Browsing articles tagged with "Mischler Financial Archives - Mischler Financial Group"
Week’s IG Corporate Bond Issuance: Cooling Off Period; April Showers Bring May Flowers
April 2017      Debt Market Commentary   

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

 

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

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

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for Next Week

Indexes and New Issue Volume

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 19th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

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

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

 

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

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

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

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

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

“Good morning and Happy Friday!

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

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

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

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


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

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

 

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

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

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

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

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

 

Below please find the replies to this week’s QC canvass of fixed income syndicate bookrunners and my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

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

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

 MOAB-BAML-Mother-of-all-Bonds

 

 

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

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates April

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 12th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

 

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

 

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

 

IG Primary & Secondary Market Talking Points

 

  • Basin Electric Power Cooperative upsized today’s 144a/REGS 30-year FMBs to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only (ex-Preferred) new issues was <13.72> bps.
  • BAML’s IG Master Index widened 1 bp to +125 vs. +124.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.19 vs. 1.18.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.5b on Tuesday versus $9.6b on Monday and $16.0b the previous Tuesday.
  • The 10-DMA stands at $14.0b.

 

Global Market Recap

 

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

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

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates April

 

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

 

 

Have a great evening!
Ron Quigley

 

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

Risk Appetites Sour as News Cycle Confounds, But US Equity Markets Remain Stable; Mischler Commentary
April 2017      Equities Market Commentary   

Peruzzi’s Perch 04.07.17 Risk Appetites Sour, But US Equity Markets Remain Stable

 

larry-peruzzi-mischler-equitiies

Larry Peruzzi

As we head into Friday, U.S equity markets find themselves little changed from last Friday.

It’s peculiar given the pace of news coming out of Washington and the Fed. What is becoming apparent is that risk appetite is souring, but there is apparently enough optimism to keep the markets in a status quo pattern.

It’s interesting that the VIX index trading range has been between 10.58 and 13.22 the entire year to date.  Friday will look to change that as three big events continue to take shape. First, Senate Republicans enacted the “Nuclear Option” to get Neil Gorsuch on the threshold of the Supreme Court. Second, on Thursday night the U.S. launched a missile strike into a Syria Government controlled military facility located in Idlib Provence in response to the earlier in the week chemical weapon sarin gas attack that brutally killed dozens of innocent civilians. Thursday night’s missile strikes immediately rallied crude oil pricing by as much as 2% and investors moved into the safety of bonds With that, Trump’s vision of improved Russian relations became increasingly foggy.

Finally, as this note is being published in advance of market open, Friday morning financial markets and investors will focus on March payrolls, which will likely be buffeted by the economic numbers over the week, which showed some modest improvement in ISM Employment, ADP employment change and Durable goods orders. A decline in March Auto sales is worth keeping an eye on. The decline may be rate-related, as higher interest rates take away a major sales incentive. Before Thursday’s night’s missile attack and Friday’s employment report the largest event was Wednesday’s release of the March 15th FOMC meeting minutes. Coming on the heels of Jeffrey Lacker’s surprise resignation, the Fed signaled it is planning on unwinding some balance sheet positions and they are looking at a 2H rate increase. The result was the S&P 500 and Dow posting their biggest one-day reversal since February 2016 on Wednesday.

Looking ahead to the Easter shorten week, the economic and earnings calendar are light. Highlights economically on Thursday are March PPI numbers and April’s Michigan sentiment readings. 1Q earnings season begins the following week. Just a handful of earnings are due for Thursday, which include PNC financial, JP Morgan, Wells Fargo and Citigroup.  Federal Reserve Chair Janet Yellen speaks at the University of Michigan’s Ford School of Public Policy and will take questions from the audience on Monday in a quite week for Fed watchers.

With the exception of the constant flow of news out of Washington, the markets will be digging for actionable news and direction. The importance of 1Q earnings cannot be overlooked. With Affordable Care Act version 2.0 dead and comments from Washington that “a new tax plan is quite some time away”,  investors will need to see earnings growth to justify current valuations. Lack of earnings growth could certainly trigger the “Sell in May and go away” strategy, but would an executive order here, and a nuclear option there be enough to keep investors hanging in the market?

