Browsing articles tagged with "minority broker-dealer Archives - Page 2 of 14 - Mischler Financial Group"
Muni Market In Gear to Issue $10bil Week of Oct 16
October 2017      Muni Market   

Municipal Bond Offerings Scheduled Week of Oct 16 -Mischler Muni Market Update Oct 16 edition looks back to last week’s metrics and provides a lens on pending municipal bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $4.2 billion. This week volume is expected to be $9.9 billion. The negotiated market is led by $850 million Future Tax Bonds for New York City Transitional Finance Authority, New York. The competitive market is led by $1.59 billion General Obligation Bonds for the State of California and $1.50 billion GO’s for the State of Illinois on Tuesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

muni-market-pending-bond-offerings

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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DCM Market Anticipates $25b New IG Issuance Week of Oct 16
October 2017      Debt Market Commentary   

Quigley’s Corner 10.13.17 – Weekend Edition Debt Market Commentary; New IG Issuance Outlook: $25b Week of Oct 16

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

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

Best & Brightest-Fixed Income Syndicate Desks Opine on Next Week Issuance

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 4th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 2 issuers across 3 tranches totaling $4.007b.  The SSA space was quiet.

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

  • The IG Corporate WTD total is 155.97% of this week’s syndicate midpoint average forecast or $32.559b vs. $20.875b.
  • MTD we’ve priced 51.43% of the syndicate forecast for October IG Corporate new issuance or $47.154b vs. $91.68b.
  • There are now 9 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points 

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues was <12.00> bps.
  • BAML’s IG Master Index was unchanged at +103 vs. +104 and setting a new post-Crisis low.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.98.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at 1 bp to +147 vs. +148.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.1b on Thursday versus $17b on Wednesday and $16.9b the previous Thursday.
  • The 10-DMA stands at $16.7b.

 

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

 

IG Corporate New Issuance This Week
10/09-10/13
vs. Current
WTD – $32.559b
October 2017 vs. Current
MTD – $47.154b
Low-End Avg. $20.15b 161.58% $90.96b 51.84%
Midpoint Avg. $20.875b 155.97% $91.68b 51.43%
High-End Avg. $21.60b 150.74% $92.42b 51.02%
The Low $15b 217.06% $110b 42.87%
The High $26b 125.23% $75b 62.87%

 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 19 of today’s respondents are in the top 20 and 21 are among 2017’s YTD top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 23 are in the top 26. 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 81.44% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

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

Let’s dive right into this week’s primary market recap and data downloads –

North Korea still remains atop the geopolitical risk factors. The only news therein was yesterday’s announcement by the U.S. Geological Survey that it recorded an event at the sight of previous North Korean nuclear tests that measured 2.9 on the Richter scale implying it could have been triggered by further underground nuclear tests. Spain’s Catalon independence risks lowered from “Elevated” to “Cautious” as Puigdemont stopped short of declaring independence pushing instead for negotiations with Madrid. President Rajoy can invoke Article 155 to suspend the Catalan government and subsequently take over. If not, then Puigdemont’s coalition may fall apart. Trump’s shortlist for the new FOMC head has dwindled to 4 candidates – Yellen, Gary Cohn, Kevin Warsh and Jerome Powell. The market is looking at a 76% chance of a December rate hike off a bit from last week. Q3 earnings are underway with the big FIGs two-thirds done and with Goldman Sachs and Morgan Stanley announcing next Tuesday, October 17th.  Of the 4 six packs banks that already announced, should BAML, CITI, JPM or WFC not print today, next week’s volume could be quite robust.

Entering this morning’s Friday session –

  • The IG Corporate WTD total stands at $28.552b. We priced $7.677b more than this week’s average estimate of $20.875b or 36.78%.
  • MTD we have now priced 47.06% of the syndicate projection for October IG Corporates or $43.147b vs. $91.68b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,118.298b vs. $1,111.191b on October 13th, 2016 or $7.107b (0.64%) more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,380.756b vs. $1,406.275b on October 13th, 2016 or $25.519b (1.85%) less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages for the 33 IG Corporate-only deals that priced this week.

o   NICS:  <0.70> bps

o   Oversubscription Rates: 3.12x

o   Tenors: 10.03 years

o   Tranche Sizes: $865mm

o   Spread Compression from IPTs to the Launch: <20.62> bps

 

Here’s how this week’s critical primary market data compares against last week’s numbers entering this morning’s session:

 

  • Average NICs tightened 1.88 bps to an average <0.70> bps vs. 1.18 bps across this week’s 33 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.38-times to 3.12x vs. 3.50x.
  • Average tenors reduced by 1.97 years to an average 10.03 years vs. 12.00 years.
  • Tranche sizes grew by $257mm to $865mm vs. $608mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 33 IG Corporate-only new issues tightened by 2.22 bps to <20.62> bps vs. <18.40> bps.
  • Standard and Poor’s Investment Grade Composite Spreads was unchanged at +147.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning was unchanged at 0.98 week-on-week.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +103 vs. +104 setting a new post-Crisis low.
  • Spreads across the four IG asset classes was unchanged week-on-week at 1.75 bps measured against their post-Crisis lows.
  • The “BBB” asset class tied its post-Crisis low of +103.
  • The 19 major industry sectors also widened 0.68 bps to 6.00 vs. 5.32 bps also as measured against their post-Crisis lows.
  • Of note, the Banking, Insurance and Services sectors set new post-Crisis lows this week while Basic Industry, Capital Goods, Consumer Products and Transportation sectors tied their post-Crisis lows this week. In total 7 out of the 19 major industry sectors or 38%, set or tied post-Crisis lows.
  • For the week ended October 11th, Lipper U.S. Fund Flows reported an inflow of $2.415b into Corporate Investment Grade Funds (2017 YTD net inflow of $98.803b) and a net inflow of $966.777m into High Yield Funds (2017 YTD net outflow of $6.364b).
  • Taking a look at the secondary trading performance of this week’s 33 IG Corporate and 1 SSA new issues, of the 34 deals that printed, 19 tightened versus NIP for a 56.00% improvement rate, 10 widened (29.50%) and 5 were flat (14.50%).

