devastating impact. Our support of the ACS is a testament to the crucial work it performs via research grants and assistance to patients undergoing treatment and their caregivers.

As the month of May pledge kicks off, thank you in advance to our sales/trading desk counterparties across the investment management industry and to the many Fortune 500 treasury teams we work with, for your ongoing support of our mission.

 

Dean A. Chamberlain (SDV)

Chief Executive Officer

Mischler Financial Group, Inc.

Southern Company and Mischler Financial truly is a formidable partnership not only when it comes to our day jobs in placing a new issue but also in our shared ethos of giving back opportunities to our military men and women in uniform – those willing to make the ultimate sacrifice.

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

  (more…)

FIG Funding 5.0- Mother Merrill Launches a MOAB (Mother of All Bonds)
April 2017      Debt Market Commentary   

Quigley’s Corner 04.19.17 – Mother Merrill Launches A Mother of All Bonds aka MOAB

 MOAB-BAML-Mother-of-all-Bonds

 

 

Investment Grade New Issue Re-Cap – BAML Launches a $6.75b MOAB (“A “Mother-Of-All-Bonds”)

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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 April 12th

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

Both Bank of America/Merrill Lynch and Morgan Stanley issued today, wasting no time to capitalize on their recent strong earnings.  BAML launched and priced a proverbial MOAB of a deal – a $6.75b 4-tranche Global Senior Notes transaction comprised of a 6nc5 FRN, 6nc5 fixed-to-float, an 11nc10 f-t-f and a 21nc20 f-t-f.  Morgan Stanley printed a $1.75b 7nc6 FRN.  That represents the fourth and fifth of the U.S. six-pack banks leaving Goldman Sachs as the one that hasn’t yet issued.  Yesterday, Goldman missed analysts estimates as a result of its currency and commodity businesses.  However, it should be noted that GS doubled its YoY profits which points to the impact lofty estimates can have.  Goldman’s investment banking business revenues rose 16% thanks to its debt underwriting strength.

 

4 Corporate issuers tapped the IG dollar DCM today pricing 8 tranches between them totaling $12b.  The SSA space was inactive.

 

  • MTD we have now priced over 63% of the IG Corporate mid-range syndicate projection for April or $58.192b vs. $91.50b.

 

IG Primary & Secondary Market Talking Points

 

  • Basin Electric Power Cooperative upsized today’s 144a/REGS 30-year FMBs to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only (ex-Preferred) new issues was <13.72> bps.
  • BAML’s IG Master Index widened 1 bp to +125 vs. +124.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.19 vs. 1.18.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  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 Tuesday versus $9.6b on Monday and $16.0b the previous Tuesday.
  • The 10-DMA stands at $14.0b.

 

Global Market Recap

 

  • U.S. Treasuries – closed down. Pressured by Japan selling and weak Bunds & Gilts.
  • Overseas Bonds – JGB’s were mixed & flatter. Bunds & Gilts were hit hard.
  • Stocks – U.S. stocks started the day bid but rolled over. Mixed heading into the close.
  • Overseas Stocks – Nikkei tiny gain. China red. Europe improved except the U.K.
  • Economic – Fed’s Beige Book: Modest or moderate is all you need to know.
  • Overseas Economic –  EU CPI YoY was unchanged (overall & core).
  • Currencies – Good day for the USD outperforming all of the Big 5.
  • Commodities – Very poor performance by crude oil & gold was also a loser today.
  • CDX IG: -0.03 to 68.77
  • CDX HY: +0.28 to 349.61
  • CDX EM: -0.88 to 211.87

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

IG Corporate New Issuance April 2017
Forecasts
vs. Current
MTD – $58.192b
Low-End Avg. $90.25b 64.48%
Midpoint Avg. $91.50b 63.60%
High-End Avg. $92.75b 62.74%
The Low $65b 89.53%
The High $111b 52.43%

 

 

Have a great evening!
Ron Quigley

 

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

Corporate Bond Issuers Close Books on Record Quarter; What’s Next for IG DCM?
March 2017      Debt Market Commentary   

Quigley’s Corner 03.31.17   QC’s Q1 Investment Grade Corporate Debt DCM Look-Back and Look Ahead

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

Syndicate IG Corporate-only Volume Estimates for Next Week and April

“Knowing the Past for the Future” – A Look at a Decade’s Worth of April IG Corporate and SSA Issuance

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

New Issues Priced

This Week’s IG New Issues and Where They’re Trading – Great Market Tone!

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Month end? Quarter end?  Lots of Global economic data? You know what that means. It was a signed, sealed and delivered no-print Friday today.  That’s always welcome as it gave me a head start on today’s more involved syndicate survey.  Forecasts today are for next week’s primary market supply as well as for the month of April.  I also have a snapshot of a decade’s worth of April IG supply across three categories: all-in (Corps + SSA), Corporate as well as just SSA volumes.  I call the section “Knowing the Past for the Future.” It will help put the Best and Brightest’s thoughts and numbers into a historical perspective for you.  You should take a look at that table.

To quickly re-cap their thoughts, all 24 syndicate desks responded to my “QC” survey  The midpoint average for next week’s IG Corporate only supply is $21.40b characterized by tight voting groups with 18 of the 24 participants projecting within $20 to $25b with a low of $12b and a high of $31b.  As for April, the average was $91.50b.  Voting brackets were all over the place ranging from a low of $65b to a high of $111b. But don’t just take my word for it.  All 24 syndicate operatives contributed responses with their numbers so, scroll down below and read their meaningful thoughts.

I hope you enjoy your read and that it helps you prepare for the week and month ahead.  Thanks again to the stellar 24 participating syndicate desks who are always there for me and for YOU each and every Friday edition of the “QC”.

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.17.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +163 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.3b on Thursday versus $20.7b on Wednesday and $17.8b the previous Thursday.
  • The 10-DMA stands at $17.3b.

 

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

 

IG Corporate New Issuance This Week
3/27-3/31
vs. Current
WTD – $22.15b
March 2017
Forecasts
vs. Current
MTD – $129.998b
Low-End Avg. $25.25b 87.72% $113.79b 114.24%
Midpoint Avg. $26.50b 83.58% $114.31b 113.72%
High-End Avg. $27.75b 79.82% $114.83b 113.21%
The Low $15b 147.67% $80b 162.50%
The High $31b 71.45% $140b 92.86

 

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

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!  23 of those participants are among 2017’s YTD top 26 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league 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 83.65% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.

