Browsing articles tagged with "Mischler Financial Archives - Mischler Financial Group"
Investment Grade Debt Issuance In Advance of Thanksgiving
November 2017      Debt Market Commentary   

Quigley’s Corner 11.17.17  Investment Grade Debt Issuance Weekend Before Thanksgiving Edition

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

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

Syndicate IG Corporate-only Volume Estimates For This Week

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

Rates Trading Lab

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending Nov 15th

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

 

Investment Grade New Issue Re-Cap

 

Today the IG dollar DCM hosted 3 issuers across 3 tranches totaling $1.485b.  The SSA space was quiet.

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

  • The IG Corporate WTD total is 101.89% of this week’s syndicate midpoint average forecast or $28.775b vs. $28.24b.
  • MTD we’ve priced 87.21% of the syndicate forecast for October IG Corporate new issuance or $84.054b vs. $96.38b.
  • There are now 4 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 1 IG Corporate-only (Non $25 par) new issue was <20.00> bps.
  • Including today’s Southern Company $25 par Jr. Sub Notes the average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 2 IG Corporate-only new issues that displayed price evolution was <13.125> bps.
  • BAML’s IG Master Index tightened 1 bp to +107 vs. to +108.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.02 from 1.03.
  • Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +148 from +150. The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.4b on Thursday versus $17.2b on Wednesday and $17b the previous Thursday.
  • The 10-DMA stands at $16.4b.

 

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

 

IG Corporate New Issuance This Week
11/13-11/17
vs. Current
WTD – $28.775b
November 2017 vs. Current
MTD – $84.054b
Low-End Avg. $27.04b 106.42% $95.28b 88.22%
Midpoint Avg. $28.24b 101.89% $96.38b 87.21%
High-End Avg. $29.44b 97.74% $97.48b 86.23%
The Low $20b 143.87% $75b 1112.07%
The High $40b 71.94% $130b 664.66

 

Global Market Recap

 

  • U.S. Treasuries – Same old story with the 30yr better bid & the 2yr in the red.
  • Overseas Bonds – JGB’s were better bid. Europe was unchanged to better bid.
  • 3mth Libor – Set at 1.44067% the highest since December 2008.
  • U.S. Stocks – Could not build on yesterday’s big rally.
  • Overseas Stocks – Shenzhen was hit hard. Nikkei higher. Europe more red than green.
  • U.S. Economic – The housing data was very good. KC Manufacturing down.
  • Overseas Economic – Not a factor today.
  • Currencies – USD traded poorly vs. the Yen and also lost ground vs. the Euro & Pound.
  • Commodities – CRB, crude oil, gold, etc., took advantage of the weaker USD & rallied.
  • CDX IG: +0.06 to 55.05
  • CDX HY: +0.36 to 325.24
  • CDX EM: -2.41 to 184.16

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

-Tony Farren 

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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 25 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 21 of today’s respondents are in the top 23 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 81.33% 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 !!

Below is the opening segue to our weekly canvass of top fixed income syndicate desks.. 

“Good morning and TGIF Ahead of Thanksgiving week!  I thought I’d start a bit early today as next week should, for all intents and purposes, be a two-day week..   

Entering this morning’s Friday session –  

  • The IG Corporate WTD total stands at $28.775b. We priced $535mm more than this week’s average midpoint estimate of $28.24b or 101.89%.
  • MTD we priced 87.21% of the syndicate projection for November IG Corporates or $84.054b vs. $96.38b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,271.993b vs. $1,226.792b on November 10th, 2016 or $45.201b (3.68%) more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,579.184b vs. $1,557.776b on November 10th, 2016 or $21.408b (1.37%) more than the year ago total. 

Entering this morning’s session, here are the five key primary market driver averages for the 49 IG Corporate-only deals that priced this week. 