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

  • IG Corps: $28.552b
  • All-in IG (Corps + SSA): $43.147b

And now ladies and gentlemen, as honored members of the “B&B” Hall of Fame it’s time for the guy-in-the corner to ask today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”
Thank you in advance for your time and contribution!

The “Best and the Brightest” in Their Own Words

……..……and here are their responses:

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Mischler Muni Market Update-Municipal Bond Offerings Scheduled Week of Oct 10
October 2017      Muni Market   

Municipal Bond Offerings Scheduled Week of Oct 10 -Mischler Muni Market Update Oct 10 edition looks back to last week’s metrics and provides a lens on pending municipal bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $4.4 billion. This holiday shortened week volume is expected to be $7.2 billion. The negotiated market is led by $2.6 billion bonds for North Texas Tollway Authority, Texas. The competitive market is led by $566.8 million bonds for Los Angeles County Metropolitan Transportation Authority, California in 2 bids on Thursday

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

municipal-bond-market-pending-deals-week-oct-10

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

 

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VIX-ated by Market Data, Sep Payroll Numbers – IG Corporate Debt Issuer Outlook
October 2017      Debt Market Commentary   

Quigley’s Corner 10.06.17 – Weekend Edition; VIX is Vexing vs. Sep Payroll Numbers; IG Corporate Debt Issuance Outlook

Investment Grade US Corporate Debt New Issue Re-Cap – VIX

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

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

Rates Trading Lab-Mischler’s Tony Farren Reports In re Sep Payroll Numbers Surprise

Best & Brightest-Fixed Income Syndicate Desks Opine on Next Week Issuance

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 4th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Investment Grade New Issue Re-Cap

 

Today was a no print Friday in our IG dollar DCM.

Although next week is a holiday shortened one, credit spreads are tightening, the VIX set a new low yesterday and equity markets continue setting new all-time highs.  The CT10 is yielding 2.35% at mid-day today so post-Q3 earnings I expect to see a nice rush to print through the end of the year amidst future rate hike sentiment.  I have maintained that rates will increase at the top of 2018, which means at the January 31st FOMC meeting, however, that’s my take. “If” the meeting was held today, the chances of a Fed hike are currently 86%. Remember folks there is a LOT playing out in our new world order.  So, why is the VIX so low?  First, the VIX is a street standard index so I will continue to post it here in the “QC” until perhaps one day it loses its prestige with market participants.  Having said that, it IS the index most akin to gambling with one’s emotions.  Unlike a basket of stocks or an index in which we can strip out good apples from bad apples, reverse engineer etc., the VIX volatility index gages market sentiment more than other indices. It’s an indication that the market believes everything is good in the world of finance when in fact, the world is far from that. With myriad highly volatile global event risk factors playing out each and every day think about this – the Fed has NEVER had to unwind a $4.5 trillion balance sheet.  Europe has NEVER dealt with a BREXIT.  We have NEVER experienced the current high level threat of nuclear rhetoric and rapid development as exists with North Korea and that includes the throes of the Cold War during the early ‘60s. Scroll down to my “QC” Geopolitical Risk Monitor just below for some other developing items.  When one of the major events turns south the VIX will spike!

As for our IG dollar DCM, we do have some big news for next week namely – Citigroup and J.P. Morgan announce Q3 earnings on Thursday, October 12th and Bank of America and Wells Fargo release earnings on Friday the 13th.  Goldman Sachs and Morgan Stanley follow on Tuesday the 17th.  They are the smart money and they lead the way for issuance each quarter.  They have more to do before 2017 is a wrap and I strongly suspect we’ll see hefty cumulative issuance from the six-pack.  The average estimate for next week’s IG Corporate only new issue volume is $20.875b. The high estimate was $26b from one desk and five others said $15b either flat out or as part of a range.

All 24 syndicate desks in my weekly “QC” survey responded once again and they are waiting below to make an early exit ahead of traffic on this start of a welcome three-day weekend.  Please scan through the below recaps and I promise you they’ll wait for you with their comments and numbers for next week before the well-deserved Columbus Day weekend!  So, sit back, relax and enjoy this Best & Brightest edition of the “QC.”

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

  • The IG Corporate WTD total is 77.22% of this week’s syndicate midpoint average forecast or $14.595b vs. $18.90b.
  • MTD we’ve priced 15.92% of the syndicate forecast for October IG Corporate new issuance or $14.595b vs. $91.68b.
  • There are now 10 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index was unchanged at +104 tying its post-Crisis set on Wednesday and that previously dated back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.98 vs. 0.99.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bps to +147 vs. +148.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.9b on Thursday versus $20.3b on Wednesday and $18.9b the previous Thursday.
  • The 10-DMA stands at $17.6b.

