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FIGs 4.0; Investment Grade New Issue Re-Cap- Mischler Debt Market Comment
April 2017      Debt Market Commentary   

Quigley’s Corner 04.18.17 FIGs 4.0; Mischler Debt Market Comment

 

Investment Grade New Issue Re-Cap – CT10 Rallies; Yield Tumbles and Big FIGs Lead By Example

J.P. Morgan & Chase Co. –Veteran Diversity & Inclusion

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

 

The big FIGs took advantage of recent strong Q1 earnings results to print deals and show why they are the uber-smart money.

Note, that I wrote the following on Wednesday April 5th here in the “QC”:

“T10 yield is coming down folks.  It’s happening at the right time too.  One week from tomorrow, the uber-smart money (think U.S. six-pack banks) release their Q1 2017 earnings with Citigroup, J.P. Morgan and Wells Fargo on tap Thursday, April 13th.  I don’t expect them to capitalize by printing that day because April 13th happens to be a SIFMA early bond market close as Good Friday, April 14th IS a bond market close.  Then on Tuesday, April 18th we’ll have both Bank of America and Goldman Sachs release their Q1 earnings followed by Morgan Stanley on Wednesday the 19thBy that time those six banks will show our IG dollar DCM just how smart “smart money” is. Be patient Treasury teams…..let the market come to you.”

Today the CT10-year closed at 2.168% and has tightened 45.9 bps versus 2.627% on March 13th the Monday before the Fed raised rates. It’s going tighter!

There’s good stuff here in the “QC” folks.

J.P. Morgan & Chase Co. –Veteran Diversity & Inclusion

 

Both J.P. Morgan and Citigroup issued three-part transactions today.  Mischler’s service disabled veteran certified investment bank was honored to be invited as an active Co-Manager on today’s largest transaction of the day –  J.P. Morgan & Chase Co’s. $5.25b 3-part Global Senior Holdco new issue comprised of 6NC5 FRNs, fixed-to-float due 4/25/2023 and 11NC10 fixed-to-float due 5/01/2028.  We thank Janeene Balmir and her staff in Treasury/Funding as well as Bob LoBue, Nick Balzano and Tom Monaghan for working so well with us today on the deal mechanics, book build and allocations.   As JPM’s Senior Diversity Advisor Pat David so eloquently put it, “We think of diversity here at JPMorgan Chase as synonymous with talent.  It’s how we achieve our business objectives. When you hear these words, “diversity,” “inclusion,” etc., try replacing them with the word “talent” – and you’ll understand what it means to us and what we’re trying to do.”

By selecting the nation’s oldest Service Disabled Veteran broker dealer as an active part of today’s mega-deal, not only was it an opportunity for us to access the primary markets for our accounts but it helped J.P. Morgan capture high quality new investors into their profile.  Today that two-way was open, productive and meaningful. For that we thank you all.

Like JPM, we here at Mischler Financial give back to our veteran community. Mischler donates 10% of its revenues to highly vetted veteran causes and organizations.  For our small tight close-knit special operations unit, that’s a lot.  We do, however, realize what the “big guns” do for our nation’s vets as well and so here’s a look at just a few of the major impacts that J.P. Morgan Chase has made in addressing its myriad veteran initiatives and its in their own words:
 mischler-debt-market-comment-041817-jpmorgan-veterans

Notice the number hired–11,000+. That’s a lot of veteran lives and families impacted.  Thank you J.P. Morgan from the top down. From Jamie Dimon to Janeene Balmir and Bob LoBue, to across the entire company, for realizing the vast potential of embracing and promoting an inclusive environment.  Many evaluate performance with money, especially in banking; but it’s all about the ideas generated by people and their successful application.  So, how about the facts?

J.P. Morgan has provided 880 mortgage-free homes valued at more than $160 million donated to military families through nonprofit partners.  They also issued 7,600 career certifications earned by 5,600 post-9/11 veterans and military spouses through the Veterans Career Transition Program while also committing $45 million to programs and initiatives that support veterans and military families.  Those are facts folks!

So, they’re not only still #1 in the IG underwriting league tables with a 10.32% market share but they’re doing great things as well for our nation’s veterans.  Another nice story that needs to get from Wall Street to Main Street! I am honored to help promote that here in the “QC.”

 

 

IG Primary & Secondary Market Talking Points

 

  • Qwest Corp. upsized today’s 40NC5 Notes new issue to $575mm from $250mm at the launch.
  • National Rural Utilities increased today’s 2-part 5s/10s Senior Unsecured Collateral Trust Bonds new issue to $800mm from $750mm at the launch and at the tightest side of guidance.
  • Wells Fargo & Co. exercised a $90mm Greenshoe (3.6mm shares) of its $25 par PerpNC5 non-cumulative Class A Preferred, Series “Y” bringing the new total to $690mm or 27.6mm shares.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 9 IG Corporate-only (ex-Preferred) new issues was <14.25> bps.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 10 IG Corporate-only – which includes today’s Qwest $25 par Preferred new issue – was <13.45> bps.
  • BAML’s IG Master Index tightened 1 bp to +124 vs. +125.  +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. 1.19.
  • 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 $9.6b on Monday versus $7.2b on Thursday – the lowest volume session since $2.5b on December 30th, 2016 – $13.1b the previous Thursday.
  • The 10-DMA stands at $13.7b.