o   NICS:  6.56 bps  

o   Oversubscription Rates: 3.00x

o   Tenors: 10.44 years

o   Tranche Sizes: $553mm

o   Spread Compression from IPTs to the Launch: <17.42> bps 

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

  • Week on week, average NICs tightened by 1.32 bps to an average 6.76 bps vs.7.88 bps across this week’s 50 IG Corporate-only new issues that had relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, increased by 0.66x to an average 3.00x vs. 2.34x. 
  • Average tenors decreased by 0.02 years to an average 10.44 years vs. 10.46 years.
  • Tranche sizes decreased by $207mm to $553mm vs. $760mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s IG Corporate-only new issues tightened by 3.48 bps to <17.42> bps vs. <13.94> bps.
  • Standard and Poor’s Investment Grade Composite Spreads widened 1 bps to +148 vs. +147.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 1 bps to 1.02 vs. 1.01 week-on-week. 
  • Week-on-week, BAML’s IG Master Index widened 2 bps to +107 vs. +105. 
  • Spreads across the four IG asset classes widened 1.50 bps to 8.25 bps vs. 6.75 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also widened 1.37 bps to 10.58 bps vs. 9.21 bps also as measured against their post-Crisis lows.
  • For the week ended November 15th, Lipper U.S. Fund Flows reported an inflow of $2.407b into Corporate Investment Grade Funds (2017 YTD net inflow of $111.988b) and a net outflow of $4.442b from High Yield Funds (2017 YTD net outflow of $12.951b).
  • Taking a look at the secondary trading performance of this week’s 52 IG Corporate and 2 SSA new issues, of the 54 deals that printed, 36 tightened versus NIP for a 66.75% improvement rate, 15 widened  (27.75%) and 3 were flat 5.50%).

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

  • IG Corps: $28.775b
  • All-in IG (Corps + SSA): $84.054b 

And now it’s time for 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!

In this season of Thanksgiving I have many things to be grateful for and one of them are wonderful clients like yourself. Thank you for your friendship and participation here each week and on deal day.  Wishing you and your family a great weekend and a very Happy Thanksgiving! -Ron”

The “Best and the Brightest” in Their Own Words

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Chicago Leads Muni Market Negotiated Deals Offered This Week
November 2017      Muni Market   
Municipal Debt Offerings Scheduled Week of Nov 13 2017 via Mischler Muni Market Update.  The Nov 13 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 $8.4 billion. This week volume is expected to be $9.9 billion. The negotiated market is led by a pair of Illinois deals, $922.3 million for the Board of Education of the City of Chicago, and $475.0 million for Metropolitan Pier & Exposition Authority. The competitive market is led by $505.8 million general obligation bonds for the State of Washington 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

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.

 

Mischler Financial Group 2017 Annual Veterans Day Pledge
November 2017      Company News, Giving Back   

Mischler Financial Group 2017 Annual Veterans Day Pledge Awarded to 

Children of Fallen Patriots Foundation

mischler-veterans-day-children-fallen-patriots-foundationNewport Beach, CA & Stamford, CT –November 1, 2017 —Each year, Mischler Financial Group, Inc., the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans pledges a percentage of the firm’s profits to veteran and service-disabled veteran philanthropies as part of its annual Veterans Day charitable initiative. This year, Mischler is proud to announce that Children of Fallen Patriots (CFPF) will be the recipient of the proceeds. Established in 2002, CFPF supports Gold Star families with college scholarships and educational counseling to military children who have lost a parent in the line of duty. Since its inception, CFPF has provided the runway to educational success for young men and women throughout the United States.

Dean Chamberlain, Chief Executive Officer of Mischler Financial Group stated, “Since we opened our doors nearly 25 years ago, our mission has been binary. Our business ethos is to not only serve the marketplace needs of Issuers, state and local governments and institutional investment managers with the highest degree of market proficiency and integrity, but to also share the rewards of our efforts by supporting men and women injured while defending our freedoms and the families of those who made the ultimate sacrifice.” Added Chamberlain, “Thanks to the opportunities presented by our clients, we take great pride in paying forward by supporting carefully selected philanthropies throughout the year. When paying tribute to Veterans Day in particular, we believe CFPF exemplifies Gold Star recognition.”

 

children-fallen-patriots-foundation-mischler-veteransAbout Children of Fallen Patriots Foundation

Nearly 20,000 dependents have been left behind by troops killed in the line of duty over the last 35 years. Many surviving families struggle to make ends meet with 63% of surviving spouses making less than $50,000 per year. CFPF scholarships and financial assistance, funded by loyal donors and corporate sponsors, have assisted nearly 1000 bright and motivated students throughout their undergraduate studies. The vision of CFPF is to ensure that every child of a fallen patriot receives all necessary college funding. The organization’s website is www.fallenpatriots.org

 

About Mischler Financial Group, Inc.