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

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

 

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

  • We fell 17% shy of this week’s syndicate midpoint average forecast or $22.15b vs. $26.50b.
  • MTD we’ve priced 13% more than the IG Corporate mid-range projection for all of March or $129.998b vs. $114.31b.
  • The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).
  • The YTD IG Corporate only volume is now $393.085b. It is the highest IG Corporate-only quarterly volume total in history.
  • YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

Here are this week’s five key primary market driver averages from the 38 IG Corporate-only deals that priced:

  • NICS:  0.46 bps
  • Oversubscription Rates: 3.48x
  • Tenors:  10.14 years
  • Tranche Sizes: $791mm
  • Spread Compression from IPTs to the Launch: <19.31> bps


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

  • Average NICs tightened 1.29 bps this week to 0.46 bps vs. 1.75 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, increased 0.58x to 3.48x vs. 2.90x.. 
  • Average tenors shortened by a meaningful 1.41 years to 10.14 years vs. 11.55 years.
  • Tranche sizes upsized by $99mm to $791mm vs. $692mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 38 IG Corporate-only new issues tightened 3.87 bps to <19.31> bps vs. <15.44>.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 2 bps to +163 vs. +165 week on week,
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.17 vs. 1.18 last Friday. 
  • Week-on-week, BAML’s IG Master Index tightened by 1 bp to +122 vs. +123. 
  • Spreads across the four IG asset classes tightened by 0.75 bps to 16.00 bps vs. 16.75 as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened by 0.74 bps to 19.63 vs. 20.37 also against their post-Crisis lows.
  • For the week ended March 29th, Lipper U.S. Fund Flows reported an inflow of $3.966b into Corporate Investment Grade Funds (2017 YTD net inflow of $39.089b) and a net outflow of $248.465m from High Yield Funds (2017 YTD net outflow of $5.937b).
  • Taking a look at the secondary trading performance of this week’s 38 IG and 3 SSA new issues, of the 41 deals that printed, 32 tightened versus NIP for a 78.00% improvement rate while 4 widened (9.75%) and 5 were flat (12.25%).

The numbers are in.  Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $22.15b
  • All-in IG (Corps + SSA): $25.90b

Is this week’s overwhelmingly hawkish Fed-speak justified? Or, is Fed leadership talking up yields?  The GOP seemed to have recovered from the health care fiasco.  Monday saw 10 issuers stand down, but the market quickly recouped lost ground with issuers printing the rest of the week.  Today marks month-end but more importantly quarter end. The Easter break is approaching all before we re-enter black-outs.

And now the all-important “two-part” question (and answer(s) posed to the fixed income market’s top Syndicate desks, along with 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

(more…)

Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemate
March 2017      Debt Market Commentary   

Quigley’s Corner 03.27.17 -Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemates

 

Investment Grade Corporate Debt New Issue Re-Cap – IG Primary Markets Bogged Down by the Swamp

CT10 Year Yield Going Lower

IG Primary & Secondary Market Talking Points

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22nd       

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Well it was a rare, highly inactive Monday for IG primary markets today. Only one well-telegraphed new issue priced that had been in the pipeline for KEB Hana Bank in the form of a $500mm 3-year FRN. I heard that as many as 10 issuers stood down today following Go/No Go calls.  So, what gives?

On Friday, I placed at the top of my edition, a comment from a widely respected Head of Syndicate.  It was an interesting comment in that it expressed an against-the-grain opinion that Friday’s healthcare bill issue might actually be good for the market in that it pulls forward focus and attention on the all-important and market impactful tax reform bill.  As we were getting ready to close shop on Friday my CEO asked me, “so do you think it’ll be busy next week?  I said, “I hate to go against 24 of the top syndicate desks, but I fear we could see a zero day on Monday and a slower week in store. A health care bill failure will send a horrible message to the market.” I added, “I hope I’m wrong and that we see lots of issuance, but I think I’m right.”  That’s how Friday ended as I left for the weekend.

First, let’s revisit my Friday syndicate voting brackets for this week’s IG new issue volume forecasts:

Next Week
3/27-3/31
1: 20b
1: 15-30b
2: 20-25b
8: 25b
6: 25-30b
5: 30b
1: 31b

 

Out of 24 desks surveyed, 19 of them, or 79%, were in a tight band of $25-$30b.  That is always a great sign.  It means a lot of joint leads verified that similar or consensus volume is expected. The comments were characterized by lots of smaller deals with the absence of any mega transaction. But, I cannot see how issuance gets done if the health care bill is pulled or doesn’t pass. Well it got pulled later on Friday as we now all know. The issue is that republicans made a mistake in prioritizing health care as the first item on their agenda. They did so because it was perceived internally as a “no brainer.” Their plan was to save a trillion dollars to justify a massive tax reform plan.  Guess what?  When it got pulled the message sent to Wall Street was that consensus will continue to be an issue within the GOP.  That’s a MAJOR problem. The historic election is now over. People no longer want to hear the same campaign rhetoric, rather they want action, as the power to legislate has been voted on and given to Trump and the GOP.  The first test was a failure. In fact, it is a massive failure.  So, the market will not be kind to an Administration that has now experienced it’s “Dysfunction Junction” wake-up call. (I refuse to call it Capitol Hill or The Beltway anymore). It’s all about action now. Failure to get a consensus on tax reform WILL lose House and Senate seats in the next elections. That would be a political disgrace after the 7 long years they had amongst themselves to one day ratify a revamped bill. That day came and went last Friday.

The result? ………..The CT10-year is going back to 2.00% to 2.10% or lower.  Here’s the challenge –  with as many as 10 Go/No Go calls this morning that wound up with issuers standing down, we risk building a congested pipeline.  That leads to creating additional congestion, sloppy deals, more concession and bankers could look bad advising clients to go now rather than wait for another 25-35 bps rally in yields. Let the market come to the issuer. The latter are in the driver’s seat.  The market is waiting for a sign of optimism. That optimism will come when positive sounders on SUBSTANTIALas in “historic” – tax reform emanates from the White House and Dysfunction Junction. When that happens, equities will rally, yields will climb quickly and we’ll be back to where the GOP wants to be. For now, the Republican Party IS part of the Swamp that desperately needs draining.  It’s a harsh but well-deserved wake-up call to get their act together.  Seven years to fix Obama Care and they come up holding nothing but a yanked deal.  Unbelievable folks!  When that happens in business people get fired fast! Trump needs to run things like a corporation and Dysfunction Junction needs a hard case of tough love. This is not what was voted for on election day. It’s all about well……….waste management………now.

 

CT10 Year Yield Going Lower

rates-going-down-mischler-debt-market

Sorry if I sound like a broken record, but I published this next piece 12 days in advance of the recent FOMC Rate Decision on Friday, March 3rd and re-printed it the day of Janet Yellen’s Press Conference on Wednesday, March 15th.  Here it is yet again:

………..I had an interesting and revealing conversation with a Chairman of a six-pack bank (That’s either BAML, CITI, GS, JPM, MS or WFS folks!) who shared thoughts on a potential March interest rate hike that the market has already built in.  I thought it would be helpful and informative to you all.  Here’s what that person said,

“Everyone is thinking a rate hike is coming in March but, the FED needs to be somewhat worried about the yield curve.  When they raised rates in December 2015 the 10yr Treasury rallied 70 bps in yield, thus crushing banks’ net interest margin or “NIM” and, having the effect of dampening growth.  When they raised rates this past December 2016, that did not happen…..instead all rates moved up a bit.  But when Yellen talked about March being a “live meeting’’, the UST 10 year went from 2.56% to 2.31%……The Fed needs to talk a good game to dampen the “animal spirits” that have elevated equity markets but, I really don’t think the Fed wants to raise rates and see the 10 year Treasury move to 2.25%. As a result, it’s a very close call…..I err on the side of thinking that the rate hike comes in June.  But, it’s  close.  If the Fed is committed to 2 to 3 hikes this year and they feel the markets are fully prepared for a March hike…they may just take advantage of that window.”

Today the CT10-year closed at 2.379% and has tightened 24.8 bps versus 2.627% on March 13th the Monday before the Fed raised rates. It’s going tighter. Issuers be patient!