Whatever you do to gain success, you have to hang in there and hope good things happen. “Always think positive.” Don Rickles May 8, 1926 – April 6, 2017

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

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 March 09 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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Knowing the Past for the Future; The Nuclear Option; Rates Rally, Yields Compress
April 2017      Debt Market Commentary   

Quigley’s Corner 04.03.17 Dysfunction Junction & the Nuclear Option; Mischler Debt Market Commentary

 

Investment Grade New Issue Re-Cap – Knowing the Past for the Future; The Nuclear Option; Rates Rally, Yields Compress

IG Primary & Secondary Market Talking Points

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 29th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

It was November 21st , 2013 when Democrats, frustrated at GOP efforts to stall its Congressional plans under former President Barack Obama, decided to take a vote to stop debate on executive and judicial branch nominees with a simple Senate majority vote rather than having to secure 60 Senate votes.  House Majority leader Harry Reid (D-Nevada), and his party won 52-48.  Reid & Co. set in motion a process that day that eased passage of several key Obama executive and judicial nominees by changing the rules of engagement. Politicians have LONG memories and it’s now payback time…..and guess which party doesn’t like it?  With the tables now turned, the so-called nuclear option –a simple majority – is likely to prevail under Senate Majority leader Mitch McConnell to avoid a Democratic filibuster of Judge Gorsuch’s nomination to the Supreme Court. It may also be used for legislation as well.  Remember everyone, Harry Reid set the precedent.  The “nuclear option” or simple majority vote will weaken the power of the filibuster but it is officially in play now.

As a result, Treasuries rallied and the CT10yr is yielding 2.34%. That’s down 28 bps since the Monday before the FOMC rate hike on Wednesday March 15th.  It’s on its way lower, much lower so, issuers be advised to watch that. Be patient. Let the market come to you.  All this thanks to “Dysfunction Junction.”  The great divide between Republicans and Democrats is getting deeper and more disparate as threats of filibusters are inviting the GOP to employ the aforementioned “nuclear option” to their arsenal.  Republicans remember all too well Democratic hardball strategies used against them in the recent past. Political campaign promises need to be kept and not danced around.  The Dems will NEVER forget (and vice versa) and as they say pay back is going to be………a well, uh…………an issue shall I say?  What goes around, comes around but in the here and now, the nuclear option will be deployed and used to pass legislation as well.  Political dislocation will continue to rally rates and compress Treasury yields lower.  @.00% is in sight folks.  I’ll remind you when we get there.

If you are a banker advising issuers when to print, if they wait, you’ll look smarter and more brilliant than ever! If you’re an issuer, well, when you do print, if you listen to the “QC” please give us an ACTIVE Co-Manager opportunity on your next deal so we can show you what a true distribution value is all about.  You WILL only look even better and brighter than you already are.  One doesn’t get what one doesn’t ask for in life right?

The Monday session featured a continuum of “quirky” issues with the exception of Met Life Global Funding’s 5-year FA-backed notes.  Investment Grade primary markets currently have 10 items in the pipeline all of which are Yankee transactions.

Today, the IG DCM hosted 5 issuers across 5 tranches totaling $2.75b or 12.85% of this week’s IG Corporate-only midpoint syndicate forecast calling for $21.40b.

IG Primary & Secondary Market Talking Points

 

  • Essex Portfolio LP upsized today’s 10-year Senior Notes new issue to $350mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 5 IG Corporate-only new issues was <20.30> bps.
  • BAML’s IG Master Index widened 2 bps to +124 vs. +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. 1.17.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.6b on Friday versus $19.3b on Thursday and $13.8b the previous Friday.
  • The 10-DMA stands at $17.7b.

 

Global Market Recap

 

  • U.S. Treasuries – USTs built on Friday’s rally.
  • Overseas Bonds – Front end JGB’s hit. Core & semi core EU bonds had a strong day.
  • Stocks – U.S. stocks closed in the red but had a nice afternoon comeback.
  • Overseas Stocks – Japan & HS closed higher. China was closed. Europe was red.
  • Economic – ISM manufacturing dipped 0.5 points but remained very strong. Vehicle sales were weak.
  • Overseas Economic – Good Tankan in Japan & positive unemployment rates in Europe.
  • Currencies – USD outperformed the Pound, CAD & AUD and lost ground vs. the Euro & Yen.
  • Commodities – Down day for CRB, crude oil & copper while gold closed with a gain.
  • CDX IG: +0.37 to 66.70
  • CDX HY: +0.47 to 339.04
  • CDX EM: +0.83 to 213.60