 

Global Market Recap

 

  • U.S. Treasuries – enjoyed a big rally with the 3yr thru the 30yr trading at their lowest yields YTD.
  • Overseas Bonds – 30yr JGB lost 5 bps. Europe rallied for the most part.
  • Stocks – U.S. stocks closed down but did have an afternoon bounce.
  • Overseas Stocks – Nikkei improved. China & HS struggled. Very bad day in Europe.
  • Economic – The U.S. data was a mixed bag.
  • Overseas Economic – Home prices in China improved.
  • Currencies – USD mixed vs. Big 5. Poor day for DXY Index & great day for the Pound.
  • Commodities – More red than green in commodity-land. Crude made a nice comeback.
  • CDX IG: +0.99 to 68.88
  • CDX HY: +4.82 to 349.15
  • CDX EM: +1.20 to 212.84

*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 – $46.152b
Low-End Avg. $90.25b 51.14%
Midpoint Avg. $91.50b 50.44%
High-End Avg. $92.75b 49.76%
The Low $65b 71.00%
The High $111b 41.58%

 

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…)

Banks Dominate Day’s Debt Issuance; JPM, UBS, NWB, Legg Mason; Mischler Comment
August 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 08.03.16-Bulge Bracket Banks Dominate Day’s Debt Market Issuance.

 

Investment Grade Corporate Debt New Issue Re-Cap

Global Market Recap

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Issuer)

New Issue Pipeline

M&A Pipeline

 

Another big day for IG primary issuance as 8 IG Corporate issuers tapped our dollar DCM to price 12 tranches between them totaling $11.50.  SSA assisted with 2 issuers, 2 deals and $1.75b bringing the all-in IG day total to 10 issuers, 14 tranches and $13.25b. WTD we’ve now priced 67% more than this week’s IG Corporate issuance estimates. MTD we have already issued 71% of the total amount projected for August…….after just three days!

             

Global Market Recap

 

  • S. Treasuries – Mixed & little changed. JGB sell off calms. Bunds/Gilts little changed.
  • 3mth Libor – Set at highest yield since May 2009 (0.77760%).
  • Stocks – The Dow snaps its 7 session losing streak.
  • Overseas Stocks – Europe bank stocks rallied. Nikkei & HS hit & . China higher.
  • Economic: US data today was solid (ADP & ISM non-manufacturing)
  • Overseas Economic: China mixed, Japan better & Europe mixed tilted to upside
  • Currencies: USD outperformed 4 of the Big 5. The Euro struggled today
  • Commodities: Good day for the CRB & crude oil but a down day for the metals
  • CDX IG: -1.83 to 75.01
  • CDX HY: -8.35 to 409.04
  • CDX EM: -4.17 to 260.25

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

-Tony Farren

 

IG Primary Market Talking Points – Mischler Co-Manages for JPM and UBS

 

  • Mischler served as a Co-Manager on today’s J.P. Morgan Chase & Co. 5NC4.  The 5NC4 structure gained much attention in today’s marketplace.  Thank you Team JPM Treasury Janeene Balmir and Adam Berg as well as JPM Syndicate’s Bob LoBue, Nick Balzano and Tom Monaghan.  Mischler served as a Co-Manager on today’s UBS Group Funding (Jersey) Ltd. two-part 5yr FXD/FRN. Thank you Team UBS. Many thanks to Bill Coughlin and his Treasury/Funding Team as well as Todd Mahoney, Igor Grinberg and Chelseay Boulos for working with me on securing our underwriting liability today for distribution throughout our middle markets network. It’s always greatly appreciated and makes a big difference in helping us to build the nation’s oldest Service Disabled Veteran broker-dealer in a value-added way. Thanks for your commitment to social responsibility today.
  • Columbia Property Trust Operating Partnership LP increased its 10-year Senior Notes new issue at the launch to $350mm from $250mm and 5bps tighter than the tightest side of guidance.
  • Legg Mason Inc. bumped up its 40NC5 $25 par Junior Subordinated Notes new issue to $500mm from $150mm.
  • NWB Bank, in the SSA space, upsized today’s tap of its 2.375% due 3/24/2026 to $250mm from $100mm. The new total amount outstanding is $1.25b.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 12 IG Corporate new issues was 14.96 bps.

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $43.90b
August 2016 vs. Current
MTD – $43.90b
Low-End Avg. $25.13b 174.69% $60.48b 72.59%
Midpoint Avg. $26.22b 167.43% $61.13b 71.81%
High-End Avg. $27.30b 160.81% $61.78b 71.06%
The Low $15b 292.67% $45b 97.56%
The High $45b 97.56% $75b 58.53%

Have a great evening!
Ron

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