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 1 IG Corporate-only new issues was <17.50> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.18.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +164 vs. +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.8b on Friday versus $17.8b on Thursday and $15.2b the previous Friday.
  • The 10-DMA stands at $17.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Closed with gains except the 2yr but closed near the low prices of day.
  • Overseas Bonds – JGB’s better except the 30yr. Bunds red & Gilts green.
  • Stocks – U.S. stocks mixed heading into the close. Nice comeback in the afternoon.
  • Overseas Stocks – The Nikkei led Asia lower. Europe had more red than green.
  • Economic – Dallas Fed manufacturing was weaker than expected/last.
  • Overseas Economic – Positive IFO releases in Germany.
  • Currencies – The USD had a poor day vs. the Euro, Pound & Yen.
  • Commodities – Crude down, gold up & a 2% gain for silver.
  • CDX IG: +0.83 to 67.84
  • CDX HY: +29.80 to 354.58
  • CDX EM: +1.72 to 213.92

*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
3/27-3/31
vs. Current
WTD – $0.50b
March 2017
Forecasts
vs. Current
MTD – $108.348b
Low-End Avg. $25.25b 1.98% $113.79b 95.22%
Midpoint Avg. $26.50b 1.89% $114.31b 94.78%
High-End Avg. $27.75b 1.80% $114.83b 94.36%
The Low $15b 3.33% $80b 135.43%
The High $31b 1.61% $140b 77.39%

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

 

 

Have a great evening!
Ron Quigley

 

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

(more…)

Draghi Says Euro is Irrevocable-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.09.17 –Draghi Says Euro is Irrevocable

 

Investment Grade New Issue Re-Cap

Buy-Side Feedback—“Its Amazing!”

IG Primary & Secondary Market Talking Points

Global Market Recap

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

Draghi’s ECB Key Talking Points

ECB Forecasts

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

6 IG Corporate issuers tapped the dollar DCM today pricing 9 tranches between them totaling $5.25b.  The SSA space featured 2 issuers and 2 tranches totaling $1.30b for an all-in IG day total of 8 issuers, 11 tranches and $6.55b.
The WTD total is now 34% more than this week’s syndicate midpoint average forecast or $44.50b vs. $33.15b. MTD, we’ve now priced 50% of the IG Corporate mid-range projection for all of March or $58.025b vs. $114.31b.

Note: In last Friday’s “QC” Best and Brightest edition I wrote at the top, “Personally one should err to the upside in markets like this wherein new issue volume forecasts are concerned.  I’ll start by saying I have a strong feeling we see another $50b week of all-in IG Corporate and SSA new issuance next week.  IG Corporates alone could easily eclipse the $40b mark.  However, that’s my take on things. Across the 24 syndicate desks that I surveyed today, next week’s IG Corporate-only midpoint average estimate calls for $33.15b to price characterized by MANY new issuers.”

The WTD tally for IG Corporate new issuance thru today is $44.50b and all-in IG Corporate and SSA issuance is $52.80b ……not too shabby eh?

Buy-Side Feedback

Late this afternoon a buy-side account pointed out the following, “It’s amazing Ron! I was looking at your “QC” from last Friday and recall how staggered I was that almost 90% of last weeks’ new issues tightened versus pricing spread levels especially considering the negative concession environment.  I don’t think I’ve ever seen that before.  But this week is an entirely different story. In fact, it’s completely the opposite.  I’ll bet that a new record number of this week’s new issues widened out vs. their pricing levels given yields.  I haven’t seen more apathy in the market than this week in a VERY long time.”

We’ll see tomorrow folks when I check  the secondary trading levels of this week’s


IG Primary & Secondary Market Talking Points

 

  • Host Hotels & Resorts LP bumped up its 7yr Senior Notes new issue to $400mm from $350m at the launch and at the tightest side of guidance.
  • Neuberger and Berman upped today’s 144a/REGS 10yr Senior Notes new issue to $300mm from $250mm at the launch. The deal skipped guidance.
  • The Asian Development Bank increased today’s 4yr FRN new issue to $1b from $750mm at the launch.
  • Swedish Export Credit Corp. upsized today’s tap of its FRNs due 10/04/2018 to $300mm from $250mm at the launch.
  • The average spread from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues, that displayed price evolution, was <25.06> bps.
  • BAML’s IG Master Index was unchanged at +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 1.14 vs. 1.12.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.2b on Wednesday versus $20.9b on Tuesday and $21.6b the previous Wednesday.
  • The 10-DMA stands at $20.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Terrible price action. Supply, Draghi and healthcare the main culprits.
  • Overseas Bonds – Europe sold off on Draghi’s political correctness.. JGB’s red except 30yr.
  • 3mth Libor – Set at 1.11956% the highest since April 2009.
  • Stocks – Basically unchanged with 40 minutes left in the session.
  • Overseas Stocks – Japan up, China & Hang Seng down & Europe more green than red.
  • Economic – Claims higher from low since 1973. Import prices YoY high since 2012.
  • Overseas Economic – China inflation data mixed & credit down. Ireland GDP was strong.
  • Currencies – U.S. weaker vs. Euro & Pound but stronger vs. the Yen, CAD & AUD.
  • Commodities – CRB, crude oil, gold, copper, silver, etc., all got hit.
  • CDX IG: +0.85 to 64.75
  • CDX HY: +4.14 to 333.37 (wider by 26.15 bps this week)
  • CDX EM: +4.48 to 221.56

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

-Tony Farren

 

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

mischler-draghi-euro-irrevocable 

 

Today the ECB left the Euro Zone’s  main refinancing rate unchanged at 0%, the marginal lending facility unchanged at 0.25% and the deposit facility rate also unchanged at <0.4%>.  Asset purchases remained €80b a month until the end of March after which they will be reduced by 25% to €60b per month from April thru December. Currency traders, however, reacted to the hawkish news that the ECB dropped its pledge to use “all available instruments” to achieve its mandate, and is now less worried about deflation. On the one hand, ECB President Mario Draghi talked up the prospects for the Euro Zone economy while saying there is no longer a deflation risk however, he also warned that there are “downside risks” that could derail the recovery. Clearly the ECB monetary chief has a firm eye on upcoming elections, particularly in France. Draghi sighted domestic risks are now more contained but subsequently took several minutes explaining how elections actually make everything uncertain. Among notable moments in his speech, he ducked the question: Could the ECB raise interest rates before it has ended its QE program?“  That was interesting, as he previously insisted that the rate would not rise until the asset-purchase program concludes.  The takeaway is that risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors.

Draghi’s ECB Key Talking Points

 

  • ECB leaves the main refinancing rate unchanged at 0.00%.
  • Leaves the marginal lending facility unchanged at 0.25%.
  • Leaves the deposit facility rate unchanged at -0.4%.
  • Keeps asset purchases at €80b a month until the end of March.
  • Says asset purchases will be €60b a month from April to December – a 25% reduction.
  • Reiterates that rates will stay at present or lower levels for an extended period of time.
  • Net purchases will be made alongside reinvestments.
  • QE can be increased in size and/or duration if the outlook worsens.
  • Draghi sees rates at present or a lower level well past the end of QE.
  • QE will run until the ECB sees a sustained inflation pick-up.
  • Sees no convincing upward trend in underlying inflation.
  • Inflation is likely to remain close to 2% in the coming months.
  • Core inflation set to rise gradually over the medium-term.
  • ECB measures preserve favorable conditions needed.
  • Sentiment indicators point to a pick-up in momentum.
  • Inflation increased due to energy effects.
  • Underlying inflation pressures remain subdued.
  • The ECB will look through transient inflation changes.
  • A very substantial degree of accommodation is needed.
  • Draghi omits pledge to use “all instruments” within the mandate.
  • Says economic risks are less pronounced, yet still to the downside.
  • Risks relate predominantly to global factors.
  • Survey results increase confidence in the recovery
  • Survey results suggest the recovery may broaden.
  • Rising employment bolsters private consumption.
  • Signs of a somewhat stronger global recovery.
  • Euro-area growth was damped by a sluggish reform pace.