Mischler Financial Group, Inc. is a federally-certified Service-Disabled Veterans Business Enterprise (SDVOSB). We provide capital markets services across primary debt and equity markets, secondary market agency-only execution within the global equities and fixed income markets, and asset management for liquid and alternative investment strategies. Clients of the firm include leading institutional investment managers, Fortune corporate treasurers and municipal officials, public plan sponsors, endowments, and foundations. The firm’s website is located at http://www.mischlerfinancial.com.

 

 

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Investment Grade Corporate Debt Issuance-A Common Thread
October 2017      Debt Market Commentary, Recent Deals   

Quigley’s Corner 10.24.17 – A Common Thread re Ford Motor Credit and Goldman Sachs Corporate Debt Issuance  

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points: Spotlight on Ford Motor Credit & GS

Global Market Recap

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

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 18th

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

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 3 issuers across 7 tranches totaling $9.45b.  The SSA space featured 4 issuers and 6 tranches for $7.50b bringing the all-in IG day totals to 7 issuers, 13 tranches and $16.95b. Clearly the mega deal of the day belongs to The Goldman Sachs Group, Inc. that issued a $7b three-part Senior Unsecured Global Notes transaction for which Mischler served as an active Co-Manager on the 21nc20 fixed-to-floating tranche due 10/31/2038.  That deal and more specifically that tranche is today’s Deal-of-the-Day.

Here are the day’s recaps first:

The DOW skyrocketed 168 points to close at a new all-time high of 23,441 propelled by stellar earnings from the likes of Caterpillar, 3M, GM and Fiat Chrysler.

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

 

  • The IG Corporate WTD total is 108.88% of this week’s syndicate midpoint average forecast or $23.724b vs. $21.79b.
  • MTD we’ve priced 98.36% of the syndicate forecast for October IG Corporate new issuance or $90.178b vs. $91.68b.
  • There are now 8 issuers in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Mischler Financial is proud to have been named a Selling Group member on today’s $1bn Ford Credit Auto Lease Trust Series 2017-B. Thank you Team Ford for choosing Mischler from among your diversity candidates.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate-only new issues was <18.71> bps.
  • BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
  • BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
  • 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
  • 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +144 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 $15.5b on Monday versus $13.8b on Friday and $14.3b the previous Monday.
  • The 10-DMA stands at $16.4b.

 

Global Market Recap

 

  • U.S. Treasuries – USTs market continues to struggle. 10yr closed over 2.40%.
  • Overseas Bonds – JGB’s mixed & flatter. Down day in Europe.
  • 3mth Libor – Set at its highest yield (1.37064%) since January 2009.
  • Stocks – Earnings sends U.S. stocks higher. Dow at all-time high.
  • Overseas Stocks – Asia weaker expected. Japan (record winning streak). Europe better.
  • Economic – All 3 Markit PMI’s were better but Richmond manufacturing was weaker.
  • Overseas Economic – Japan data weaker. Europe data mixed but solid overall.
  • Currencies – USD better bid vs. 4 of the Big 5 bit the DXY Index was little changed.
  • Commodities – CRB traded at high since May. Crude & gasoline up. Gold down.
  • CDX IG: -0.20 to 52.73
  • CDX HY: -0.44 to 308.86
  • CDX EM: +0.34 to 174.84

*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
10/23-10/27
vs. Current
WTD – $23.724b
October 2017 vs. Current
MTD – $90.178b
Low-End Avg. $20.75b 114.33% $90.96b 99.14%
Midpoint Avg. $21.79b 108.88% $91.68b 98.36%
High-End Avg. $22.83b 103.92% $92.42b 97.57%
The Low $15b 158.16% $110b 81.98%
The High $30b 79.08% $75b 120.24%

 

The Goldman Sachs Group, Inc. $2.5b 21nc20 Fixed-to-Floating Senior Unsecured Global Notes

 

Today’s Goldman Sachs transaction was a $7bn three-part comprised of a 5nc4 fixed-to-floater as well as a 5yr FRN both due 10/31/2022.  Mischler proudly served as an active Co-Manager on today’s longest tranche of that issuance – the 21nc20 fixed-to-floating due 10/31/2038 so I am writing about that tranche this evening.

It’s important to note that in speaking with today’s accounts they like the pro-U.S. growth sentiment and rates that are helping to boost markets especially for bank and finance issuers.  Broader corporate tax reform will certainly lead to additional M&A activity ahead which is good for banks/finance. Several international accounts expressed their view that U.S. banks as flight to relative safety underscore an overall bullish sentiment in the sector.  Other investors were attracted by some additional yield compared to the risk-reward in European banks and Asian banks.  We’ve seen some front-loaded supply in the sector post Q3 earnings but the demand for GS paper has been consistently strong.

  • BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
  • BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
  • 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
  • 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.

 

Use of proceeds on today’s transaction will be used for general corporate purposes.

For relative value we looked to the outstanding GS 3.691% due 6/05/2028 6nc5 fixed-to-floating that priced on May 31st that was quoted today T+119 (G+120) pre-announcement.

Curves on comparable FIGs show an average 11- to 21-year spread differential of <13> bps. Applying that to the GS 11nc10 pegs fair value at T+106 nailing NIC on today’s new 21nc20 F-t-F as 2 bps.

 

GS Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
21nc20 F-t-F
10/31/2038
+120-125 +110a (+/-2) +108 +108 <14.5> bps 2 bps 106/104 <2>

 

………and here’s a snap shot of today’s final book size and oversubscription rate:

 

GS Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
21nc20 F-t-F
10/31/2038
$2.5b $5bn 2.00x

 

Final Pricing – The Goldman Sachs Group, Inc. f-t-f Perp NC5 Preferred

GS $2.5b 4.017% 10/31/2038 21nc20 fixed-to-floating @ $100.00 T+108 (Back-end: 3mL+137.3)

 

Have a great evening!

Ron Quigley

 

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

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/23
AVERAGES
WEEK 10/16
AVERAGES
WEEK 10/09
AVERAGES
WEEK 10/02
AVERAGES
WEEK 8/25
AVERAGES
WEEK 8/18
AVERAGES
WEEK 9/11
New Issue Concessions 1.33 bps 0.41 bps <0.38> bps 1.18 bps 1.38 bps 0.62 bps 1.40 bps
Oversubscription Rates 2.23x 2.89x 3.03x 3.50x 3.31x 3.18x 3.27x
Tenors 6.20 yrs 8.85 yrs 9.77 yrs 12.00 yrs 8.50 yrs 8.21 yrs 9.84 yrs
Tranche Sizes $793mm $804mm $906mm $608mm $645mm $483mm $674mm
Avg. Spd. Compression
IPTs to Launch
<12.75> bps <16.81> bps <19.81> bps <18.40> bps <20.19> yrs <18.40> bps <18.91> bps

  

Rates Trading Lab

 

Most of today’s trading was confined to a tight range with yields slowly migrating higher as the curve steepened. Then came the news that John Taylor had reportedly won a straw poll on a show of hands when President Trump asked GOP Senators about their Fed pick. Market got hit with the belly leading the sell-off and 5yrs traded at 2.044%, 10yr at 2.4225% and 30yr 2.934%. Stops were hit in futures as TY touched 124-18 before bouncing. Taylor had a big day in the betting pools, for what it’s worth, solidifying his second place standing. https://www.predictit.org/Market/3306/Who-will-be-Senate-confirmed-Fed-Chair-on-February-4%2C-2018 Lost in the fray were reports that the trio of Corker, McCain and Paul might not support a tax cut program if not revenue neutral and that Jeff Flake bowed out of the Arizona Republican race, but not before saying that “[w]ithout fear of the consequences and without consideration of the rules of what is politically safe, we must stop pretending that the conduct of some in our executive branch are normal. They are not normal. Reckless, outrageous and undignified behavior has become excused as telling it like it is when it is actually reckless, outrageous and undignified.” Meanwhile, stocks carried on, with records falling once again and the financial networks straining to contain their giddiness.

 

Thoughts:

Today’s price action was a textbook case of why this market is becoming so difficult to trade. I understand that a Taylor chairmanship and its potentially consequential rules-based policy metrics is a decidedly hawkish event. Countering that, however, is more stagnation on the legislative front. Senators Corker and Flake are now question marks in the Republican camps along with the fiscal conservatives. I know we have broken through established support levels and that it may trigger a further sell-off on that basis alone, but I think this is a counter-trade. Whatever happens, it will happen fast. Machines can hit bids and lift offers faster than you can blink.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-30 99-19+ 99-22 99-10 97-23
RESISTANCE LEVEL 99-27+ 99-14 99-14+ 99-00 97-12+
RESISTANCE LEVEL 99-25 99-102 99-08+ 98-23+ 96-28
         
SUPPORT LEVEL 99-22+ 99-052 99-02+ 98-15+ 96-11
SUPPORT LEVEL 99-196 99-01+ 98-28+ 98-07+ 95-30
SUPPORT LEVEL 99-17+ 98-31 98-24+ 98-01 95-24

 

New Investment Grade Corporate Debt Issues Priced

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

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Investment Grade Corporate Bond-New Issue Re-Cap
October 2017      Debt Market Commentary   

Quigley’s Corner 10.17.17 – Debt Market Commentary; Investment Grade Corporate Bond-New Issue Re-Cap

Investment Grade US Corporate Debt New Issue Re-Cap 

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 October

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 11th

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 3 issuers across 5 tranches totaling $3.65b.  The SSA space featured 3 issuers and 3 tranches for $4.50b bringing the all-in IG day totals to 6 issuers, 8 tranches and $8.15b.

