Browsing articles tagged with "Mischler Financial Archives - Page 10 of 11 - Mischler Financial Group"
Corporate Debt Issuance : A Go Day
February 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 02.17.16- Oil Uptick Drives Day’s Corporate Debt Issuance

 

Investment Grade Corporate Debt New Issue Re-Cap

Overall Market Recap

FOMC Minutes: Headlines & Text

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Market Trading Lab

Economic Data Report

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

Oil continued rebounding closing today’s session up 8.23% or $2.39 per barrel.  Peeling back the layers, it happens to be thanks to Venezuela’s agreement to join the “A”-Team that has suddenly agreed to freeze oil output.  Look, when our inextricably-linked global financial services industry moves in a positive direction, in large measure because of actions taken by countries like Iran, Iraq, Venezuela, Russia, Saudi Arabia, all the OPEC nations and some others to form the first coordinated attempt to boost oil prices, well, it’s time to worry.  OPEC nations and Saudi Arabia aren’t so bad although they have issues in the hotbed known as MENA. But really, are you okay with Russia, Venezuela, Iran and Iraq having that much impact in our lives?  Putin?  Iran – the cradle of extremism?  Iraq, which just divulged today that it’s in a desperate search for – get this – highly dangerous radioactive material that was reported lost on November 30th, 2015 and that they fear could fall into the hands of ISIL jihadists!  Let’s hope this is international intelligence agencies working on a sting operation of some sort to create “activity” and “noise” to weed out the bad guys. (BTW that happens all the time).  Venezuela? Need I say more about the country with the world’s highest crime rate (90 homicides per 100,000 or 27,875 murders in 2015)?

Regardless as to how you feel about the seemingly sorry state of the new world order, mu keeping it to IG primary issuance is a lot easier. We enjoyed another stellar day. Allow me to list the reasons why:

The EU’s 7 major equity exchanges were up an average 2.87%.

CDX IG25 was 4.4 bps tighter
CDX HV25 compressed a whopping 20.3 bps

The VIX narrowed 1.80
S&P closed up 31

DOW gained +257

Having said all that, 4 more IG Corporate issuers tapped the dollar DCM today printing 6 tranches between them totaling $2.6b2 SSA issues totaling $6b also materialized bringing the all-in IG day total to 6 issuers, 8 tranches and $8.6b.

 

Overall Market Recap

USTs – 3rd losing session in a row as risk assets & PPI showed some life.

Stocks – Europe leads U.S. higher. Nikkei & Hang Seng lost ground & China rallied.

Economic – U.S. PPI higher than expected. Other U.S. data was mixed. U.K. employment solid.

Currencies – USD better vs. Euro/PND, weaker vs. the CAD/AUD & unchanged vs. Yen.

Commodities – Solid session for commodities led by crude oil.

CDX IG: -3.66 to 117.59

CDX HY: -17.80 to 546.64

CDX EM: -13.38 to 375.34

 

FOMC Minutes: Headlines & Text (more…)

Muni Bond Deals This Week
February 2016      Debt Market Commentary   

Assets flowing into municipal debt issues  indicates institutional appetite for muni bond deals remains strong..

Mischler Muni Market Update for the week commencing 02.16.16 provides public finance investment managers and municipal bond market participants a snapshot of last week’s muni bond activity, including credit spreads, and a look at selected pending municipal finance offerings for this week’s pending issuance.

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

For reading ease, please click on image below

mischler muni market 02-16-16

Recession Rattling; Industry Experts Opine-Mischler Commentary
February 2016      Debt Market Commentary   

Quigley’s Corner 02.11.16 – Industry Experts On Recession Talk: Déjà vu All Over Again

  • The IG Re-Cap
  • Special Edition of the Best & Brightest
  • Takin’ It to the Street-Soundbites from Most Influential Accounts and Strategists
  • An Illustrated “Market Circle of Death”
  • Tale of the Tapes
  • Today’s 5-Section Global Market Recap
  • Urgent Bulletin to all Treasurers, Bankers, Accounts and Syndicate managers.
  • “On Black Holes, Politicians and Central Banks”
  • Everything Syndicate and Secondary from the day’s debt capital markets

 

Investment Grade New Issue Re-Cap – Apocalypse N-O-W ?