 

ECB Forecasts

  • 2017 GDP growth at 1.8% vs 1.7%
  • 2018 GDP growth at 1.7% vs 1.6%
  • 2019 GDP growth at 1.6% vs 1.6%
  • 2017 inflation at 1.7% vs 1.3%
  • 2018 inflation at 1.6% vs 1.5%
  • 2019 inflation at 1.7% vs 1.7%

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

 

IG Corporate New Issuance This Week
3/06-3/10
vs. Current
WTD – $44.50b
March 2017
Forecasts
vs. Current
MTD – $58.025b
Low-End Avg. $31.79b 139.98% $113.79b 50.99%
Midpoint Avg. $33.15b 134.24% $114.31b 50.76%
High-End Avg. $34.50b 128.99% $114.83b 50.53%
The Low $25b 178.00% $80b 72.53%
The High $45b 98.89% $140b 41.45%

 

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 (more…)

Rate Hike Coming..Beige Book Talking Points-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.01.17-Rate Hike IS Coming; Fed Beige Book Talking Points

 

Investment Grade New Issue Re-Cap – Dow Breaks 21,000 – Odds of March Rate Hike Rise From 40% to 80% in 3 Sessions!

IG Primary & Secondary Market Talking Points

Global Market Recap

The Federal Reserve Beige Book Talking Points – All You Need to Know

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 February 22nd    

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

7 IG Corporate issuers tapped the dollar DCM today pricing 12 tranches between them totaling $9.275b.  The SSA space hosted 2 issuers across 4 tranches including a $5b 3-part from the Sultanate of Oman that pumped up the all-in IG day totals to 9 issuers, 16 tranches and $14.625b. March has certainly started off on the right foot.
The WTD total is now 52% more than this week’s syndicate midpoint average forecast or $38.825b vs. $25.44b.
The all-in (IG Corporate plus SSA WTD volume total is now $51.425b.

Deregulation, cutting corporate taxes, focusing on American manufacturing and jobs while negotiating with America’s interests first and building a strong national defense equates to GROWTH.  Growth will cause rates to rise, rising rates will swell the stock market and bank stocks should get back to a semblance of their true values among many other things.
IG Primary & Secondary Market Talking Points

 

  • Mercury General Corp. upped its 10-year Senior Notes new issue to $375mm from $350mm at the launch and at the tightest side of guidance.
  • Telus Corp. increased its 10-year Senior Notes new issue to $500mm from $350mm at the launch.
  • Brixmor Operating Partnership LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <19.00> bps.
  • BAML’s IG Master Index tightened 1 bp to +121 vs. +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.15 vs. 1.16 setting yet another new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $22.7b on Tuesday versus $15.8b on Monday and $17.8b the previous Tuesday.
  • The 10-DMA stands at $20b.

 

Global Market Recap

 

  • U.S. Treasuries – had a very difficult day thanks to the Fed Speak & President Trump.
  • Overseas Bonds – Europe hit hard with USTs and JGB’s also closed in the red.
  • 3mth Libor – Set at the highest yield (1.09278%) since April 2009.
  • Stocks – Big rally for U.S. stocks as S&P, Dow & NASDAQ traded at all-time highs.
  • Overseas Stocks – Very strong day for Europe & the Nikkei. China & HS with small gains.
  • Economic – Full U.S. calendar with some very good & not so good data.
  • Fed’s Beige Book at odds with the very hawkish Fed Speak this week.
  • Overseas Economic – The data in China, Japan & Europe overall was positive.
  • Currencies – Big rally for USD overnight & gave a little back during NY hours.
  • Commodities – CRB, copper & wheat were higher while crude oil & gold were lower.
  • CDX IG: -2.57 to 60.01 (trade at 59.856 the tightest since 2014)
  • CDX HY: -11.47 to 305.44
  • CDX EM: -7.51 to 213.30

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

-Tony Farren

 The Federal Reserve Beige Book Talking Points – All You Need to Know

 

  • Near-term business optimism eased since the last report.
  • Economy grew at a modest to moderate pace through mid-February.
  • Job market is tight amid little price pressure change.
  • There were a few districts that saw a pickup in wage growth.
  • Businesses expect prices to rise modestly in the months ahead.
  • Most Fed regions say prices were up modestly to moderately.
  • Some districts saw widening labor shortages.
  • Employment expanded moderately in most of the country.
  • Staffing firms saw a “brisk business for this time of year”.
  • Energy, home-building and house sales are all growing moderately.
  • Auto sales were up in most districts; tourism mostly stronger.
  • New York Fed prepared the Beige Book from early January to February 17th.

 

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 (more…)

US Corporate Debt New Issuance Market-What’s Next?
February 2017      Debt Market Commentary   

Quigley’s Corner 02.24.17 – Weekend Edition: Corporate Debt New Issuance- What’s Next?

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

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

“Knowing the Past for the Future” – A Look at a Decade’s Worth of March IG Corporate and SSA Issuance

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

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 22nd    

Investment Grade Credit Spreads by Rating

Investment Grade Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

We missed the midpoint syndicate forecast for IG Corporate volume this week by a lot. In fact, the very low estimate calling for only $19.4b was off by 42% with only $11.125b in new supply.  Next week, however, desks seemed focused on around $25b.

Yellen speaks next Friday, March 3rd and the Employment Report is the following Friday, March 10th. Those are really the only two bits of data that could move the market. Of course that’s notwithstanding any one of myriad global event risk factors playing out i.e. the Dutch election on Wed. 3/15 followed by round one of the French election on Sunday, April 23rd and round 2 on Sunday, May 7th. As we get closer and closer to each, polling will gyrate thru the markets.

Next week has been a huge one in each of the past three years for IG Corporate volume and overall IG issuance including SSA product.

Take a look:

2016 – IG Corps: $50.72b Corps + SSA: $61.22b

2015 – IG Corps: $59.03b Corps + SSA: $65.03b

2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 

Unfortunately no estimate for next week comes close to the $50m mark. The highest estimate is an out layer at $43b. The most dense groupings are focused on around $25b with the midpoint estimate being $25.46b. I am more optimistic for 30b+ in new IG Corporate issuance only because we’ve disappointed on recent weekly issuance projections in 3 of the past 4 weeks, the time is right, tone is formidable, concessions are skimpy, issuers cannot sit around forever, demand is very strong and so, I err to the upside. Overall issuance including SSA could top $40b.

IG Primary & Secondary Market Talking Points

  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.17 vs. 118 setting a new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +164 vs. +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $21.2b on Thursday versus $20.8b on Wednesday and $24b the previous Wednesday.
  • The 10-DMA stands at $19.9b.