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 22.38% of this week’s syndicate midpoint average forecast or $5.65b vs. $25.25b.
  • MTD we’ve priced 57.60% of the syndicate forecast for October IG Corporate new issuance or $52.804b vs. $91.68b.
  • There are now 8 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • Hospitality Properties Trust increased its 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • Pacific Life Insurance Co. upsized its 50nc30 fixed-to-floating subordinated surplus notes new issue today to $750mm from $500mm at the launch.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 5 IG Corporate-only new issues was <18.00> bps.
  • BAML’s IG Master Index tightened 1bp to +103 vs. +104 tying its post-Crisis low set on 10/06.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.98.
  • Standard & Poor’s Investment Grade Composite Spread tightened 2bps to +146 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 $14.3b on Thursday versus $13.8b on Friday.
  • The 10-DMA stands at $15.9b.

Global Market Recap 

  • U.S. Treasuries – Closed mixed & flatter. Yields & curve at levels not seen in many years.
  • Overseas Bonds – JGB’s unchanged to down. Gilts rallied 4-6 bps despite higher CPI.
  • Stocks – Unchanged (NASDAQ) to higher. S&P’s and Dow traded at all-time highs.
  • Overseas Stocks – Nikkei 21 year high. China closed mixed. Europe had a down day.
  • Economic – Import prices index higher. IP, Cap U & MP nothing special but NAHB was strong.
  • Overseas Economic – U.K. CPI YoY reached 3.0% – the highest since 2012.
  • Currencies – The USD outperformed 4 of the Big 5 & the 5th was unchanged (¥en).
  • Commodities – Energy small gains. Gold, copper & silver traded poorly.
  • CDX IG: -0.09 to 54.15
  • CDX HY: -1.70 316.16
  • CDX EM: -1.30 to 176.21

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
10/16 – EU imposes total ban on oil & petroleum to NOKO. 10/6 – Russian news announces NOKO is preparing to test fire a missile capable of reaching the U.S. Coast. Recall Trump’s “calm before the storm” comment.  NOKO rumored to reach out to GOP to help “figure out Trump.” On 9/24 Trump warns NOKO leadership that if rhetorical threats continue its leaders “won’t be around much longer.” NOKO claims comment is an “Act of War” and that it now has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.”
ELEVATED
“The EU”
Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government.  Worst performance for Merkel’s CDU and Christian Social Union party since 1949.  Immigration a source of tension. Right wing has a seat in German decision-making.

EU and Macron-Merkel coalition to squeeze U.K. re: BREXIT “divorce” bill. Companies prepping for messy BREXIT & 2 years of weak growth. EU wants UK to pay exit bill before any negotiations. UK withdrawal from EU takes place in 3/2019. Moody’s downgraded the UK on 9/22 to Aa2 from Aa1.

CAUTION
“U.S. political gridlock”
31 year old conservative Sebastian Kurz becomes the world’s youngest leader winning Austria’s Presidential election. He is expected to form a coalition with the resurgent far right anti-immigration party or Freedom Party. (See the “QC” dated 11-18-2015 and 11-30-2016).

10/16 – Catalonian Pres. Puigdemont defended right to claim to independence. Spain’s Pres. Rajoy can use Article 155 to suspend the Catalan gov’t. and take over in days. If not, Puigdemont’s diverse coalition may fall apart. Results of Catalonia’s Oct. 1st independence referendum vote posted 90% support for secession from Spain. National riot police cracked down at the voting booths injuring ~900 voters in the EU nation’s worst crisis in 40+ years since turning to democracy.

Steve Bannon’s war on the GOP’s “imperialist” political class targets Senate Majority Leader Mitch McConnell among others to unite Republicans behind Trump to get things done in Washington.

