Browsing articles tagged with "mischler financial group Archives - Mischler Financial Group"
Investment Grade Debt Issuance Case Study: Exelon
February 2018      Debt Market Commentary   

Quigley’s Corner 02.15.18 – Exelon Inspires Investment Grade Debt Issuance Case Study

Investment Grade New Issue Re-Cap

Explaining EXC 10bp Spread Differential

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap

The “QC” Geopolitical Risk Monitor

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

The “QC” Geopolitical Risk Monitor

New Issues Priced

Indexes and New Issue Volume              

Lipper Report/Fund Flows – Week ending February 7th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Rates Trading Lab

Economic Data Releases

Tomorrow’s Calendar 

  
Investment Grade New Issue Re-Cap – Better Clearing Levels

Today the IG dollar DCM hosted 3 issuers across 8 tranches totalling $4.575b.  The SSA space was inactive today and with nothing slated.

Here’s a look at MTD IG Corporate new issue volume as measured against syndicate desk estimates:

  • The IG Corporate WTD total is 50.79% of this week’s syndicate midpoint average forecast or $9.477b vs. $18.66b.
  • MTD we’ve priced 47.28% of the syndicate forecast for February IG Corporate new issuance or $42.067b vs. $88.98b.
  • There are now 6 issuers in the IG credit pipeline. 

At the Crossroads of Art & Science: EXC-plaining a 10 bp Spread Differential

mischler-exelon-case-study 

 

 

 

 

 

Last evening I wrote a bit about Exelon’s $800mm CoMed 30-year Global Secured FMBs rated A1/A-/A that priced at T+85 on Monday that printed with a 7 bp NIC. The comp used for the relative was the outstanding CoMed 3.75%s due 8/2047 that were T+78 pre-announcement pegging NIC as 7 bps.  The order book finished at $1.85b for a 2.31x bid-to-cover rate. Those bonds are T+83 bid this afternoon or 2 bps tighter vs. NIP. Some of the reasons for the 7 bp NIC were: 

  • It was an $800mm deal size that needed a bit more to clear
  • Market volatility/uncertainty
  • Exelon has numerous subs that need to issue and we all know that investors have long memories. In other words, do the right thing at an inflection point of sorts in our market and investors will come back to you in spades.

Now let’s fast forward to today, a mere 72 hours later, in which Exelon’s PECO Energy priced a $325mm 30-year that is also a Global Secured FMB rated Aa3/A that priced at T+77. Today’s PECO comp was the outstanding PECO “EXC” 3.70% due 9/2047 that was T+80 pre-announcement nailing NIC on today’s new issue as negative <3> bps. WHOOOOAA!  A 10 bp differential between the two and remember as a 30-year there is no curve adjusting and both entities have direct comparables to use for a relative value study. We all know that relative value is part art and part science!

On Monday 2/12 at 10:27am ET, and in the middle of CoMed’s book build, the VIX or “fear factor” was 29.70 versus this morning’s 2/15 opening session level of 18.50 when PECO was announced. That’s a whopping 37.7% drop in the all-important and eagerly watched VIX volatility index……more dramatic supporting evidence for the final spread level.

And guess what?  Exelon’s Commonwealth Edison deal on Monday was the first utility to issue since the recent historic market gyrations! That nailed it for me. Ahhhhh!  There it is! The search for a resolution in what seemed an illogical endeavor was discovered.  It was a combination of many market ingredients including a dramatic VIX and was all about the utility that opened up the issuance doors for the sector.  A question begot an answer with myriad moving parts and persistence really does pay off. So, to re-cap:

  • EXC’s CoMed deal was an $800mm deal size that needed a bit more to clear
  • Market volatility/uncertainty (re: VIX levels and a 37.7% differential between Monday’s pricing and today’s PECO pricing).
  • CoMed was the first U.S. IG Utility to print since the historic volatility and equity market gyrations.  
  • PECO is +76 bid or 1 bp tighter and CoMed is T+83 or 2 bps tighter.

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 8 IG Corporate-only new issues was <11.31> bps.
  • BAML’s IG Master Index tightened 1 bp to +99 vs. +100. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.94 vs. 0.95.  (+85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +133 vs. +135. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $19.7b on Wednesday versus $19b on Tuesday and $22.8b the previous Wednesday.
  • The 10-DMA stands at $19.4b. 