 

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

 

IG Corporate New Issuance This Week
2/20-2/14
vs. Current
WTD – $11.125b
February 2017
Forecasts
vs. Current
MTD – $61.15b
Low-End Avg. $18.25b 60.96% $90.65b 67.46%
Midpoint Avg. $19.40b 57.35% $91.96b 66.50%
High-End Avg. $20.54b 54.16% $93.26b 65.57%
The Low $15b 74.17% $85b 71.94%
The High $26b 42.79% $120b 50.96%

 

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

 

I am happy to announce that I had 96% response to today’s “Best & Brightest” survey! That means 23 out of 24 desks.  21 of those participants are among 2017’s YTD top 25 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, 22 of today’s 23 participants finished in the top 25 of last year’s 2016 final IG Corporate Bloomberg league 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 84.38% 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.

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

Getting right to it today, here are this week’s numbers entering today’s morning session:

  • We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.
  • Thus far in February we priced 66.50% of the monthly syndicate projection or $61.15b vs. $91.96b.
  • All-in YTD IG Corporate and SSA issuance stands at $303.183b! 
  • Wednesday was the fastest pace ever to reach the $300mm mark for all-in IG Corporate and SSA issuance.

 Here are this week’s five key IG Corporate-only primary market driver averages:

  • NICS:  <0.16> bps
  • Oversubscription Rates: 3.26x
  • Tenors:  8.37 years
  • Tranche Sizes: $695mm
  • Spread Compression from IPTs to the Launch: <18.47> bps


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

  • NICs widened 0.70 bps to<0.16> bps vs.  <0.86> bps.
  • Over subscription or bid-to-cover rates, the measure of demand, reduced by 0.50x to 3.26x vs. 3.76x. 
  • Average tenors extended by 0.34 years to 8.37 years vs. 8.03 years.
  • Tranche sizes decreased by $49mm to $695mm vs. $744mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 16 IG Corporate-only new issues tightened fractionally by <0.02> bps to <18.47> bps vs. <18.45> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to+164 vs. +165.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +123 vs. +124. 
  • Spreads across the four IG asset classes tightened 0.25 bps to16.50 bps vs. 16.75 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors tightened 0.79 bps to 20.37 vs. 21.16 bps also against their post-Crisis lows.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).

It seems as if syndicate desks have said issuance would increase “the week after next” in each of the last two Friday’s.  Now, however, with Corporate America having posted earnings and with most issuers having exited blackouts, expectations are for a much more robust calendar next week. The two bits of potentially market moving data are: Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd and the Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST). After that there’s the FOMC meeting on Tuesday and Wednesday March 14th and 15th, which is associated with a Summary of Economic Projections and a press conference by Chair Yellen.  Blackouts then begin shortly thereafter. The point being – this time, next week really should see very strong issuance across all sectors. But why listen to me let’s go back to the same week in time over the past three years. The results are eye-opening:

  • 2016 – IG Corps: $50.72b Corps + SSA: $61.22b
  • 2015 – IG Corps: $59.03b Corps + SSA: $65.03b
  • 2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 We all understand that “past performance is no guarantee of future results” but those are pretty telling statistics right there folks!

The Big Question:  Next Wednesday begins the month of March, so today I ask a two-part question “what are your thoughts and numbers for BOTH next week AND March?

The “Best and the Brightest” in Their Own Words

……..……and here are their formidable responses: (more…)

Munching on Mnuchin Musings; Mischler Debt Market Comment
February 2017      Debt Market Commentary   

Quigley’s Corner 02.23.17- Munching on Mnuchin Musings

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary & Secondary Market Talking Points

Global Market Recap

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

Treasury Secretary Steve Mnuchin Speaks on Squawk

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 15th    

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

 

Danske Bank A/S was the lone corporate issuer to tap the IG dollar DCM today pricing 3 tranches totaling $1.75b.  The SSA space woke up featuring one well-telegraphed NWB 5-year that was $1b, bringing the all-in IG day totals to 2 issuers, 4 tranches and $2.75b.
We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.
CDX IG and HV closed today’s session at new tights and the S&P and Dow closed at new all-time highs.

Upcoming potential market moving events:

  • Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd.
  • The Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST).

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs thru the launch/final pricing of today’s 3 IG Corporate-only new issues was <11> bps.
  • BAML’s IG Master Index tightened 1 bp to +123 vs. +124.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.18 vs. 119 matching its tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.8b on Wednesday versus $17.8b on Tuesday and $24.6b the previous Wednesday.
  • The 10-DMA stands at $20.0b.

 

Global Market Recap

 

  • U.S. Treasuries – rallied into the $28 bn 7yr auction & then the market stood still.
  • Overseas Bonds – 30yr JGB rallied 5 bps. Strong session for France & Belgium.
  • Stocks – Dow heading for its 10th winning session in a row.
  • Overseas Stocks – Asia with small losses. Europe closed mostly red.
  • Economic – Jobless claims 4-week moving average at lowest level since 1973.
  • Overseas Economic – China data better & Japan weaker. Good data in Germany & U.K.
  • Currencies – USD was weaker vs. all of the Big 5.
  • Commodities – Good day for crude oil, gold & silver and very bad day for copper.
  • CDX IG: -0.75 to 61.83
  • CDX HY: -1.53 to 314.93
  • CDX EM: -8.77 to 213.16

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/20-2/14
vs. Current
WTD – $11.125b
February 2017
Forecasts
vs. Current
MTD – $61.15b
Low-End Avg. $18.25b 60.96% $90.65b 67.46%
Midpoint Avg. $19.40b 57.35% $91.96b 66.50%
High-End Avg. $20.54b 54.16% $93.26b 65.57%
The Low $15b 74.17% $85b 71.94%
The High $26b 42.79% $120b 50.96%

 

Treasury Secretary Steve Mnuchin Speaks on Squawk Box

US Treasury Secretary Steve Mnuchin offered his views this morning while appearing with Becky Quick of CNBC in his first interview since becoming the 77th U.S. Secretary of State. He spoke on various topics ranging from policy and regulation to immigration tax and growth.  Here are the key takeaways.  Thank you to one of our own Treasury gurus, Mr. Tony Farren, for the summary..

  • Most important thing for growth is tax plan.
  • We’re mostly focused on middle-class tax cut.
  • We believe in dynamic scoring for tax plan.
  • High-income tax cuts should be offset.
  • Could be late 2018 to get to 3% growth.
  • We’re looking closely at border adjustment tax.
  • Some issues with border adjustment tax.
  • Tax reform to be significant.
  • Tax reform goal is by August Congress recess.
  • Not ready to announced a longer-term U.S. Bond.
  • Should seriously look at longer-term bond issues (50- and 100-year).
  • Have had terrific talks with China so far.
  • Not making judgments on China FX.
  • Treasury has a process for reviewing FX policies.
  • We will probably have low rates for a long period.
  • Administration’s growth projections are likely higher versus Congress.
  • 3% GDP growth is very achievable.
  • Regulatory relief is also important boost to growth.
  • We’re looking at significant economic changes.
  • We’re reaching out to businesses.
  • Need to ensure banks put liquidity to work.
  • USD, stocks reflecting confidence in U.S. economy.
  • Not focused on day-to-day market moves.
  • Looking forward to regular meetings with Yellen
  • Looking forward to G-20 talks in March.
  • Has his team looking at EXIM Bank loan expansion.
  • He’s committed to housing finance reform.
  • We need bipartisan solution so that GSEs are not left as is.