GOP tax overhaul plan would double deduction and create 3 tax brackets vs. 7. Bringing Corporate rate to 20% might return trillions of dollars to the U.S. that corps are keeping overseas.  Consensus GOP support to pass legislation still in doubt. Partisan politics.

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

October MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. October MTD thru 10/16 – there were 43 terrorist attacks. Killing 541 people and wounding 638.

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

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

MODERATE
“China”
China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. National Congress of the Chinese Communists Party held on Oct. 18th. Most decisions are made prior to it but it’s historically pivotal regarding leadership changes & reshuffling as elders retire.

Venezuela – Maduro dictatorship firmly in control. U.S. Tsy freezes Maduro family assets. Risk of VZ default. Isolated by int’l community. 4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3). Economy sliding into abyss. Regional immigration issue w/many continuing to flee abroad. Increased domestic crime.

MARGINAL
“More about monetary policy than recession”
Fed signals 1 more rate hike in 2017; 3 in 2018. Dot plots unchanged for 2017 & ’18; lower for ’19 & longer-term. Hurricane’s Harvey, Irma and Maria appearing in economic data; “could” push hike to 2018. $4.5 trln b/s unwind begins at Oct. 31st mtg & absence of inflation are concerns. Bullish corp. cdt. forecast for 20yr maturities and out; widening front end spreads ahead; optimism re: tax reform could mean return to US of $1trln currently offshore.  Issuers not so worried about rates. . Shifts/adjustments in monetary policy are more of a concern than chance of a 2018 recession.

 

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

 

IG Corporate New Issuance This Week
10/16-10/20
vs. Current
WTD – $5.65b
October 2017 vs. Current
MTD – $52.804b
Low-End Avg. $24.21b 23.34% $90.96b 58.05%
Midpoint Avg. $25.25b 22.38% $91.68b 57.60%
High-End Avg. $26.29b 21.49% $92.42b 57.13%
The Low $15b 37.67% $110b 48.00%
The High $36b 15.69% $75b 70.41%

 

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:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/16
AVERAGES
WEEK 10/09
AVERAGES
WEEK 10/02
AVERAGES
WEEK 8/25
AVERAGES
WEEK 8/18
AVERAGES
WEEK 9/11
AVERAGES
WEEK 9/05
New Issue Concessions 0.00 bps <0.38> bps 1.18 bps 1.38 bps 0.62 bps 1.40 bps 2.12 bps
Oversubscription Rates 2.05x 3.03x 3.50x 3.31x 3.18x 3.27x 2.70x
Tenors 20.00 yrs 9.77 yrs 12.00 yrs 8.50 yrs 8.21 yrs 9.84 yrs 11.10 yrs
Tranche Sizes $1,000mm $906mm $608mm $645mm $483mm $674mm $731mm
Avg. Spd. Compression
IPTs to Launch
<15.00> bps <19.81> bps <18.40> bps <20.19> yrs <18.40> bps <18.91> bps <16.80> yrs

 

New Issues Priced

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

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

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

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

For reading ease, please click on image below

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

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

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

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

 

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

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

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

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

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

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

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

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

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

www.mischlerfinancial.com

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

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

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

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

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

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

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

SNEAK PREVIEW : “Thank You For Your Service”

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 20th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Investment Grade New Issue Re-Cap

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

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

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

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

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Hudson Pacific Properties LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <18.29> bps. Including today’s IG-rated Federal Realty $25 par preferred, the average compression of today’s 13 new issues was <17.85> bps.
  • BAML’s IG Master Index was unchanged at +111. +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +154.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.5b on Friday versus $17.5b on Thursday and $12.7b the previous Friday.
  • The 10-DMA stands at $17.3b.

 

The “QC” Geopolitical Risk Monitor

 

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

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

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

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

Mueller’s continuing FBI probe into Trump.

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

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

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

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

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

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

 

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

 

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

Sneak Preview of “Thank You For Your Service”

 

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

Here’s the preview:

 

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

 

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

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

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

 

New Issues Priced

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

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

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

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

For reading ease, please click on image below 

municipal-debt-offering-calendar

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

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

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

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No Power Lost re: IG New Issue Debt Market; Mischler DCM Comment
September 2017      Debt Market Commentary   

Quigley’s Corner 09.12.17-No Power Lost re: IG New Issue Debt Market  

 

Investment Grade New Issue Re-Cap – Equity Exchanges Achieve a Trifecta of New Highs; CDX IG & HV New Tights

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

A Special Message from the EEI About Hurricane Irma

Prudential Financial Inc. Veteran Initiatives

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 6th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights – $112.4 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calender

I have a special edition for you tonight, it is chock full of all the usual talking points of our dollar IG primary markets as well as a feature for you that I recommend you all read about Prudential Financial’s long and wonderful history giving back to our nation’s veteran community. Mischler was selected as an active Co-Manager today’s Prudential Financial 30nc10 f-t-f new issue.  Then, it’s on to a permission-ed piece by the Edison Electric Institute re: what they and our utility sector are doing to remedy and resolve the damage done by the recent hurricanes Irma and Harvey.  Edison is quite the authority for all things power-related in the United States.