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
10/6 – Russian news announces NOKO is preparing to test fire a missile capable of reaching the U.S. Coast. Recall Trump’s “calm before the storm” comment.  NOKO rumored to reach out to GOP to help “figure out Trump.” On 9/24 Trump warns NOKO leadership that if rhetorical threats continue its leaders “won’t be around much longer.” NOKO claims comment is an “Act of War” and that it now has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Trump says “if Kim continues to threaten the U.S., allies and the world, we will have no choice but to totally destroy North Korea.”
ELEVATED
“The EU”
-Regional parliament meets 10/9 defying a Spanish Constitutional Court suspension.  Results of Catalonia’s Oct. 1st independence referendum vote posted 90% support for secession from Spain. National riot police cracked down at the voting booths injuring nearly 900 voters in what is the EU nation’s worst territorial crisis since turning to democracy 40+ years ago. Catalan leadership is divided on rush to independence given potential civil unrest and economic consequences. Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government.  Worst performance for Merkel’s CDU and Christian Social Union party since 1949.  Immigration a source of tension. Right wing has a seat in German decision-making.

-EU and Macron-Merkel coalition to squeeze U.K. re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU.  UK withdrawal from EU takes place in March, 2019. Moody’s downgraded the U.K. to Aa2 from Aa1.

CAUTION
“U.S. political gridlock”
GOP tax overhaul plan would, in their view, double deduction and create 3 tax brackets vs. 7. Bringing Corporate rate to 20% might return trillions of dollars to the U.S. that corps are keeping overseas.  Consensus GOP support to pass legislation still in doubt. Partisan politics. Trump recently bypassed GOP to close a deal w/Dems to extend debt limit to December.

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

-GCC Crisis continues as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

-Las Vegas mass shooting on Sunday 10/01 is the worst in U.S. history killing 58 and 515 injured.

-October MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. October MTD there were 13 terrorist attacks. Killing 64 people and wounding 72.

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

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

-On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

-Mueller’s continuing FBI probe into Trump.

MODERATE
“China”
-China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. National Congress of the Chinese Communists Party held on Oct. 18th. Most decisions are made prior to it but it’s historically pivotal regarding leadership changes & reshuffling as elders retire.
MARGINAL
“2018 U.S. Recession”
-Fed signals 1 more rate hike in 2017; 3 in 2018. Dot plots unchanged for 2017 & ’18; lower for ’19 & longer-term. Hurricane’s Harvey, Irma and Maria not yet reflected in economic data; “could” push hike to 2018. $4.5 trln b/s unwind begins at Oct. 31st mtg & absence of inflation are concerns.

 

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

 

IG Corporate New Issuance This Week
10/02-10/06
vs. Current
WTD – $14.595b
October 2017 vs. Current
WTD – $14.595b
Low-End Avg. $17.54b 83.21% $90.96b 16.05%
Midpoint Avg. $18.90b 77.22% $91.68b 15.92%
High-End Avg. $20.25b 72.07% $92.42b 15.79%
The Low $10b 145.95% $110b 13.27%
The High $26b 56.13% $75b 19.46%

 

Rates Trading Lab- Mischler’s Tony Farren Reports In

Economic data this week, outside of payrolls, has been very good (details below). Treasuries have traded poorly over the last four weeks. The 10yr is currently trading at 2.40% (98-22) the level where buyers are expected to step in. The 2yr (1.524%) traded at a yield not seen since 2008. Considering the sell off over the last four weeks in USTs it makes sense for the shorts to start to cover some of their positions at current levels. Remember the longs basically did not exist in this week’s JPM Survey. I expect the 2.40% in 10’s to hold today before the long weekend (Columbus Day on Monday).

Looking ahead at factors that could impact the Treasury market –

  • What did President Trump’s comment last night “calm before the storm” mean? (North Korea?)
  • What happens between Madrid and Catalonia?
  • Does the GOP deliver on Tax Reform?
  • Do the U.S. and Global stock market rallies continue or take a breather?
  • Who does President Trump select as Chair of the FOMC?
  • Fed-speak will be active again next week
  • The FOMC Minutes from the Sept 19-20 Meeting will be released on Wednesday.
  • Next week’s Treasury supply will be a challenge for the UST market.

        ($56 billion in 3’s, 10’s & 30’s next Wednesday & Thursday)

  • PPI will be released on Thursday.
  • CPI will be released on Friday.
  • Retail sales will be released on Friday.
  • Tropical Storm Nate could impact the U.S. on Sunday as a hurricane.

As for recent economic data, it seems too good to be true with Payrolls the exception. Is the theory that hurricanes are a short term negative for the economy wrong? This week’s data makes that a fair question to ask –

  • ISM manufacturing the strongest since 2004 (Mon).
  • ISM non-manufacturing the strongest since 2005 (Weds).
  • Vehicle sales this month were very strong (Tues).
  • Unemployment Rate has not been lower since Dec 2000.
  • The U6 rate has not been lower since May 2007.
  • Average hourly earnings MoM has not been higher since June 2007.
  • Average hourly earnings YoY has not been higher since 2009.
  • The Participation Rate has not been higher since September 2013.
  • Household employment and labor force both had sizeable gains.