 

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 (more…)

Philip Morris Smokes DCM with 5-part Debt Deal-Mischler Comment
February 2017      Debt Market Commentary   

Quigley’s Corner 02.15.17-Philip Morris Deal “Smokes” Primary DCM with $2.5bil 5-part

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 8th    

IG Credit Spreads by Rating     

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

4 IG Corporate issuers priced 9 tranches between them totaling $5.65b.  The SSA space, however, remained quiet.

The WTD IG Corporate total is now $22.25b or 4% more than this week’s syndicate midpoint average estimate calling for $21.33b. In fact, WTD we priced 85.50% of the highest projection in my survey which was $26b.

 

The S&P, Dow and Nasdaq all reached new all-time highs again today!

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs thru the launch/final pricing of today’s 9 IG Corporate-only new issues was <20.78> bps.
  • BAML’s IG Master Index tightened 2 bps to +124 vs. +126.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.19 vs. +120 marking a new tight..  The “LUACOAS” wide since 2012 is +215.  +120 is the new tight.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +166 vs. +167.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $23.8b on Tuesday versus $16.7b on Monday and $22.1b the previous Tuesday.
  • The 10-DMA stands at $19.8b.

 

Global Market Recap

 

  • U.S. Treasuries – registered its 5th losing session in a row.
  • Overseas Bonds – JGB’s & Europe mixed & little changed except for Greece (weak).
  • Stocks – U.S. stocks traded at all-time highs for the 5th session in a row.
  • Overseas Stocks – Nikkei, Hang Seng & Europe rallied while China was red.
  • Economic – Full calendar was mixed. Data that counted most was negative for USTs.
  • Currencies – USD gave up overnight gains during the NY session.
  • Commodities – Gold & wheat were better. Crude oil small lose (bearish inventory).
  • CDX IG: +0.08 to 62.88
  • CDX HY: +0.41 to 317.36
  • CDX EM: +8.48 to 218.63

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/13-2/17
vs. Current
WTD – $22.25b
February 2017
Forecasts
vs. Current
MTD – $49.225b
Low-End Avg. $20.71b 107.44% $90.65b 54.30%
Midpoint Avg. $21.33b 104.31% $91.96b 53.53%
High-End Avg. $21.96b 101.32% $93.26b 52.78%
The Low $15b 148.33% $85b 57.91%
The High $26b 85.58% $120b 41.02%

 

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 five key primary market driver averages for IG Corporates only through Tuesday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

 

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
Consumers Energy Co. A1/A+ 3.95% 7/15/2047 350 +110a +90a (+/-2.5) +87.5 +87.5 BAML/CITI/GS/SCOT/WFS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A FRN 2/22/2022 500 3mL+equiv 3mL +equiv 3mL+92 3mL +92 MUFG/MS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A 2.998% 2/22/2022 1,000 REV. GUID: +120a
+120-125
+100-105 +100 +100 MUFG/MS
Mitsubishi UFJ Finc’l. Grp. Inc. A1/A 3.677% 2/22/2027 1,000 REV. GUID: +135a
+135-140
+120a (+/-2) +118 +118 MUFG/MS
Philip Morris Int’l. Inc. A2/A 1.625% 2/21/2019 700 +70a +55a (+/-5) +50 +50 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A FRN 2/21/2020 300 3mL +57a 3mL +equiv 3mL+42 3mL+42 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A 2.00% 2/21/2020 1,000 +80a +70a (+/-5) +65 +65 CITI/CS/DB (a) BNPP/ING (p)
Philip Morris Int’l. Inc. A2/A 2.625% 2/18/2022 500 +90a +80a (+/-5) +75 +75 CITI/CS/DB (a) BNPP/ING (p)
Snap-On Incorporated A2/A 3.25% 3/01/2027 300 +110a +85a (+/-5) +75 +75 CITI/JPM

 

Indexes and New Issue Volume
*Denotes new tight or new record high.

 

Index Open Current Change  
IG27 *62.80 62.979 0.179
HV27 134.645 132.445 <2.20>
VIX 10.74 11.94 1.20  
S&P 2,337 *2,349 12
DOW 20,504 *20,611 107  
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $5.65 bn DAY: $5.65 bn
WTD: $22.25 bn WTD: $24.25 bn
MTD: $49.225 bn MTD: $61.475 bn
YTD: $221.608 bn YTD: $288.758 bn

 

Lipper Report/Fund Flows – Week ending February 8th    

     

  • For the week ended February 8th, Lipper U.S. Fund Flows reported an inflow of $4.932b into Corporate Investment Grade Funds (2016 YTD net inflow of $17.286b) and a net inflow of $441.718m into High Yield Funds (2016 YTD net inflow of $732.780m).
  • Over the same period, Lipper reported a net inflow of $854.782m into Loan Participation Funds (2016 YTD net inflow of $4.614b).
  • Emerging Market debt funds reported a net inflow of $358.189m (2016 YTD inflow of $502.693m).

 

IG Credit Spreads by Rating (more…)

Janet Yellen Valentine’s Day Message; Healthcare M&A Break-Ups
February 2017      Debt Market Commentary   

Quigley’s Corner -Valentine’s Day With Love From Janet Yellen; No Love for Healthcare M&A

 

Investment Grade New Issue Re-Cap

Insure This! – Anthem for Cigna, like Aetna for Humana, is Dead in the Water – $91b in M&A Erased By Two Deals

IG Primary & Secondary Market Talking Points

Global Market Recap

Key Talking Points of Fed Testimony

Three Rates Hikes in 2017? .HIGHLY Improbable or “You Gotta Be Kiddin’ Me!”

Next Up – Greece, Grexit, France & Frexit

Tony’s Take on Today’s Fed Testimony

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

The Boeing Company $300mm 30-year Deal Dashboard

Happy Valentine’s Day to All the Ladies Among My “QC” Readership

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 8th    

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

5 IG Corporate issuers priced 9 tranches between them totaling $9.90b.  The SSA space hosted a 2-part 3-year FXD/FRN from JBIC adding $2b to the mix.

The all-in IG day total was 6 issuers, 11 tranches and $11.90b.

 

The WTD IG Corporate total is now $16.60b or 78% of this week’s syndicate midpoint average calling for $21.33b.


Can’t Insure This! – Anthem for Cigna, like Aetna for Humana, is Dead in the Water – $91b in M&A Erased By Two Deals

You’ve read about the Anthem for Cigna merger in my M&A Pipeline near page bottom for months now.  Well, today, Cigna terminated its $54b merger agreement with Aetna following a federal judges rejection.  Let’s trace back the story. Anthem Inc. (Baa2/A) in July 2015, proposed to purchase Cigna Corp. (Baa1/A) for $54b or $188 per share furthering the consolidation in the healthcare sector. The deal was expected to close sometime during the second half of 2016. The merger would have involved 53mm members and would include $22b in new debt and loans. However, in light of a federal judge’s ruling on Monday, January 23rd that another proposed insurance merger – the $37b deal between Aetna and Humana should not be allowed to consummate due to antitrust issues it remained to be seen if the Anthem/Cigna merger would meet the same fate especially given the former deal size involved $17bn more the former. That two rejected deals have taken $91b out of the M&A pipeline. 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs thru the launch/final pricing of today’s 9 IG Corporate-only new issues was <15.78> bps.
  • BAML’s IG Master Index tightened 2 bps to +126 vs. +128.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.20 vs. +121.  The “LUACOAS” wide since 2012 is +215.  +120 is the new tight.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +167.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.7b on Monday versus $18.2b on Friday and $15.5b the previous Monday.
  • The 10-DMA stands at $20.2b.