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
4/03-4/07
vs. Current
WTD – $2.75b
April 2017
Forecasts
vs. Current
MTD – $2.75b
Low-End Avg. $20.35b 13.51% $90.25b 3.05%
Midpoint Avg. $21.40b 12.85% $91.50b 3.01%
High-End Avg. $22.44b 12.25% $92.75b 2.96%
The Low $12b 22.92% $65b 4.23%
The High $31b 8.87% $111b 2.48%

 

It’s a Tough Job But Somebody’s Gotta Do It

It’s not always fun writing about politics but then again, politics is driving everything in our market more than ever before and it will continue to do that.  Given the myriad global risk factors playing out in our inextricably global-linked world economy, it’s safe to say we are living in dangerous times.  For my part, all I can do is try and tell you about what’s going on in a genuinely honest, insightful and hopefully, refreshing way.  Why?  Well, if you see that we “get it” i.e. understand the machinations of global markets, and appreciate that we work every day to get fresh and informative perspectives to you,  in turn you’ll notice the distinct added-value that we provide and ideally, you will conclude that we should be appointed to the list of other formidable syndicate desks you have chosen to distribute your offerings.

We might be a minority firm, but we are NOT a “one check shop.”  Mischler has a long history in which we have earned Fortune Issuers’ mandates by demonstrating best-in-class cap mkt capabilities via a proven process and recognized platform. As the nation’s oldest Service Disabled Veteran broker-dealer, our ethos is dedicated to serving not just clients with integrity, but also in-need veteran organizations. Towards that mission, we give back 10% of our firm’s profits to veteran causes year round. When hiring for roles within the organization, we prioritize hiring service-disabled veterans and recently-returning veterans who meet our criteria. Once hired, we mentor and coach up our veteran compatriots and we integrate them into becoming members of our team because they earned the opportunity. We grow our own capital month-to-month, quarter-to-quarter and year-to-year. Our operations staff is second to none; it’s not just about our getting underwriter roles for Issuer deals, more important to all, it’s about settling the trade on trade date to settlement date smoothly, each and every time.  We also take great pride in sharing with clients our daily fixed income “downloads”; content that has earned Mischler the Wall Street Letter Award for Best Broker Dealer/Research for three consecutive years – 2014, 2015  and 2016.  It’s all about a value-added proposition.

 

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

 

Have a great evening!
Ron Quigley

 

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

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Best Quarter EVER- Investment Grade Corporate Debt Issuance; Mischler DCM Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.30.17 – Top Ranked Quarter Ever for US IG Corp Issuance

 

Investment Grade New Issue Re-Cap – Q1 2017 Finishes as the #1 Ranked Quarter for IG Corporate-only and All-In IG Issuance.

On This Week’s Hawkish Fed-Speak

Point Counter-Point

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22nd

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

6 IG Corporate issuers tapped the IG dollar DCM today pricing 12 tranches between them totaling $6.00b.  There was no activity from the SSA space.

 

  • “CHTR” (Ba1/BBB-/BBB-) rated 144a/REGS 30-year Senior Secured Notes new issue due 5/01/2047.  The deal was upsized to $1.25b from $750mm at the launch and at the tightest side of guidance. (Mischler served as passive co-manager)
  • CCO Holdings LLC/Capital Corp. (Charter Communications) High Yield-rated (B1/BB+/BB+) 144a/REGS tap of its 5.125% 10-year Senior Notes due 5/01/2027.  We thank the issuer for our inclusion. (Mischler served as passive co-manager)
  • The IG Corporate only WTD total is now over 83% of the syndicate midpoint average forecast or $22.15b vs. $26.50b.
  • MTD, we are now more than 13% above the IG Corporate mid-range syndicate projection for all of March or $129.998b vs. $114.31b. (scroll to the table below).
  • The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).
  • The YTD IG Corporate only volume is now $393.085b. It is the highest quarterly volume total in history.
  • YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

 

On This Week’s Hawkish Fed-Speak

 