Here are the negatives from this morning’s Employment Report –

  • Payrolls were negative for the first time since August 2010.
  • The two-month revision for payrolls was <38k>.
  • Average weekly hours was unchanged.

-Tony Farren

 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 20 of those participants are among 2017’s YTD top 21 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 81.59% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

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

Let’s dive right into this week’s primary market recap and data downloads as a segue to our syndicate desk canvass as to what is in expected next week i.e. DCM market and new investment grade corporate debt issuance.

North Korea remains global event risk factor number 1 with Kim Jong-Un’s regime making no progress this week toward negotiating with the U.S.  When NOKO is dormant it  means something is brewing and/or amiss.  Stay thirsty my friends!! Spanish Catalonia adds more EU suspense to the mix with 90% support for secession from Spain. The independence referendum, in defiance of the Spanish Constitutional Court, erupted in violence with Spanish National police injuring over 900 voters in attempts to prevent citizens from voting. Catalonia’s regional parliament meets on Monday, October 9th in defiance of the Spanish Court’s suspension.  GOP hopes of tax reform legislation may not appear until early in 2018 and it remains to be seen what support it has with opposition coming from within the party. Earlier this week we saw the impact of hurricanes Harvey, Irma and Maria on Vehicle Sales while this morning’s numbers confirm how skewed they will be going forward.  Clearly the hurricanes reduced the NFP number this morning as unemployment fell while the labor force participation rate rose. Any weak number is chalked up to storms while strength is attributed to a resilient economy. Go figure!

Entering this morning’s Friday session –   

  • The IG Corporate WTD total stands at $14.595b. We priced $4.305b less than this week’s average estimate of $18.90b or 77.22%.
  • MTD we have now priced 15.92% of the syndicate projection for October IG Corporates or $14.595b vs. $91.68b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,089.746b vs. $1,088.336b on October 6th, 2016 or 0.13% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,349.204b vs. $1,374.92b on October 29th, 2016 or 1.91% less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages from the 28 IG Corporate-only deals that priced this week.  

  • NICS:  1.18 bps
  • Oversubscription Rates: 3.50x
  • Tenors: 12.00 years
  • Tranche Sizes: $608mm
  • Spread Compression from IPTs to the Launch: <18.40> bps

 

Here’s how this week’s critical primary market data compares against last week’s numbers entering this morning’s session: 

  • Average NICs widened 0.20 bps to an average 1.18 bps vs. 1.38 bps across this week’s 28 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, increased by 0.19-times to 3.50x vs. 3.31x. 
  • Average tenors extended by 3.50 years to an average 12.00 years vs. 8.50 years.
  • Tranche sizes reduced by $37mm to $608mm vs. $645mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 28 IG Corporate-only new issues widened by 1.79 bps to <18.40> bps vs. <20.19> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 4 bps to +147 vs. +151 bps.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 5 bps to 0.98 vs. 1.03 bps. 
  • Week-on-week, BAML’s IG Master Index tightened 4 bps to +104 vs. +108 setting a new post-Crisis low dating back to July 2007. 
  • Spreads across the four IG asset classes tightened 2.50 bps to 1.75 bps vs. 4.25 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened 4.21 bps to 5.32 vs. 9.53 bps also as measured against their post-Crisis lows.
  • For the week ended October 4th, Lipper U.S. Fund Flows reported an inflow of $3.770b into Corporate Investment Grade Funds (2017 YTD net inflow of $96.388b) and a net inflow of $645.473m into High Yield Funds (2017 YTD net outflow of $7.331b).
  • Taking a look at the secondary trading performance of this week’s 24 IG Corporate and 4 SSA new issues, of the 28 deals that printed, 20 tightened versus NIP for a 50% improvement rate, 3 widened (10.50%) and 5 were flat (18.00%).
  • The VIX closed yesterday at a new low of 9.17 (Amazing!) while issuance is running neck and neck with last year’s record pace given low rates and tightening spreads.  7 of the 19 IG sector spreads set or equaled post Crisis lows this week and 2 of the 4 IG asset classes did the same!

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

  • IG Corps: $14.595b
  • All-in IG (Corps + SSA): $26.475b

And now ladies and gentlemen, as honored members of the “B&B” Club it’s time for the guy-in-the corner to ask today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?” 

As always, I hope the daily “QC” and my data downloads are helpful and informative to you.  Without your participation this widely read “QC” survey edition can’t get done.  I greatly appreciate your meaningful sound bites that bring your numbers and ranges to life. A LOT of Fortune Tsy teams read this every day and they love it!  I consistently receive positive feedback about the “QC” from them directly.  Wall Street fixed income syndicates desks that contribute to this column are directly contributing to a much bigger picture, while also helping the nation’s oldest Service Disabled Veteran broker-dealer build in a more meaningful and sustainable way.

Please know that on each and every new issue, the guy-in-the-corner is ALWAYS be in YOUR corner on deal day! If an issuer asks you who some of the best diversity firms are, my hope is that you’ll mention Mischler Financial and the guy-in-the-corner.  Our distribution is high quality, prolific and consistent. On deal day, we perform enough to influence your bid-to-cover rates with REAL unpadded orders. Besides where else can you get an award winning daily fixed income DCM piece for FREE? But most of all, we have a great certification as the nation’s oldest Service Disabled Veteran broker-dealer. We demonstrate remarkable authenticity here at Team Mischler. Our commitment to our demographic is our foundation. We donate 10% of our earnings to heavily-vetted veteran foundations and non-profits to help our active and veteran service men and women and their families. It’s all well worth it and I hope you think so too!