 

Global Market Recap

 

  • Fed Chair Yellen: Hawkish but the markets are not so sure she is that hawkish.
  • U.S Treasuries – Closed in the red on Yellen but closed well off the session low prices.
  • Overseas Bonds – JGB’s mixed & steeper. Europe followed Treasuries down.
  • Stocks – Even a hawkish Yellen cannot keep U.S. stocks down (record highs again).
  • Overseas Stocks – Japan had a poor day. China unchanged. Europe at a 1 year high.
  • Economic – U.S. PPI data m/m was higher but the y/y data was not.
  • Overseas Economic – China inflation higher. Japan IP solid. EU data disappointing.
  • Currencies – USD rallied on the Yellen testimony. DXY Index back over 101.
  • Commodities – Crude oil small gain, gold unchanged, silver better & cooper red.
  • CDX IG: -0.12 to 63.15
  • CDX HY: -0.48 to 317.89
  • CDX EM: -3.18 to 208.93

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

-Tony Farren


Key Talking Points of Fed Testimony

Federal Reserve Chair Janet Yellen testified before the Senate today delivering her Semiannual Monetary Policy Report to Congress.  The big headline statement is when Yellen  said the Committee would like a balance sheet that is substantially smaller and only comprised of Treasuries.  It was the Chair’s most hawkish comment of the day.

Here are the key takeaways:

  • Fed Chair Yellen: Will evaluate progress at “upcoming meetings.”
  • “Too early to know” fiscal policy and its effects on outlook.
  • Fiscal policy should focus on improving long term economic growth.
  • Business sentiment has “noticeably improved” in the past few months.
  • U.S. monetary policy “remains accommodative.”
  • Expects the economy to continue to expand at a moderate pace.
  • Fiscal changes should put accounts on a sustainable trajectory.
  • FOMC expects neutral Fed Funds Rate to rise somewhat over time.
  • Pace of global economic activity should pick up over time.
  • Waiting too long could disrupt financial markets and result in recession.
  • Waiting too long to remove accommodation is “unwise.”
  • Fiscal policy change could affect the economy and is only one factor.
  • Further hikes are appropriate if employment and inflation evolve w/expectations.
  • Yellen repeats that waiting too long to tighten “would be unwise.”
  • Further adjustments are likely needed if the economy is on track.
  • Fed to adjust rate path views as outlook evolves.
  • Says changes in fiscal policy could affect outlook.
  • Too early to know what policies will be put in place.
  • Stresses importance of policies that lift productivity.
  • Rate decisions to be aimed at meeting the Fed’s twin goals.
  • Keeping the Fed balance sheet large supports accommodation.
  • Economy has continued to make progress toward the Fed’s goals.
  • Reassuring market-based inflation compensation has risen.
  • FOMC reaffirms long-run symmetrical inflation goal of 2%.

 

  • Wages have picked up, labor market improvement widespread.
  • Says jobless rate is in line with long-run normal estimates.
  • Business sentiment has improved in the past few months.
  • Recent rise in mortgage rates may restrain housing somewhat.
  • FOMC’s longer run goal is to shrink its balance sheet.
  • We hope asset purchases were unusual intervention.
  • Would anticipate the balance sheet eventually being much smaller.
  • Fed doesn’t want to use its balance sheet as an active policy tool.
  • The FOMC wants to rely on rate changes for policy.
  • Stopping reinvestment to happen in a gradual and orderly way.
  • Wants to wait until normalization is well under way.
  • The FOMC will discuss balance sheet strategy in the coming months.


Three Rates Hikes in 2017? .HIGHLY Improbable

Now let’s first sit back a second and re-evaluate the thought of three rate hikes in 2017.  In each of the last two years the lone annual rate hike came in December.  The chances of a rate hike in March increased from 12% to a resounding 18%. In other words “big deal!”  There is no rate hike coming in March.  Next, next look at Western Civilization.  There are critical elections in the EU with Holland up first on March 15th.  Geert Wilders is ahead in that election. He represents the far-right Party for Freedom or the “PVV”.  He is expected to gain the most seats in that general election.  Among his notable campaign promises – for which there is significant support – is to leave the Euro and the EU as well as close down all the mosques in Holland.  Okay!  You see where this is going?
Next up, France. Marine Le Pen, head of the National Front is ahead of her rival Francois Fillon, the latter bogged down by Penelope-gate, by 2-3%.  As each day goes by Le Pen is getting stronger and stronger as her message resonates with and reflects that of “true” France.  The second round or “run-off” election in May shows Le Pen behind but dramatically closing the gap. She is now trailing 58% to 42% and gaining each day. Just over a week ago the numbers were 73% to 37%. Remember the Trump election.  A voice in France WILL BE HEARD!  Among Le Pen’s promises is to also leave the EU and take back France’s wonderful but rapidly dying culture.

German elections then follow in September with Angela Merkel losing ground to Socialist Party leader and secondary school drop-out Martin Schulz. Polls currently show Merkel barely ahead 33% to 32%.  Germany’s far-right Alternative for Deutschland Party (AfD) is set to win its first parliamentary seats and thus far has captured 10% of the Hinterland’s support……interesting to say the least!

By the time this all plays out Yellen will be into late September not counting adjustment periods and shocks to the system. Oh yes, I haven’t even begun to discuss Greece so, while I’m on that topic let’s do it –

Next Up – GreeceA Global Macro View

Greece never ever went away. Greece was simply outperformed in the media by BREXIT, the U.S. Presidential election, the new Administration and the aforementioned EU elections. Let’s take a look at some of the major problems confronting the Hellenic Republic shall we? Thanks to friend and former colleague Dr. Scott MacDonald, Chief Economist for Smith’s Research and Gradings for his meaningful discourses and today’s piece titled, “Can the EU Stop Yet Another Greek Debt Crisis?” Thanks Doc!

 

  • Greece needs creditors to release a €10.3b tranche from its 2015 bail out agreement to fulfill its debt obligations and avoid default.
  • Given the aforementioned issues playing out in the EU (BREXIT, the various elections, immigrations, sweeping nationalism/populism), Greece is once again the potential linchpin for the future EU.
  • The Greek economy has contracted by 26% since 2009.
  • Unemployment hovers at 20%.
  • Inefficient bureaucracy
  • Massive debt, prevalent tax evasion
  • All this despite three prior bail outs and stringent austerity measures.
  • According to the OECD, Greece’s gross debt-to-GDP-ratio stands at 185.7% of GDP. Only Japan has a worse ration of 240%.
  • Greece posted anemic 0.4% real GDP growth in 2014 after which the country slipped back into recession in 2015 and was flat last year.
  • Concerns of the full impact of BREXIT on the EU and Greece in particular.
  • Risk of another wave of migrants for which Greece serves as a major transit point.
  • Risk from weaker global trade.
  • Germany’s Finance Minister Wolfgang Schauble ruled out debt reduction for Greece with this statement last week, “for that, Greece would have to leave the monetary union.”
  • The Euro Zone’s rescue funds, EFSF and ESM already disbursed €174b to Greece, with more needed! The ESM’s head Klaus Regling said, “we would not have lent this amount if we did not think we would get our money back.”  Tip of the day: If Regling ever returns to the private sector to head a company one day, please remember to never buy its stock = Investing 101.

In conclusion before BREXIT et al, Greece was always threatened with being kicked out of the EU.  Post-BREXIT and in the midst of a much more complicated developing geopolitical landscape, Greece might see the royal boot as a wonderful invitation!