So, sit back relax, the day is done and this is all you really need to know. Thank you as always for stopping in.

Today’s IG dollar DCM hosted 10 issuers across 14 tranches totaling $8.05b.  The SSA added another 4 issues, 6 tranches and $5.75b for an IG Corporate and SSA day tally of 14 issuers, 20 tranches and $13.80b.

What’s more is the S&P, the Dow and Nasdaq all closed today’s session at new all-time highs.  CDXIG and HV also both reached new tights!

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 58.55% of this week’s syndicate midpoint average forecast or $19.175b vs. $32.75b.
  • MTD we’ve priced 59.95% of the syndicate forecast for July or $67.415b vs. $112.45b.
  • There are now 12 issuers in the IG credit pipeline

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Mischler Financial was named a “passive” Co-Manager on today’s Metropolitan Life Global Funding 10-year Secured FA-backed Notes tranche. We thank Team MetLife for selecting Mischler, the nation’s oldest Service Disabled Veteran broker dealer, from among your many diversity partners.
  • PS Business Parks Inc. upped its $25 par PerpNC5 cumulative preferred Series “X” new issue to $200mm (8mm shs) from an initially announced $100mm (4mm) size at the launch and at the tightest side of guidance.
  • Penske Truck leasing Co. increased its long 5-year 144a/REGS Senior Notes new issue to $600mm from $500mm today at the launch and at the tightest side of guidance.
  • Banistmo S.A. upsized today’s 5-year 144a/REGS Senior Notes new issue to $500mm from $400mm 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 13 IG Corporate-only new issue, was <26.56> bps.  Including today’s PS Business Parks IG-rated Preferred, the spread compression across 14 tranches was <25.11> bps.
  • BAML’s IG Master Index was unchanged at +117.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.12 vs. 1.13.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +162.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.8b on Monday versus $12.2b on Friday. Last Monday was a holiday.
  • The 10-DMA stands at $13.0b.

 

Global Market Recap

 

  • U.S. Treasuries – Back to back losing days for USTs. Supply and higher U.K. CPI were the catalysts.
  • Overseas Bonds – Poor day for JGB’s and an even worse day for bonds in Europe.
  • 3mth Libor – Set at the highest yield since March 2009 (1.31917%).
  • Stocks – Closed with gains and with the S&P reaching an all-time high.
  • Overseas Stocks – Nikkei strong rally. Europe closed higher except the FTSE.
  • Economic – Another strong JOLTS release. PPI tomorrow.
  • Overseas Economic – U.K. CPI ties the highest level in 4 years.
  • Currencies – USD mixed vs. the Big 5. Big rally for the Pound.
  • Commodities – Non-event today
  • CDX IG: -1.15 to 56.24
  • CDX HY: -3.71 to 323.0
  • CDX EM: +0.86 to 175.43

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
·         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. Geological Survey. Head of IAEA (Int’l. Atomic Energy Authority) said the hydrogen bomb test 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. Ambassador to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis. Only the strongest sanctions will enable us to solve this problem through diplomacy.” Monday 8/31 began joint U.S. & S. Korean military exercise the world’s largest computerized command control implementation that involved  over 80,000 U.S. and South Korean troops. CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on 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 on the U.S. continent. NOKO may use nuclear technology as barter for food with ”suspect” nations. U.S. sanctions of select Chinese banks to pressure PRC to influence NOKO has 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 justified to build out their respective militaries.
ELEVATED
BREXIT Fallout
·         Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani

border conflict as one of if not the most volatile. Both are nuclear capable. The 100-year old non-partisan Brookings Institute calls Pakistan “the world’s most dangerous country.”

·        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”
·         Trump tax reform targeted for this year. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt after repeal and replace defeat in late July. Trump’s Strategic and Policy Forum disbanded as did his Manufacturing Council. Tense U.S. political environment.