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

 

IG Corporate New Issuance This Week
2/12-2/16
vs. Current
WTD – $9.477b
February 2018 vs. Current
MTD – $42.067b
Low-End Avg. $17.56mm 53.97% $88.28b 47.65%
Midpoint Avg. $18.66mm 50.79% $88.98b 47.28%
High-End Avg. $19.75mm 47.98% $89.68b 46.91%
The Low $10mm 94.77% $70b 60.10%
The High $26mm 36.45% $110b 38.24%

 

Global Market Recap 

  • U.S. Treasuries – closed mixed with a flatter curve.
  • Overseas Bonds – JGB’s mixed and little changed. Europe mixed with no major moves.
  • 3mth Libor – Set at 1.87250% the highest since December 2008.
  • Stocks – At 3pm stocks had strong gains with the NASDAQ leading the way.
  • Overseas Stocks – Nikkei and HS had strong rallies. Europe also closed higher.
  • Economic – Higher inflation data with weaker economic data for the 2nd day in a row.
  • Overseas Economic – Japan mixed. France unemployment rate improved (big). No inflation in Europe.
  • Currencies – The USD struggles continued. DXY Index approaching a 3-year low.
  • Commodities – CRB, crude oil and copper up (+ $20 this week) and gold small loss.
  • CDX IG: -2.32 to 53.85
  • CDX HY: -11.23 to 328.23
  • CDX EM: -5.30 to 123.35
  • VIX: +0.33 to 19.59

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

Updates are highlighted in BOLD print!

Risk Level/Main Factor Geopolitical Risks
HIGH +
“North Korea”
·        2/15 – The Seoul Olympics kicked off on Fri. 2/09 and conclude Sun. 2/25. Sources tell me to “watch” mid-March thru April as NOKO will be back to its old tricks and the game will ratchet up with newly announced war games along with a much larger allied force participating together. It’s amazing how the world comes together in a spirit of healthy competition to participate in the Olympics.  Events are governed by the standard set of rules and guidelines of each sport. Unfortunately, that’s not how the political world works. When NOKO dictator Kim Jong-Un’s sister, Kim Yo Jong steals the show thanks to an overwhelmingly liberal media at the Seoul Olympics it gives reason to pause. They should be focused on the torture, extermination, enslavement, sexual violence, murder and disappearances that take place every day in North Korean prison camps for starters. We’d all like peace to come to the Korean peninsula but let’s not be naïve. It was nice to see the two Korea’s march under one flag on the opening night of the Olympics but don’t be fooled.  1/25 -North Korea issued a statement encouraging the unification of the Korean peninsula asking all Koreans to “promote contact, travel, co-operation between North and South Korea” and saying it will “smash” all challenges against unification.  1/16 – H.R. McMaster met with Japanese & SOKO security council members concluding recent talks with NOKO are a “diversion.” 1/02 – Kim Jong Un announced, “the entire U.S. territory is within the range of a NOKO nuclear strike.” 11/20 – Pres. Trump announced the U.S. designated NOKO a “state sponsor of terrorism.”
ELEVATED
“Trumponomics”
& The Beltway
·        2/15 –  On 2/12 President Trump broke the GOP trend of fiscal prudence with his $4.4 trillion 2019 budget sent to Congress that is unlikely to be enacted as is. On 2/09 the gov’t. averted a shut-down signing into law along with a $1 trillion spending bill with major hikes to disaster relief, full-year funding for defense, infrastructure and our nation’s opioid crisis. Among major items on Trump’s 2018 agenda – a DACA fix, the Wall, Infrastructure Plan and Welfare Reform. 1/26 – Pres. Trump’s  immigration reform plan proposes a DACA fix by offering citizenship to 1.8mm undocumented immigrants brought to the U.S. as children (Dems asked for 800k) in exchange for restrictions on future immigration and a $25b border defense system and wall along the Mexican border.
CAUTION
German coalition?
BREXIT & Terror
·        2/15 – March 2nd is a key date as Germany’s Social Democrats (Socialist Party) votes to approve or reject the recent grand coalition deal referred to as a “marriage of convenience” with Merkel’s CDU/CSU party to stabilize Europe’s keystone nation and economy. A “no” vote means new elections for the Hinterland and further political tension and turmoil. 2/08 -Angela Merkel sealed a grand coalition deal with the Socialist SPD party but gave up the finance and foreign ministry’s.  Many Merkel CDU party members are upset that Wolfgang Schäuble, the longest ever serving German finance minister and a major architect of today’s Eurozone economy is now gone. The Socialist SPD party envisions a United States of Europe by 2025! Germany is the keystone of the EU and 28% of its GDP.