Today, crude oil hit a 3-week high, gold slipped, equity markets were all in the black and U.S. Treasury yields compressed while the dollar strengthened.  Most all of that reflects the fluctuations of our fluid daily market gyrations.  Net, net, though it was a good day.  However, what garnered all the attention today – as it did all week – was the sudden overwhelmingly hawkish Fed-speak from just about every Fed member.  Yesterday, Boston FRB President Eric Rosengren said a rate increase at every other FOMC meeting this year “could and should be the committee’s default unless data change.” There are eight meetings left this year implying four additional rate hikes. He also said, four hikes in 2017 would be gradual but “more regular.” The market, however, is expecting 2.5 at the most!  The Fed is a laggard; the market is always accelerated.  Europe, meanwhile is worrying that its recent tiny monetary adjustments have investors concerned of a rate rise for still suffering laggard peripheral EU member economy’s.  They are clearly not home free by any stretch of the imagination. ……..and we do live in an inextricably global-linked world economy.

So, now let’s link all that to today’s major talking points from statements made by the Fed’s William Dudley –

 

  • Dudley says, “growth and inflation risks may be shifting to the upside.”
  • He is more confident that inflation is settling near its goal, medium-term.
  • “Forward-looking data points to further job-market gains.”
  • Calls job gains “sturdy” and labor market slack “diminishing.”
  • Says the Federal Reserve is not “removing the punch bowl, yet.”
  • Comments that the “economic outlook abroad also appears brighter.”
  • The Fed shouldn’t overreact to every “wiggle” in markets.
  • Fed cares about financial condition effects on the economy.
  • Fiscal policy is likely to shift in time to more stimulus.
  • Favors tapering reinvestments instead of an abrupt end to them

 

Point Counter-Point

The takeaway is that Fed-speak is clearly very hawkish.  That pervasive sentiment among FOMC members gives reason to pause.  Here is the point counterpoint of all this –

Several times I re-printed the following comment from a six-pack bulge bracket U.S. bank Chairman.  I also pointed out the banker is either from BAML, CITI, GS, JPM, MS or WFS.  I will always preserve anonymity folks. To clarify, no one person has tomorrow’s news today, BUT this person has a firm grip on what IS going on in the world and a track record that’s perhaps second to none. Here’s a re-print of what the Chairman said in the “QC” dated Friday, March 3rd, 12 days in advance of the most recent FOMC Rate Decision,

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

It seems that this week the historically lagging Fed is clearly attempting to talk up U.S. Treasury yields because they KNOW the CT10-year yield is going to go down…..down…..down much like it did in 2015, though perhaps not as dramatically.  Therefore, take what you are hearing with a massive grain of salt.  The market is priming itself for issuance.  As yields fall, and deals are well-priced, investor appetite remains voracious for better rated IG corporate credits.  There should be a robust amount of issuance ahead of black-outs as we head toward the Easter break.  The opportunities are creating themselves in here and the Fed doesn’t like what it sees from their prior December 2015 experience.  That’s why they ARE talking up yields.  It’s also why yields WILL contract.  The inference is clear – the Fed talks the talk but they will not walk the walk. And that’s how it is folks.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <17.67> bps.
  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.17.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.7b on Wednesday versus $18.4b on Tuesday and $19.2b the previous Wednesday.
  • The 10-DMA stands at $17.3b.

 

Global Market Recap

 

  • U.S. Treasuries – Down day for USTs led by the 30yr for a host of reasons.
  • Overseas Bonds – JGB’s closed down. Mixed session in Europe.
  • Stocks – Solid gains heading into the close.
  • Overseas Stocks – Weak session in Asia. Europe closed with gains.
  • Economic – Personal consumption moved higher. Inflation data inched higher.
  • Overseas Economic – German CPI lower than expected/last. Big global calendar tomorrow.
  • Currencies – USD mixed vs. the Big 5 but a solid rally for the DXY Index.
  • Commodities – Good day for crude oil (back over 50) & bad day for gold.
  • CDX IG: -0.92 to 66.86
  • CDX HY: -4.28 to 337.98
  • CDX EM: -2.73 to 209.24

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

-Tony Farren

 

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

 

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

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

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

 

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

 

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.
3/27
TUES.
3/28
WED.
3/29
AVERAGES
WEEK 3/20
AVERAGES
WEEK 3/13
AVERAGES
WEEK 3/06
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
New Issue Concessions 0.00 bps/flat 2.60 bps 1.39 bps 1.75 bps 0.00 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps
Oversubscription Rates 2.00x 3.76x 3.53x 2.90x 3.08x 2.73x 3.39x 3.26x 3.76x
Tenors 3.00 yrs 11.65 yrs 8.10 yrs 11.55 yrs 10.05 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs
Tranche Sizes $500mm $727mm $475mm $692mm $859mm $671mm $738mm $695mm $744mm
Avg. Spd. Compression
IPTs to Launch
<17.50> bps <20.87> bps <19.12> bps <15.44> bps <17.99> bps <20.00> bps <16.79> bps <18.47> bps <18.45> 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.
(more…)