·         Market expecting unwind announcement by Fed in September.

·         Mueller’s 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.

·         Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. There were 57 global terrorist attacks in the month August killing 766 people and wounding 1,112.

·         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
·         Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; recent absence of inflation and $4.5 trillion balance sheet unwind are concerns.

 

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

 

IG Corporate New Issuance This Week
9/11-9/15
vs. Current
WTD – $19.175b
September 2017 vs. Current
WTD – $67.415b
Low-End Avg. $31.71b 60.47% N/A N/A
Midpoint Avg. $32.75b 58.55% $112.45b 59.95%
High-End Avg. $33.79b 56.75% N/A N/A
The Low $25b 76.70% $100b 67.415%
The High $40b 47.94% $125b 53.93%

A Special Message from the EEI about Hurricane Irma

In light of the recent catastrophic hurricanes Harvey and Irma that slammed Texas and Florida among other states and with damage costs estimated as high as between $150b-$200b I wanted to share an article with you all that came to me from the Edison Electric Institute (EEI).  It’s informative and in many ways perhaps the best source from which to receive a power/electric damage assessment from and certainly to comprehend the immensity of what EEI and the power companies are facing.  It should also serve as reassurance that they are in fact truly doing everything they can to power you all back up.  We here at Mischler are acutely aware of what our friends (issuers, accounts, family and friends) have gone through and will be facing in the coming weeks and in some cases months.  We appreciate what you’re experiencing and would like to thank the EEI and particularly Brian Reil at EEI Media Relations for the quick permission approval process to re-print the below article for all of you. There are some embedded links in the piece that may also be very helpful and informative to you.

The Edison Electric Institute is the association that represents every U.S. investor-owned electric company.  EEI’s members provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to its U.S. members, EEI has more than 60 international electric companies with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members.

Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.

Hurricane Irma: More Than 50,000 Workers From Across the U.S. and Canada Dedicated to Power Restoration Efforts  
WASHINGTON (September 11, 2017) – As of 7 p.m. EDT, more than 7.1 million customers are without power across Florida and in parts of Alabama, Georgia, and South Carolina as a result of Hurricane Irma. As the storm moved through the region, companies were able to address more than 1.25 million outages, thanks largely to recent investments in energy grid technology and automation. Irma was downgraded to a tropical storm earlier today.

 

“This is likely to be one of the largest and most complex power restoration efforts in U.S. history,” said EEI President Tom Kuhn. “An army of more than 50,000 workers from across the United States and Canada is now dedicated to supporting the industry’s Irma restoration efforts. This includes workers from affected companies, as well as mutual assistance crews, contractors, and other support personnel. Mutual assistance is a hallmark of our industry and serves as an effective—and critical—restoration resource for electric companies.”

 

Given the size and strength of Irma, infrastructure systems will need to be rebuilt completely in some places of Florida before power can be restored. This will delay restoration times, and customers should be prepared for the possibility of extended power outages.

 

“We know that being without electricity creates hardships, and we greatly appreciate customers’ patience as electric companies work day and night to assess damage and to restore power where and when conditions are safe to do so,” said Kuhn. “Companies will continue their storm restoration efforts around the clock until the last customer who can receive power is restored.”

 

Responding to major events like Irma requires significant coordination among the public and private sectors, and strong industry-government coordination is critical. As we did throughout Hurricane Harvey, EEI and the electric power industry are working through the Electricity Subsector Coordinating Council (ESCC) to coordinate with the federal government, other segments of the industry, and critical infrastructure operators.

 

For the fourth consecutive day, Energy Secretary Rick Perry joined an ESCC call with the CEOs of companies impacted by Irma to identify issues that will expedite power restoration. “We commend Secretary Perry’s ongoing leadership and the commitment of the entire Administration to ensure unity of effort in the Irma response,” said Kuhn.

 

Ensuring the safety of customers, communities, and workers is the electric power industry’s highest priority. As always, customers should stay away from downed power lines and always treat fallen wires and anything touching them as though they are energized. Customers using generators should plug appliances directly into the generator and follow all safety warnings.

 

EEI’s Storm Center is a resource for real-time information and explanations of the restoration process. It also includes a map to company outage centers. Customers can follow EEI on Twitter and Facebook​ for the latest updates.

I hope the EEI article was helpful and informative to you.

 

Have a great evening!

Ron Quigley, Managing Director, Head of Fixed Income Syndicate (more…)