 

Tony’s Take on Today’s Fed Testimony

The Fed and I clearly are not seeing the U.S. and the world in the same light. The Fed owns roughly $414 bln in Treasuries maturing in 2018. Where does the Fed think the Treasury will be able to come up with $414 bln to pay the Fed for their 2018 holdings?  Treasury would have to jack up issuance to pay the Fed back. Raising rates 75 bps per year, shrinking the Fed balance sheet and a sizable increase in UST issuance would be a disaster for Treasury yields and the U.S. economy. Tony Farren

 

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

 

IG Corporate New Issuance This Week
2/13-2/17
vs. Current
WTD – $16.60b
February 2017
Forecasts
vs. Current
MTD – $43.575b
Low-End Avg. $20.71b 80.15% $90.65b 48.07%
Midpoint Avg. $21.33b 77.82% $91.96b 47.38%
High-End Avg. $21.96b 75.59% $93.26b 46.72%
The Low $15b 110.67% $85b 51.26%
The High $26b 63.85% $120b 36.31%

 

The Boeing Company (NYSE:BA) $300mm 30-year Deal Dashboard

 

The Boeing Company today issued a $900mm 3-part 5-, 10- and 30-year transaction.  If I’m writing about that means Mischler was involved.  Today, the nation’s oldest Service Disabled Veteran broker dealer was were invited to serve as an active 0.50% Co-Manager on the longer 30-year tranche.

The direct comparable for today’s new 30-year tranche was the outstanding BA 3.375% due 6/15/2046 that was T+87 pre-announcement nailing NIC as negative <2> bps on today’s new print that priced at T+85.
Here’s a look at today’s Deal Dashboard for The Boeing Company’s $900mm 3-part new issue:

 

BA Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
5yr +60a +45a (+/-3) +42 +42 <18> bps <1> 41.5/ <0.5>
10yr +80a +65a (+/-5) +60 +60 <20> bps <2> 59.5. <0.5>
30yr +100-105 +90a (+/-5) +85 +85 <17.5> bps <2> 85/ 0/flat

 

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

 

BA  Issue – Tranche
Size
Final Book
Size
Bid-to-Cover
Rate
5yr 300 $1.3b 4.33x
10yr 300 $1.55b 5.17x
30yr 300 $2b 6.67x

 

Boeing Company A2/A 2.125% 3/01/2022 300 +60a +45a (+/-3) +42 +42 CITI/DB/SMBC
Boeing Company A2/A 2.80% 3/01/2027 300 +80a +65a (+/-5) +60 +60 CITI/GS/MIZ
Boeing Company A2/A 3.65% 3/01/2047 300 +100-105 +90a (+/-5) +85 +85 CITI/JPM/WFS

 

Final Pricing – Boeing.
BA $300mm 2.125% due 3/01/2022 @ $98.790 to yield 2.381% or T+42  MW+10

BA $300mm 2.80% due 3/01/2027 @ $97.698 to yield 3.068% or T+60  MW+10

BA $300mm 3.65% due 3/01/2047 @ $95.392 to yield 3.912% or T+85  MW+15

 

Happy Valentine’s Day to All the Ladies Among My “QC” Readership

 

To wrap things up, this lovable guy-in-the-corner sends out a Happy Valentine’s Day wish to all the wonderful women among his “QC” distribution list, especially all the great leading ladies from fixed income syndicate land and those in Treasury/Funding from among the many issuers in his DCM universe. I wish you all a spectacular evening.

Remember guys – behind every successful man is a truly awesome woman! That’s just the way it is!

 

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 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.
2/13
AVERAGES
WEEK 2/06
AVERAGES
WEEK 1/30
AVERAGES
WEEK 1/23
AVERAGES
WEEK 1/16
AVERAGES
WEEK 1/09
AVERAGES
WEEK 1/02
New Issue Concessions 0.62 bps <3.44> bps <0.87> bps 1.13b bps 3.42 bps 0.85 bps 2.25 bps
Oversubscription Rates 3.62x 3.92x 3.12x 3.29x 2.40x 2.85x 2.45x
Tenors 5.82 yrs 12.04 yrs 11.60 yrs 6.67 yrs 12 yrs 7.83 yrs 6.52 yrs
Tranche Sizes $609mm $735mm $1,311 yrs $845mm $1,123mm $927mm $859mm
Avg. Spd. Compression
IPTs to Launch
<16.86> bps <19.60> bps <19.77> bps <18.20> bps <14.69> bps <18.77> bps <15.27> 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
Boeing Company A2/A 2.125% 3/01/2022 300 +60a +45a (+/-3) +42 +42 CITI/DB/SMBC
Boeing Company A2/A 2.80% 3/01/2027 300 +80a +65a (+/-5) +60 +60 CITI/GS/MIZ
Boeing Company A2/A 3.65% 3/01/2047 300 +100-105 +90a (+/-5) +85 +85 CITI/JPM/WFS
J.P. Morgan Chase & Co. A3/A- 4.26% 2/22/2048 2,000 +130a +120-123 +120 +120 JPM-sole
Morgan Stanley A3/A FRN 2/14/2020 3,000 3mL+95a 3mL+80 the # 3mL+80 3mL+80 MS-sole
Novartis Capital Corp. Aa3/AA- 1.80% 2/14/2020 1,000 +50-55 +40-45 +40 +40 BAML/CITI/JPM
Novartis Capital Corp. Aa3/AA- 2.40% 5/17/2022 1,000 +65-70 +55-60 +55 +55 BAML/CITI/JPM
Novartis Capital Corp. Aa3/AA- 3.10% 5/17/2027 1,000 +90-95 +75a (+/-2) +73 +73 BAML/CITI/JPM
PNC Bank NA A2/A+ 2.625% 2/17/2022 1,000 +85a +70a (+/-2) +68 +68 CITI/GS/JPM/PNC

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
JBIC A1/A+ FRN 2/24/2020 500 3mL+equiv 3mL+equiv 3mL+57 3mL+57 BARC/CITI/DAIW/JPM
JBIC A1/A+ 2.25% 2/24/2020 1,500 MS +60a MS +58a MS +57 +80.7 BARC/CITI/DAIW/JPM

 

Indexes and New Issue Volume
*Denotes new tight or new record high.

 

Index Open Current Change  
IG27 63.268 *62.80 <0.468>
HV27 136.89 134.645 <2.245>
VIX 11.08 10.74 <0.34>  
S&P 2,328 *2,337 9
DOW 20,412 *20,504 92  
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $9.90 bn DAY: $11.90 bn
WTD: $16.60 bn WTD: $18.60 bn
MTD: $43.575 bn MTD: $55.825 bn
YTD: $215.958 bn YTD: $283.108 bn

 

Lipper Report/Fund Flows – Week ending February 8th    

     

  • For the week ended February 8th, Lipper U.S. Fund Flows reported an inflow of $4.932b into Corporate Investment Grade Funds (2016 YTD net inflow of $17.286b) and a net inflow of $441.718m into High Yield Funds (2016 YTD net inflow of $732.780m).
  • Over the same period, Lipper reported a net inflow of $854.782m into Loan Participation Funds (2016 YTD net inflow of $4.614b).
  • Emerging Market debt funds reported a net inflow of $358.189m (2016 YTD inflow of $502.693m).

IG Credit Spreads by Rating (more…)

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