US Corporate Debt Issuers Return From Sidelines; USD 10b Floated
March 2017      Debt Market Commentary   

Quigley’s Corner 03.28.17   They’re Back! US Corporate Debt Issuers Return After Multi-Day No-Go Signal

 

Investment Grade Corporate Debt New Issue Re-Cap – What a Difference a Day Makes

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22nd       

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

7 IG Corporate issuers tapped the IG dollar DCM today pricing 15 tranches between them totaling $10.90b.  1 SSA issuer, the Export Development of Canada, added a $500mm 2-year to the mix for an all-in IG day total of 8 issuers, 16 tranches and $11.40b.

  • The IG Corporate only WTD total is now 43% of the syndicate midpoint average forecast or $11.40b vs. $26.50b.
  • MTD, today we officially surpassed the high-, mid-point and low-end averages for March.  We are more than 4% above the IG Corporate mid-range syndicate projection for all of March or $119.248b vs. $114.31b. (scroll to the table below).
  • The all-in MTD total (IG Corporates plus SSA) now stands at $152.158b.
  • Both CDX IG and HV tightened, the VIX also pulled 1 point and the S&P and DOW gained ending an 8 day losing streak – the most since 20011.

IG Primary & Secondary Market Talking Points

 

  • Ford Motor Credit Corp. today dropped the 2yr FRN tranche from its 2- and 5-year FXD/FRN having found sufficient 2yr interest in the fixed rate tranche. The other 3 tranches all launched at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 15 IG Corporate-only new issues was <20.87> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.18.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +165 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.9b on Monday versus $13.8b on Friday and $13.8b the previous Monday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap

 

  • U.S. Treasuries – Poor day for USTs because of stocks, supply, economic data, USD & Trump.
  • Overseas Bonds – JGB’s down except 30yr. Bunds little changed, Gilts red & peripherals bid.
  • Stocks –  Rally in U.S. stocks. The Dow snapped its 8-session losing streak.
  • Overseas Stocks – Japan rallied, China closed down & Europe had a good day.
  • Economic – Positive U.S. data with consumer confidence off the charts strong.
  • Overseas Economic – Light calendar overseas today.
  • Currencies – U.S. came roaring back today. The DXY Index improved 1/2 handle.
  • Commodities – Crude oil, copper & silver improved while gold sold off.
  • CDX IG: -0.63 to 67.17
  • CDX HY: -7.0 to 347.24
  • CDX EM: -0.23 to 213.16

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/27-3/31
vs. Current
WTD – $11.40b
March 2017
Forecasts
vs. Current
MTD – $119.248b
Low-End Avg. $25.25b 45.15% $113.79b 104.80%
Midpoint Avg. $26.50b 43.02% $114.31b 104.32%
High-End Avg. $27.75b 41.08% $114.83b 103.85%
The Low $15b 76.00% $80b 149.06%
The High $31b 36.77% $140b 85.18%

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

 

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

 

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

 

Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior six weeks:

(more…)

Equity Market Drivers: Sentiment, Spending and Politics; Peruzzi’s Perch
March 2017      Equities Market Commentary   

What’s Next for Stocks? Equity Market Drivers-It’s all about Sentiment, Spending and Politics…

larry-peruzzi-mischler-equitiies

Larry Peruzzi

U.S and global markets experienced a classic risk reversal trade on Tuesday as investors re-priced the probability of a reduction in taxes. Investors took profits and reduced their risk exposure by knocking the Dow down 1.14% and the S&P 500 by 1.24% on Tuesday.  The S&P 500 and Dow Jones Industrials ended their historic streak of 110 sessions without a 1% decline. Crude oil continued its decline with WTI crude down 3.1% over the first 4 days of the week. Energy, the worst-performing sector this year, has fallen by about 8% year to date. The economic front was largely void of any market moving numbers.