·        2/15 – PM Theresa May finally has cabinet members providing clarity on a post-BREXIT vision noting Boris Johnson’s speech on 2/14. He expressed an unwillingness for the U.K. to be tied down to EU regulation and alignment in lieu of British “choice”; avoided addressing a potential Second Referendum saying “….let’s not go there.” It w/b tumultuous for the U.K. to vote on any deal resultant from EU negotiations. Said U.K. will leave the Customs Union and called for a national debate on the low-skill immigration problem saying the U.K. should focus on the best indigenous talent. Supports stopping payments to the EU budget and total U.K. control of its immigration policy. Wants no EU political integration and a more global U.K. in line with its history. Refers to BREXIT future as more “hope” than “fear”. 1/01 – UK Parliament voted 309-305 requiring separate Act before BREXIT can be implemented dealing PM Theresa May a major setback in negotiations on the EU divorce bill. The U.K. is targeting an “implementation period” of March and completion by October 2018. U.K. withdrawal from the EU takes place in 3/2019.

·        February 2018 Terror Events and Casualties: 74 terrorist attacks; 180 dead; 453 wounded.

MODERATE
Italian elections, Spain & Pakistan.
·        2/15 – Italy’s center-right coalition party is expected to win the March 4th election with its leaders projecting sufficient votes to govern without a second ballot. Silvio Berlusconi, the man behind the Forza Italia Party but banned from serving due to a tax evasion charge, is calling for the EU to devise a Marshall Plan-like approach with MENA nations to help the latter keep their people from flocking to Italy which is choked by over 630,000 immigrants only 5% of which have the legal right to be there as refugees. Matteo Silvani head of the Eurosceptic Lega supports leaving federalized Europe (backed by Germany’s coalition SPD party). Italy has had 65 gov’ts. in 71 years. Unemployment is 10.8%; youth joblessness is 32.2%. Italy is the EU’s 3rd largest economy and has the world’s 3rd highest debt-to-GDP ratio at 132.5%; its national debt is $2.8 trillion (equiv.) It is the EU’s biggest economic risk. Italy’s banking sector holds $220bn of bad loans.

·        2/08 – Friction increased as the U.S. designated 3 Pakistanis as “global terrorists” linked to Al Qaeda, the Afghan Taliban and Lashkar-e Taiba militant groups. 2/06 – The U.S. gov’t said it would consider lifting its security assistance suspension against Pakistan if that nation took immediate action to alleviate U.S. concerns by focusing on all terrorist organizations “without distinction.” On Jan. 4th Pres. Trump suspended security assistance to Pakistan including $2b in defense aid tweeting on Jan. 1 that the U.S. gave it “$33bn in exchange for lies and deceit” while accusing Pakistan of arming and funding terrorists against U.S. troops.

·        2/10 – Elsa Artadi may wind up as Catalonia’s next President with self-exiled leader Carles Puigdemont possibly governing de facto from Brussels. A special council of the republic is being considered although Catalan law must be changed for that accommodation. Harvard graduate Artadi is Puigdemont’s loyal gal Friday.  Puigdemont currently still faces arrest for charges of sedition should he return to Spain.

MARGINAL
2018 US Recession?
Interest rates &
U.S. market volatility
·        2/11 – U.S. equity markets are currently in the midst of a historic, albeit transparent, efficient and healthy market correction.  Volatility will continue to be exacerbated by hawkish interest rate outlooks in which UST yields swelled to four-year highs. Fears of increased inflation tied to high deficits and lower taxes have weighed on equity markets wiping out an estimated $5 trillion globally. The U.S. economy is doing well, earnings are positive but a correction leaves more room for stocks to plunge in light of valuations. Fed is forecasting 3 hikes in 2018. (Many forecast four hikes). Should the U.S. see 4 rate hikes in 2018 and 3 more in ’19, without inflation, as some are beginning to forecast, the U.S. would be heading straight into a recession.