Thank you and wishing you and yours a great long Columbus Day weekend! -Ron”

The “Best and the Brightest” in Their Own Words

 

……..……and here are their responses:

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Mischler Muni Market Update Week of Oct 2
October 2017      Muni Market   

Municipal Bond Offering Schedule Week of Oct 2 -Mischler Muni Market Update Oct 02 edition looks back to last week’s metrics and provides a focused lens on pending municipal bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $8.7 billion. This week volume is expected to be $5.0 billion. The negotiated market is led by $500 million taxable bonds for Northwestern University and $301.5 million for Dormitory Authority of the State of New York for School Districts. The competitive market is led by $1.7 billion tax-exempt and taxable PIT bonds for Dormitory Authority of the State of New York in 5 bids on Tuesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

municipal-debt-market-offering-schedule 

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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Equities Market Comment: Coddle This! Then Keep Calm and Carry On
September 2017      Equities Market Commentary   

Peruzzi’s Perch 09.29.17- US Equities Markets Buttressed By Fed Coddling; Global Markets At/Near Record Highs-October Is Here.

Children are born and then coddled and fed by their parents for years until the time comes for them to face the world on their own. This is like the Fed coddling and nurturing financial markets with asset purchases and low interest rates. At the September 20th  FOMC meeting, while not raising rates, the Fed did signal that they continue to increase the pace of their balance sheet unwind. While inflation is below their 2% target rate, which perplexes them, they are planning on raising rates soon, or eventually, or someday. While some doubt the Fed will actually raise rates again this year, the market is pricing in a meager 1% chance of an October rate hike, and a more substantial 67% chance of a December rate hike. The end of cheap money will eventually come, but the recently disclosed Tax reform blueprint could give financial markets its next coddle-induced growth spurt. Tax reform details suggest a battle in Congress is on the horizon. This leads us once again to focus on macro and micro economic data as well as upcoming corporate earnings growth.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

As Major League Baseball’s regular season and the third quarter comes to an end, the S&P 500 closes out September with its 6th straight monthly gain. This is the first time the S&P closed positive in the month of September since 2013, with leading sectors being: Techs, Energy and Industrials. The U.S dollar is closing out its best week of the year; Asian markets closed out a strong quarter with the MSCI Asia Pac index posting its 9th straight monthly gain. WTI crude, while pulling back the last few sessions, will close out Q3 up about 10%. U.K data on Friday showed the savings rate increased more than expected while wages grew faster than prices for first time in a year. We will be watching to see if this is a one month outlier or if a trend is developing. Deutsche Bank’s rating was cut by Fitch on a lack of revenue recovery. Volkswagen announced a $3billion charge related to the buy back or retrofit of tainted U.S. diesel cars.  Also, this week we saw a pullback in August U.S new home sales as well as pending sales; better durable and Cap goods orders and personal income and spending was mostly in line. The core PCE deflator slowed to 1.3% in August, while Euro area core inflation fell .1% to 1.1% in September.

U.K. PM May will give the keynote speech at next week’s Conservative Party’s annual conference and Janet Yellen will give opening remarks at a community banking conference in St. Louis on Wednesday. September ISM data is due on Monday, ADP employment change on Wednesday, August trade balance, factory and durable goods orders on Thursday. “Here we go again” as the Spanish region of Catalonia will attempt to stage a separatist referendum on Sunday. The most-watched release will be September U.S payroll due on Friday. Payrolls are expected to show that we added the fewest workers in six months (88K estimates) as hurricanes Harvey and Irma put a temporary halt to hiring in parts of the southeast. 3Q earnings will begin in 2 weeks, but we are expecting earnings from PepsiCo Inc., Monsanto Co., Tesco Plc, Paychex Inc., Lennar Corp. and Costco Wholesale Corp next week.

Nobel prizes will be awarded through the week. Equifax ex CEO will be questioned at a U.S House Energy and Commerce subcommittee hearing on Tuesday. Asian market volume will be light next week as China, Taiwan and Korea observe autumn festivals. North Korea has been quiet recently, and that’s a welcomed change.

Most global markets are at or are near all-time highs and the VIX index once again is near its lows at 9.61. So, while the FED would very much like its child to go out and confront the world on its own, recent data and September payrolls may warrant some form of continued coddling. The coming few weeks of economic data, tax reform and earnings should give us clarity as to when the Fed can raise rates and turn that bedroom into a den. Recent trading volumes suggests traders are currently not sure. Looking back at the S&P 500 return the last four Octobers: October 2016 -1.94%, October 2015 +8.3%, October 2014 +2.32%, and October 2013 +4.46%.  We can see that October is a month that investors do not want to sit idle on the sidelines. October is a month to pick apples, watch the leaves turn, watch football and watch the market.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

www.mischlerfinancial.com

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

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch September 29, 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

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

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Investment Grade Corporate Debt Issuers of the Day-Mischler Comment
September 2017      Debt Market Commentary   

Quigley’s Corner 09.25.17  – IG Issuers of the Day: AEP, BX, HPP, NSANY

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

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

SNEAK PREVIEW : “Thank You For Your Service”

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 September 20th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Investment Grade New Issue Re-Cap

Today’s IG dollar DCM hosted 7 issuers across 13 tranches totaling $6.75b.  The SSA space was quiet with two deals slated for tomorrow’s business.