That’ll get your attention.  Here’s why – I walked in this morning and turned on the TV to Bloomberg News. Someone was being interviewed and the caption in large font at the bottom of the screen read, “Money out of global markets and into pockets.”  I knew immediately this was a “risk off” day.  I then turned on my systems and saw the extent of the carnage.  There was no IG Corporate issuance today.  We’ve now had “7” no-print non-Friday sessions YTD. That puts us on pace for 61 total non-Friday no-print days for 2016. SSA issuer Rentenbank priced its new 5-year FRN and upsized it to $750mm to $500m. That was all she wrote today.  I immediately started calling global money managers, domestic and overseas accounts, strategists and personal market contacts to get their take on things.  Here are sound bites from some of those conversations. They are very revealing and frighteningly similar.

“The Best and the Brightest” – A Must Read Special Edition

Given recent global market tumult, especially this week and today, it was obvious to me that asking anyone for next week’s forecast of IG Corporate supply would seem foolish as no one has any idea in here.  It speaks to how volatile and uncertain our markets are.  Asking that question of the Best & Brightest in tomorrow’s Friday edition ahead of a long three-day President’s Day weekend would be unfair. So, instead I asked three questions pertinent and critical to our credit markets.  The responses were very thoughtful and the meaningful responses took the Best and Brightest respondents time and reflection.  If you are in the credit markets; if you are a Treasury/Funding operative; if you are a tier I, II or III account, a banker, a salesman, a trader or an executive in this business this is a MUST read.

3 questions posed to the “Best and the Brightest” today:

“Good afternoon! I decided to withhold my usual Friday IG Corporate new issue volume forecast poll.  I simply ask that you reply to any one or each of the following questions, as your time allows.  I will print responses instead in lieu of forecasts.  I am always trying to find new ways to make the “QC” more meaningful to its readership. These questions are on many market participant’s minds including Issuers’ Treasury/Funding teams, other members of the Best & Brightest crew, Accounts and Strategists. Here are the questions:

  1. “When do you think markets unfreeze and we get back to new issue activity again, albeit at wider levels?”
  2. “What do you think it takes for the current cycle to break, and for us to find a firmer footing?”
  3. “This week the NY Fed released a research piece saying they felt there is sufficient liquidity in the U.S. credit markets. Is that true in your opinion?”

……and here are their responses: (more…)

Will Germans Bail Out Greece or Deutsche Bank?
February 2016      Debt Market Commentary   

Quigley’s Corner 02.08.16-A Global Financial Market Conundrum

 

Investment Grade Corporate Debt New Issue Re-Cap – Really Bad Global Karma

Global Macro- EU Seam Crack: Germans To Decide Who To Bail Out, Deutsche Bank or Greece

Global Credit Spreads Blowing Out: What’s Next? European TARP?

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

Investment Grade Credit Spreads (by Industry/Rating)
It was the fifth non-Friday goose egg for IG Corporate issuance YTD as global markets were sent reeling despite China being closed all week for their Lunar New Year and LATAM essentially taken off the table as well thanks to Carnival. So what could possibly go wrong?  Are you kidding me!? Europe, of course!  With the spotlight on the EU we had a chance to really see just how bad the situation is there.  Take a look at these closing levels – the average of Europe’s 7 major exchanges was <4%> and that’s ex –Switzerland finished down 2.52%.  CDXIG 25 closed out down 5.44 bps after being down as much as 7.52 bps by mid-afternoon!  The T10yr gave up 9 bps versus Friday and is now yielding 1.74%. The DOW, better referred to as “The DOWN” closed the session down 177 after another wild ride rallying back 227 points in 90 minutes from being down 401 at 2:30.  The S&P was off 26.  That’s all she wrote.

 

Gloom and doom prevailed as the “Big Bad” seemingly gets more volatile.  Wider credit spreads are not conducive for issuers to bring new deals so the game of chicken continues wherein issuers will either surrender to new clearing levels or wait and hope for a better economic environment.  There’s been an abundance of issuance these last few years given historically low rates.  Some conjectured today that all of that could be coming to a swift end.  Many companies are overleveraged and may not need to re-fi while debt levels are much higher.  More debt equates to being put on credit watch and wider spreads while too much debt could result in downgrades.  6 “BBBs” which are one notch away from junk would subsequently be dumped from funds.  People are talking about that. Should the death spiral continue some people offered that with less issuers issuing, underwriting fees would grow which, in turn, would segue into underwriting deals using lead managers’ own electronic transaction systems.  You know it’s a terrible day when trading floor conversation, phone calls and discussions actually reach the point of conceptualizing those horrible thoughts.  And that was what came back to me not the other way around. People are nervous folks.

 

As a separate developing story, other market participants discussed the possibility that Germany may eventually wind up choosing between informing Germans they will have to choose between paying in to save Deutsche Bank or Greece.  Greece remains in dire straits. Don’t believe what you hear or read, it’s worse than that.  If asked to choose, Germans have reached the point of subsidizing the quality of life in other EU nations to the point that Germans WILL CHOOSE Deutsche Bank, not Greece.  Therein the EU will burst another seam in its fragile union as it heads to what I firmly believe will be an eventual dual currency dividing Northern and Southern nations before breaking up entirely.