·        2/06 – Russian Presidential elections were moved to March 18th by Putin to coincide with 4th anniversary of annexation of Crimea.  Vlad Putin’ 87% approval rating effectively assures victory. Question is what happens in the 2024 election? Russian Constitution restricts position to two consecutive terms. Putin got around that issue in 2008 by installing Medvedev with Putin serving as Prime Minister (though he was in control). He could become Speaker of the Duma in 2024 and install someone else and then become President again. At 66 years of age and in good health, expect Putin to be around and in charge for the long haul.

·        1/11 – Cybercrime: Crypto-jacking, PowerShell-based attacks, cybercriminal underground, ransomware, viruses, hacking, worms and malware estimated to cost the world $6 trillion by 2021.

 

 

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 Wednesday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/12
TUES.
2/13
WED.
2/14
AVERAGES
WEEK 2/05
AVERAGES
WEEK 1/29
AVERAGES
WEEK 1/22
AVERAGES
WEEK 1/15
AVERAGES
WEEK 1/08
AVERAGES
WEEK 1/01
New Issue Concessions 3.50 bps 2.10 bps N/A 2.67 bps <0.13> bps 0.43 bps 1.73 bps <0.725> bps <0.79> bp
Oversubscription Rates 1.70x 2.36x N/A 4.09x 2.98x 2.02x 2.15x 3.75x 2.85x
Tenors 11.50 yrs 22.57 yrs N/A 14.85 yrs 13.80 yrs 5.74 yrs 7.43 yrs 8.12 yrs 7.80 yrs
Tranche Sizes $600mm $357mm N/A $823mm $847mm $623mm $1,137mm $747mm $787mm
Avg. Spd. Compression
IPTs to Launch
<14.25> bps <14.10> bps N/A <17.02> bps <17.42> bps <13.87> bps <14.11> bps <19.12> bps <17.01> bps

 

New Issues Priced

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

Please Note: 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
CSX Corp. Baa1/BBB+ 3.80% 3/01/2028 800 +110a +95a (+/-5) +90 +90 CITI/JPM/MS/UBS
CSX Corp. Baa1/BBB+ 4.30% 3/01/2048 850 +130a +120a (+/-5) +115 +115 CITI/JPM/MS/UBS
CSX Corp. Baa1/BBB+ 4.65% 3/01/2068 350 +165-170/+167.5a +155a (+/-5) +150 +150 CITI/JPM/MS/UBS
Daimler Fin. North America A2/A FRN 2/22/2021 400 3mL+equiv 3mL+equiv 3mL+45 3mL+45 BBVA/CITI/HSBC/JPM/MIZ/SG
Daimler Fin. North America A2/A 3.00% 2/22/2021 550 +70a +65 the # +65 +65 BBVA/CITI/HSBC/JPM/MIZ/SG
Daimler Fin. North America A2/A 3.35% 2/22/2023 675 +80a +75 the # +75 +75 BBVA/CITI/HSBC/JPM/MIZ/SG
Daimler Fin. North America A2/A 3.75% 2/22/2028 625 +90a +85 the # +85 +85 BBVA/CITI/HSBC/JPM/MIZ/SG
PECO Energy Co. Aa3/A 3.90% 3/01/2048 325 +95a +80a (+/-3) +77 +77 MIZ/USB/WFS

 

Indexes and New Issue Volume              

Countable IG volume includes maturities of 18-months and out and IG-rated Preferreds.

*Denotes new high or tight.