Equity markets were in the red today due to mounting tensions between the U.S. and North Korea, concern over historic gains by nationalist parties in German elections forcing Angela Merkel to form a coalition government, and increasing jitters over whether the FED hikes rates one more time in 2017 or not.

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

  • The IG Corporate WTD total is 35.14% of this week’s syndicate midpoint average forecast or $6.75b vs. $19.21b.
  • MTD we’ve priced 105.02% of the syndicate forecast for September or $118.096b vs. $112.45b.
  • There are now 7 issuers in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Hudson Pacific Properties 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 compression from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <18.29> bps. Including today’s IG-rated Federal Realty $25 par preferred, the average compression of today’s 13 new issues was <17.85> bps.
  • BAML’s IG Master Index was unchanged at +111. +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +154.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.5b on Friday versus $17.5b on Thursday and $12.7b the previous Friday.
  • The 10-DMA stands at $17.3b.

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
On 9/24 Trump warns NOKO leadership that if rhetoric threats continue its leaders “won’t be around much longer.” NOKO responds saying it has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing termed calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.” On 9/14 North Korea launched another ballistic missile over Northern Japan in the face of UN Security Council sanctions. Trump warned U.S. military options are “effective and overwhelming”. Missile traveled 2,300 miles landing in the Pacific. Guam is 2,131 from NOKO! On 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake. Head of IAEA  said hydrogen bomb test is “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Amb. to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis.” Called for strongest sanctions vs. NOKO. Friday 8/11 Trump said “U.S. military solutions are in place, locked and loaded” matching his earlier “fire and fury” statement. On Th. 8/10 NOKO announced its plan to “pre-emptively strike Guam in mid-August.” Trump’s reaction, “Maybe my “fire and fury” threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location in U.S.
ELEVATED Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government.  Worst performance for Merkel’s CDU and Christian Social Union party since 1949.  Immigration a source of tension. Right wing has a seat in German decision-making.

On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU.  UK withdrawal from EU takes place in March, 2019.

CAUTION
“U.S. political gridlock”
GOP to release tax overhaul plan week of Sept. 25th & Senate will vote on new Graham-Cassidy healthcare bill to repeal Obama Care. Consensus GOP support to pass legislation still in doubt. Partisan politics. Trump recently bypassed GOP to close a deal w/Dems to extend debt limit to December.

Mueller’s continuing FBI probe into Trump.

GCC Crisis continues as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

September MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. September MTD there were 87 terrorist attacks. killing 347 people and wounding 581.

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

Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up.

Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3).

MODERATE China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns.
MARGINAL
2018 U.S. Recession
Fed signals 1 more rate hike in 2017; 3 in 2018. Dot plots unch for 2017 & ’18; lower for ’19 & longer-term. Hurricane’s Harvey, Irma and Maria not yet reflected in economic data; “could” push hike to 2018. $4.5 trillion b/s unwind begins in October & absence of inflation are concerns.

 

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

 

IG Corporate New Issuance This Week
9/25-9/29
vs. Current
WTD – $6.75b
September 2017 vs. Current
WTD – $118.096b
Low-End Avg. $18.17b 37.15% N/A N/A
Midpoint Avg. $19.21b 35.14% $112.45b 105.02%
High-End Avg. $20.25b 33.33% N/A N/A
The Low $10b 67.50% $100b 118.096%
The High $30b 22.50% $125b 94.48%

Sneak Preview of “Thank You For Your Service”

 

Friday, October 9th is Veteran’s Day here in the U.S., and in recognition of this important day, I thought it fitting to share a sneak preview of an upcoming film that is getting a lot of buzz in the industry.
THANK YOU FOR YOUR SERVICE profiles a group of U.S. soldiers returning from Iraq who aer struggling to integrate back into family and civilian life, while living with the memory of a war that threatens to destroy them long after they’ve left the battlefield. The film stars Miles Teller and Haley Bennett.  The film is the directorial debut of Jason Hall, a graduate of my alma mater, the University of Southern California’s School of Cinematic Arts or “SCA” and is based on the non-fiction book by David Finkel and adapted for the screen by Finkel and Hall.  The Universal Pictures production opens in theatres on Wednesday, October 27th.  As an SCA Alum, I am doing my part to get the word out from my corner desk here at our nation’s oldest Service Disabled Veteran broker dealer. Considering this past weekend’s controversies surrounding the NFL, rights, freedoms and respect of our flag, country, service men and women and first responders, I thought that perhaps we should all make it a point to see “Thank You For Your Service” at our local theatres when it’s released.  The ensemble cast tackles myriad veteran-focused situations, disorders and struggles pertinent to today’s public discourses.  The film overlays nicely with the Service Disabled Veteran mandate that we are all dedicated to here each and every day at Mischler Financial.