The housing sector did release some contradictory numbers as Wednesday’s existing home sales in February registered a 3.7% decline, but Thursday new home sales surged 6.1%. Who wants used when you can have new?  As the week came to an end, more uncertainty was created as the House GOP leaders looked to vote on Friday on their health-care bill, while not knowing for sure they have enough votes to pass it. As we have learned time and time again, markets greatly despise uncertainty.

Further evidence of the risk reversal trade can be seen in Gold’s trading action, as the precious metal is up 3.25% over the last 2 weeks. The week will also be remembered for what might have been the beginning stages of an end to an era when Sears Holdings had its worst decline in 2 years. Sears said there was “substantial doubt” about its future. Sears was once the world’s largest retailer over its 131 year history. With the Fed’s rate hike behind us and the next meeting not until May 3rd and 1Q earnings still a few weeks’ away, investors will continue to ponder their risk tolerance in these highly partisan political times.  Friday was an active day for Fed governors with Bullard, Dudley, Williams and Evans speaking.

Next week will be equally active for the Fed, with 12 speeches by governors, culminating with Chair Yellen speaking on Tuesday.  With the market drivers changing over the last couple of weeks, I think what the market and investors will be concentrating on is sentiment, spending and politics. Tuesday’s March Conference Board consumer confidence and Friday’s March Michigan sentiment readings should give us a good idea how the public views the economy, while Wednesday’s February pending home sales and Thursday 4Q personal consumption, followed by Friday’s February Personal Spending will be a good indication of how much the recent market rally has buoyed the consumption and spending.

The political front remains divided by party lines and reforms in taxes, healthcare, immigration and a Supreme Court nominee are at risk. As we watch a few key economic numbers and Fed speeches, we will be closely monitoring the shenanigans out of Washington. Quarter-end on Friday is normally “meet with portfolio managers” who will be making some last minute adjustments to portfolio holding and cash levels. I would expect trading volumes to increase as the week progresses.

There is a lot to digest for a market that looks like it is being stymied by a fork in the road.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

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 March 09 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.
(more…)

Cat’s Out of the Bag-Caterpillar 2-part Leads Day’s Deals; Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.20.17 – Debt Deal of the Day: Caterpillar Financial Services 

 

Investment Grade Corporate Debt New Issue Re-Cap The Cat’s Out of the Bag-Caterpillar Financial Srvs $900m 2-part

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 15th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline – $225.5 Billion in Cumulative Enterprise

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

4 IG Corporate issuers tapped the dollar DCM today pricing 8 tranches between them totaling $4.625b.  Caterpillar Financial Services, Heineken NV, Mass Mutual Life and Korea National Oil were the names of the day; the SSA space was quiet today.
The IG Corporate only WTD total is 18% of the syndicate midpoint average forecast or $4.625b vs. $25.65b.
MTD, we’ve now priced 81% of the IG Corporate mid-range projection for all of March or $93.098b vs. $114.31b.
The all-in MTD total (IG Corporates plus SSA) now stands at $123.508b.

IG Primary & Secondary Market Talking Points

  • Mass Mutual Life Insurance Co. upsized today’s 144a/REGS 60-year Surplus Notes new issue to $475mm from $400mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 8 IG Corporate-only new issues was <17.69> bps.
  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp tp +117 vs. +116.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +163 vs. +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.2b on Friday versus $20.2b on Thursday and $15.6b the previous Friday.
  • The 10-DMA stands at $18.9b.

 

Global Market Recap

 

  • U.S. Treasuries – Positive start to the week. Seasonals favor a late March rally.
  • Overseas Bonds – Bunds & Gilts little changed. Peripheral bonds mostly better.
  • 3mth Libor – Set at the highest yield (1.15622%) since April 2009.
  • Stocks – U.S. was better in the morning but sold off in the afternoon.
  • Overseas Stocks – Asia closed with gains while Europe closed with losses.
  • Economic – Light calendar this week in the U.S. Germany PPI YoY at high since 2011.
  • Currencies  – USD mixed vs. Big 5 & the DXY Index closed with a very small gain.
  • Commodities – Crude oil, copper & wheat closed down while the CRB & gold were up.
  • CDX IG – closed at 68.43 (6mth roll was today).
  • CDX HY – closed at 326.39 (6mth roll was today).
  • CDX EM – closed at 214.78 (6mth roll was today).