                                                                                                                                               

Index Open Current Change
IG29 56.17 52.971 <3.199>
VIX 19.26 19.13 <0.13>
CT10 2.903% *2.910% 0.007
S&P 2,698 2,731 33  
DOW 24,893 25,200 307
Nasdaq 7,143 7,256 113
OIL 60.60 61.42 0.82  
GOLD 1,350 1,353 3  
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $4.575 bn DAY: $4.575 bn
WTD: $9.477 bn WTD: $13.777 bn
MTD: $42.067 bn MTD: $60.117 bn
YTD: $174.452 bn YTD: $247.317 bn

 

2018 Lipper Report/Fund Flows – Week ending February 7th

  

  • For the week ended February 7th, Lipper U.S. Fund Flows reported an inflow of $4.734b into Corporate Investment Grade Funds (2018 YTD net inflow of $19.478b) and a net outflow of $2.743b from High Yield Funds (2018 YTD net outflow of $5.858b).
  • Over the same period, Lipper reported a net inflow of $611.901m from Loan Participation Funds (2018 YTD net inflow of $900.938m).
  • Emerging Market debt funds reported a net outflow of $679.846m (2018 YTD inflow of $3.128b).

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Municipal Debt New Issuance : Toll Roads in Texas and Sewers in South Florida
February 2018      Muni Market   

Municipal Bond New Issuance Scheduled Week of Feb 05 2018– First Week of Feb is Infrastructure Theme: Toll Roads in Texas and Sewers in South Florida need repair and the municipalities of Harris County, TX and Ft. Lauderdale, FL represent the top municipal debt new issuance deals of the week. In both floats, proceeds will go towards repairs and upgrades in those cities.  

Mischler Muni Market Update looks back to last week’s metrics and provides a curated view towards municipal debt offerings scheduled for this week.  As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and muni bond market participants with a summary of the prior week’s municipal bond market activity, including credit spreads and money flows, and a look at pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $3.6 billion. This week volume is expected to be about $3.8 billion. The negotiated market is led by $567.2 million of toll road revenue bonds for Harris County, Texas. The competitive market is led by $180.1 million of water and sewer bonds for the City of Ft. Lauderdale, Florida 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-new-issue-calendar-mischler

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 and Municipal Debt New Issuance outlooks are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

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Muni Bond Offerings Week Before Christmas
December 2017      Muni Market   

Muni Bond Offerings Scheduled Week of Dec 18 2017 via Mischler Muni Market Update.  ‘Twas the week before Christmas and all through the house, muni bond buyers were bristling for bond deals, not just a mouse..The Dec 18 edition of Mischler Muni Market Update looks back to last week’s metrics and provides a lens on municipal bond offerings anticipated for this week.  As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and muni 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 $16.4 billion from a projected $22.9 billion. This week volume is expected to be $11.7 billion. The negotiated market is led by $1.0 billion of taxable pension bonds for the City of Houston, Texas. The competitive market has no deal over $100 million.

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-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.

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FOMC Rate Decision Talking Points “Unchanged!”
November 2017      Debt Market Commentary   

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

 Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

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

FOMC Rate Decision Talking Points: Unchanged (as Expected)

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

Rates Trading Lab

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 25th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

The “QC” Geopolitical Risk Monitor

 

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

Investment Grade New Issue Re-Cap

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

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

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

Today’s IG Primary & Secondary Market Talking Points 

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

Global Market Recap 

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

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

-Tony Farren

 

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

 

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

 

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

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

Policy:

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

Economy:

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

Employment:

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

Inflation:

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

 

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

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

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

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

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

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

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

The “QC” Geopolitical Risk Monitor

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Municipal Debt Offerings Scheduled Week of Oct 30
October 2017      Muni Market   
Municipal Debt Offerings Scheduled Week of Oct 30 2017 via Mischler Muni Market Update.  The Oct 30 edition looks back to last week’s metrics and provides a lens on municipal bond offerings anticipated 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 $10.2 billion. This week volume is expected to be $6.7 billion. The negotiated market is led by $737.0 million P3 private activity bonds for Virginia Small Business Financing Authority. The competitive market is led by $684.3 million general obligation bonds for Montgomery County, Maryland in 4 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

mischler-muni-market-outlook-103017

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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Municipal Debt Offerings Scheduled Week of Oct 23
October 2017      Muni Market   
Municipal Debt Offerings Scheduled Week of Oct 23-Mischler Muni Market Update Oct 23 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 $10.2 billion. This week volume is expected to be $10.1 billion. The negotiated market is led by $4.5 billion general obligation bonds for the State of Illinois. The competitive market is led by $712.5 million general obligation bonds for Washington Suburban Sanitary District, Maryland 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 debt offerings scheduled

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 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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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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