Here’s the preview:

 

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

 

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

…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
9/18
TUES.
9/19
WED.
9/20
TH.
9/21
FRI.
10/22
AVERAGES
WEEK 8/18
AVERAGES
WEEK 9/11
AVERAGES
WEEK 9/05
AVERAGES
WEEK 8/28
AVERAGES
WEEK 8/21
AVERAGES
WEEK 8/14
New Issue Concessions 1.50 bps <0.39> bps 0.50 bps 0.75 bps N/A 0.62 bps 1.40 bps 2.12 bps 1.00 bp 0.72 bps 4.37 bps
Oversubscription Rates 3.10x 3.25x 2.39x 3.58x N/A 3.18x 3.27x 2.70x 2.95x 3.03x 3.25x
Tenors 8.14 yrs 11.79 yrs 3.30 yrs 15.08 yrs N/A 8.21 yrs 9.84 yrs 11.10 yrs 5.17 yrs 9.86 yrs 10.26 yrs
Tranche Sizes $414mm $531mm $281mm $625mm N/A $483mm $674mm $731mm $575mm $352mm $1,023mm
Avg. Spd. Compression
IPTs to Launch
<17.25> yrs <21.39> bps <14.75> bps <17.83> bps N/A <18.40> bps <18.91> bps <16.80> yrs <15.00> bps <19.67> bps <17.79> bps

 

New Issues Priced

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Municipal Bond Offering Schedule Week Sep 25-Texas Water Development Board-Mischler Comment
September 2017      Muni Market   

Municipal Bond Offering Schedule -Mischler Muni Market Market Update Sep 25 edition looks back to last week’s metrics and provides a focused lens on pending muni bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $5.4 billion.  This week volume is expected to be $9.9 billion.  The negotiated market is led by $1.1 billion for the Texas Water Development Board.  The competitive market is led by $846.8 million general obligation bonds for the State of Minnesota in 5 bids on Wednesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below 

municipal-debt-offering-calendar

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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Investment Grade US Corporate Debt Market Comment: Distilling DCM Data
September 2017      Debt Market Commentary   

Quigley’s Corner 09.22.17-Distilling the Week’s DCM Activity; Look Back to Learn, Look Forward to Window of Opportunity

 

Investment Grade US Corporate Debt New Issue Re-Cap –A Day for Donuts, Dissecting the New Issue Pipeline

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

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

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 September 13th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Investment Grade US Corporate Debt New Issue Recap

No IG issues printed today, however, it does not mean that nothing happened. In fact, something big happened!  The Best & Brightest all came back to me once again today in the “QC’s” most eagerly anticipated Friday edition.  That’s right they’re busy lining things up for next week and they’re taking just a little bit of time out to respond in their own words and with their own volume thoughts for next week’s IG Corporate new issue volume.  And you know what? ….They’re all here just waiting for you to scroll down below.  So, let’s get thru the recaps et al and then it’s onto the best and the brightest in the world of investment grade dollar syndicate. Thank you as always to those 24 desks and the very fine operatives on all of them for participating.

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

  • The IG Corporate WTD total is 65.41% of this week’s syndicate midpoint average forecast or $17.876b vs. $27.33b.
  • MTD we’ve priced 99.02% of the syndicate forecast for September or $111.346b vs. $112.45b.
  • There are now 4 issuers in the IG credit pipeline

Today’s IG Primary & Secondary Market Talking Points

 

BAML’s IG Master Index was unchanged at +111. +106 represents the post-Crisis low dating back to July 2007.

Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.

Standard & Poor’s Investment Grade Composite Spread was unchanged at +154.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $17.5b on Thursday versus $18.8b on Wednesday and $20.2b the previous Thursday.

The 10-DMA stands at $17.1b.

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.” On 9/14 North Korea launched another ballistic missile over Northern Japan in the face of UN Security Council sanctions. Trump warned U.S. military options are “effective and overwhelming”. Missile traveled 2,300 miles landing in the Pacific. Guam is 2,131 from NOKO! On Sunday, 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake according to the U.S. GS. Head of IAEA  said the hydrogen bomb test is a “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO ICBM launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Amb. to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis.” Called for strongest sanctions vs. NOKO. Monday 8/31 began joint U.S. & SOKO military exercise the world’s largest computerized command controlled with over 80,000 troops. CIA Director Mike Pompeo says of NOKO “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Friday 8/11 Trump said “U.S. military solutions are in place, locked and loaded” matching his earlier “fire and fury” statement. On Th. 8/10 NOKO announced its plan to “pre-emptively strike Guam in mid-August.” Trump’s reaction, “Maybe my “fire and fury” threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location in U.S. U.S. sanctions against select Chinese banks to pressure PRC to influence NOKO failed. China insiders say PRC does not have influence with NOKO that the U.S. thinks it does. China in precarious position given South China Sea Islands. Asian allies now justified to build out their respective militaries.
ELEVATED
BREXIT Fallout
On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU.  UK withdrawal from EU takes place in March, 2019.

CAUTION
“U.S. political gridlock”
GOP to release tax overhaul plan week of Sept. 25th & Senate will vote on new Graham-Cassidy healthcare bill to repeal Obama Care. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt. Partisan politics. Trump recently bypassed GOP to close a deal w/Dems to extend debt limit to December.

Mueller’s continuing FBI probe into Trump.

GCC Crisis continues as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

September MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. There were 4 terrorist attacks thus far in September – that had 100 or more deaths – killing 615 people and wounding 733.