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/20-3/24
vs. Current
WTD – $4.625b
March 2017
Forecasts
vs. Current
MTD – $93.098b
Low-End Avg. $24.92b 18.56% $113.79b 81.82%
Midpoint Avg. $25.65b 18.03% $114.31b 81.44%
High-End Avg. $26.38b 17.53% $114.83b 81.07%
The Low $20b 23.12% $80b 116.37%
The High $35b 13.21% $140b 66.50%

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

 

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

March-In Like a Lion..Out Like A Lamb, a Bull or a Bear? Mischler Equities Insight
March 2017      Equities Market Commentary   

Mar 09 11 pm EST– March comes in like a lion and goes out like a lamb. Traders are hoping March does not come in like a bull and goes out like a bear.

larry-peruzzi-mischler-equitiies

Larry Peruzzi

On March 1, the Dow, S&P 500 and NASDAQ comp all closed at record highs, over the next 6 trading sessions the S&P declined on 4 of 6 days and had very small gains on the 2 other days.

On Thursday, the bull market celebrated its 8th year with gains of between 1bp and 8 bps in U.S indices. After 8 years, markets seem to be both tired and excited. Valuations are starting to be questioned but expectation of job growth and tax relief has few ready to sell; but an equally few are ready to jump in.

So, markets feel as though we are currently in a stalemate. Friday’s February employment report is truly the first report that will be more affected by the present administration rather than the former. It is being closely watched, and anticipation about the Feb report explains why the equities markets move this week has been muted. Investors have been calling for, and patiently waiting for, policy details. Friday’s report should give us something to digest for now.

Although the market moves this week have been narrow, news has been abundant. We have seen a new proposed health care bill, a new immigration policy effort, U.S shale production increase, a global bond rout, U.S dollar at highest levels in 2 months, South Korean President ousted from office and an EU summit all kept us busy. Monday’s Factory orders exceeded expectations, Wednesday’s ADP employment change exceeded estimated by a healthy 112K and Thursday import prices showed inflation seems to be under control.

After Friday’s employment report, I think that the next two most important events this week were: 1) WTI crude oil falling back below $50 (WTI is down 8.3% for March). This has always been a double edge sword. More money in consumers’ pocket, but decline in the energy sector is a drag on the economy and indices. 2) A largely overlooked surge in Household Net Worth, with both a positive revision to 3Q and a better than expected gain in 4Q. Simply put, more wealth equals more spending, which equals more jobs and growth. But we need to watch that inflation as well.

Looking ahead to next week investors will have plenty to digest. As this market moves more toward a dual factor market (taxes and jobs), we will be reminded of the other factors able to move the market. We get a good view on inflation with Tuesday’s PPI report for February and Wednesday CPI report for February. Wednesday’s retail sales figures will give us a clearer picture as to how much of the surge in household wealth has pushed through the economy. With recent weakness in the retailers, we will be watching the sales numbers closely. Later in the day on Wednesday, the FED will release its FOMC rate decision, in which a 25bps hike is widely expected. Fed Funds rate is actually pricing in a 100% probability of a rate increase; the accompanying comments will be of more importance than the action.

With Thursday’s February Housing Starts and building permits release we get a better idea of the health of real estate.  Mild weather in February should help this number. The week concludes with Michigan sentiment reading. With the stock market near all-time highs, surge in household wealth and cheaper oil and gas prices in store, consumers should have reason to be optimistic.  With the S&P 500 PE ratio continuing to creep up to 21.8, companies’ earnings need to be able to sustain these prices when 1Q earnings roll around next month, otherwise we could some profit taking on the rise.

But it all starts with Friday’s employment number.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

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 March 09 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 and largest 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.

(more…)

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

Quigley’s Corner 03.09.17 –Draghi Says Euro is Irrevocable

 

Investment Grade New Issue Re-Cap

Buy-Side Feedback—“Its Amazing!”

IG Primary & Secondary Market Talking Points

Global Market Recap

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

Draghi’s ECB Key Talking Points

ECB Forecasts

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 8th      

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

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

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

Buy-Side Feedback

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

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


IG Primary & Secondary Market Talking Points

 

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

 

Global Market Recap

 

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

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

-Tony Farren

 

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

mischler-draghi-euro-irrevocable 

 

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

Draghi’s ECB Key Talking Points

 

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

 

ECB Forecasts

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

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

 

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

 

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

 

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

 

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