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

Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up.

Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3).

MODERATE China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns.
MARGINAL
2018 U.S. Recession
Fed signals 1 more rate hike in 2017; 3 in 2018. Dot plots unch for 2017 & ’18; lower for ’19 & longer-term. Hurricane’s Harvey, Irma and Maria not yet reflected in economic data; “could” push hike to 2018. $4.5 trillion b/s unwind begins in October & absence of inflation are concerns.

 

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

 

IG Corporate New Issuance This Week
9/18-9/22
vs. Current
WTD – $17.876b
September 2017 vs. Current
WTD – $111.346b
Low-End Avg. $26.29b 68.00% N/A N/A
Midpoint Avg. $27.33b 65.41% $112.45b 99.02%
High-End Avg. $28.375b 63.00% N/A N/A
The Low $20b 89.38% $100b 111.346%
The High $36b 49.66% $125b 89.08%

 

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week’s Investment Grade Corporate Debt

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!  Thank you to all of them. 19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  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 81.46% 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.

Here are this week’s primary market recap and data downloads:

Fed Chair Yellen continues to express concern about the absence of inflation that she’d like to see at 2%.  The FOMC tempts markets with accolades about the how low the unemployment rate is. Meanwhile, Wednesday’s eagerly anticipated $4.5 trillion QExit guidance amounted to nothing more than “we’ll start that in October!” Although the FOMC voiced there’d be one more rate hike in 2017 and 3 in 2018, the market doesn’t really believe that. The devastating hurricanes Harvey, Irma and Maria have not begun to show up in our economic data. I don’t believe we’ll see a rate hike in 2017.  Additionally, the next meeting in late October is not followed by a press conference so it’s highly unlikely that they’ll raise rates at that time. That leaves one meeting left in December. Do you think the Fed is giving out holiday gifts this year? I think not.  The S&P, Dow and Nasdaq once again reached new all-time highs this week.

Entering this morning’s Friday session –

 

  • The IG Corporate WTD total stands at $17.876b. We priced $9.454b less than this week’s average estimate of $27.33b or 65.41%.
  • MTD we have now priced 99.02% of the syndicate projection for September IG Corporates or $111.346b vs. $112.45b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,053.881b vs. $1,055.736b on September 22nd, 2016 or 0.18% less than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,280.209b vs. $1,331.873b on September 22nd, 2016 or 4.04% less than the year ago total.
  • Entering this morning’s session, here are the five key primary market driver averages from the 37 IG Corporate-only deals that priced this week
  • NICS:  0.62 bps
  • Oversubscription Rates: 3.18x
  • Tenors: 8.21 years
  • Tranche Sizes: $483mm
  • Spread Compression from IPTs to the Launch: <18.40> bps

 

Here’s how this week’s critical primary market data compares against last week’s numbers entering this morning’s session:

 

  • Average NICs widened 0.78 bps to an average 0.62 bps vs. 1.40 bps across this week’s 37 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.12-times to 3.18x vs. 3.30x.
  • Average tenors contracted by 1.63 years to an average 8.21 years vs. 9.84.
  • Tranche sizes decreased by $192mm to $483mm vs. $675mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 37 IG Corporate-only new issues widened by 0.51 bps to <18.40> bps vs. <18.91>.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 4 bps to +154 vs. +158 bps.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 4 bps to 1.06 vs. 1.10 bps.
  • Week-on-week, BAML’s IG Master Index tightened 5 bps to +111 vs. +115.
  • Spreads across the four IG asset classes tightened 3.5 bps to 7.50 bps vs. 11.00 bps as measured against their post-Crisis lows.
  • The 19 major industry sectors also tightened 3.58 bps to 11.95 vs. 15.53 bps also as measured against their post-Crisis lows.
  • For the week ended September 20th, Lipper U.S. Fund Flows reported an inflow of $2.858b into Corporate Investment Grade Funds (2017 YTD net inflow of $91.384b) and a net inflow of $865.832m into High Yield Funds (2017 YTD net outflow of $8.410b).
  • Taking a look at the secondary trading performance of this week’s 37 IG Corporate and 4 SSA new issues, of the 41 deals that printed, XX tightened versus NIP for a 75.50% improvement rate, 5 widened (12.25%) and 5 were flat (12.25%).

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

  • IG Corps: $17.876b
  • All-in IG (Corps + SSA): $23.389b

 

And now ladies and gentlemen, as honored members of the “B&B” Club it’s time for the guy-in-the corner to ask today’s question, “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

Thank you in advance for your time and contribution!

Have a great evening!

Ron Quigley, Managing Director, Head of Fixed Income Syndicate

……..……and here are their formidable responses:

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Municipal Debt New Issue Calendar Week of Sept 18 Mischler Comment
September 2017      Muni Market   

Municipal Debt New Issue Calendar Week of Sept 18 2017- Mischler Muni Market Market Update looks back to last week’s metrics and provides a focused lens on pending muni bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $5.6 billion. This week volume is expected to be $4.7 billion. The negotiated market is led by $900.0 million taxable bonds for Northwell Healthcare, Inc. and $854.3 tax-exempt and taxable bonds for The Regents of the University of California. The competitive market is led by $178.3 million general obligation bonds for Cherry Creek School District No. 5, Colorado in 2 bids on Thursday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below 

muni market new issues

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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