As for issuance, well, in speaking with desks, press and my account sources, unfortunately current credit conditions could conceivably persist for weeks……..or longer.  A widely read article in today’s Wall Street Journal written by Matt Wirz of the Wall Street Journal highlighted the dilemma facing U.S. investment grade-rated credit markets.  It’s worth your time.

To read the article please click below or copy/paste the link to your browser:

http://www.wsj.com/articles/hedge-funds-bet-on-risks-in-u-s-blue-chip-debt-1454880754

 

The takeaway is that Central Banks have screwed up the world for good.  Every day seems like a new threshold of pain and those that say, “we’ve seen this before, what goes around comes around” are WRONG! Dead wrong.  Defaults and bankruptcies are on the horizon. 100 of the S&P 500 will be able to get deals done and about 50 of those 500 represent half of the index when factoring in weightings.  What we’ve witnessed these last several years is socialism being spoon fed to all of us through Central Banks.  They can’t sell it to us ideologically, so they’re enmeshing it into our global economic systems.  It will take decades to unwind it, which is why the 2016 election IS the most important of our lifetime.

 

At the expense of having nothing positive to say about current market conditions, I turned to a co-worker, rates trader Glen Capelo, with my dilemma.  Here’s a cut and paste of what Glen sent around this morning:

Global Credit Spreads Blowing Out:  What’s Next?  European TARP

Everyone’s asking what’s causing this new leg of the global meltdown. Pick your reason, but the bottom line: It doesn’t matter why, what matters is what’s next from the Central Banks.

Pick your reason:

  1. China Slowdown continues to effect commodity centric countries/companies
  2. Energy collapse starting to cause bankruptcies
  3. Global Earnings recession gather steam
  4. Negative rates making extremely difficult for International Banks to make money
  5. Dovish Central Banks sound alarm bells
  6. Disappointing Global Economic data in general
  7. Credit Spreads blowing out: US IG spreads 35% wider on the year, yes 35%
  8. Geo-political concerns

 

The slow-down in China along with the negative rate environment exposed the woefully under-capitalized problems in many European Banks.

Bottom Line: Global institutions are being forced to de-lever. Problem is the credit markets are shut. Hearing European Credit markets are effectively not trading. No bid.

ECB did LTROs = 3-year loan/band aid

US did TARP = Capital infusion program.

Tarp forced the banks to raise capital or be under government ownership…HUGE difference from a 3-year loan band aid….Until the European Banks (Portugal, Italy, Greece, Spain etc) recapitalize properly, credit spreads and global risk is at danger of getting worse.

……and therein lays the rub folks!  It was all bad today.

 

Market Recap

 

USTs, – Big day for Treasuries led by the 30yr as risk assets sold off hard.

Stocks – U.S. hit hard as of 3:30pm but well off day lows & rallying into close.

Overseas Stocks – Europe hit very hard (disaster). Nikkei higher & China closed.

Economic – Not a factor today. Retail sales on Friday is the highlight of the week.

Currencies – Mixed day for USD vs. the Big 5. DXY down & Yen with a strong bid.

Commodities – CRB, crude oil & wheat down but gold & silver had strong sessions.

-Tony Farren

 

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.

 

NICs, Bid-to-Covers, Tenors and Sizes

 

Here’s this week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the last four week’s averages:

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/01
TUES.
2/02
WED.
2/03
TH.
2/04
FRI.
2/05
LAST WEEK’S
AVERAGES
AVERAGES
Week 1/25
AVERAGES
Week 1/18
AVERAGES
Week 1/11
New Issue Concessions 10.5 bps 4.5 bps 7.67 bps 3 bps N/A 7.45 bps 21.77 bps 14.25 bps 12.66 bps
Oversubscription Rates 4.35x 3x 2.74x 2x N/A 3.01x 2.71x 1.96x 2.39x
Tenors 5 yrs 5 yrs 9.29 yrs 10 yrs N/A 8.19 yrs 7.43 yrs 5.33 yrs 7.41 yrs
Tranche Sizes $500mm $400mm $621mm $275mm N/A $548mm $940mm $1,235mm $1,901mm

Lipper Report/Fund Flows

 

For the week ended February 3rd, Lipper U.S. Fund Flows reported an outflow of $1.451bn from corporate investment grade funds (2016 YTD net outflow of $4.947bn) and a net outflow of $40.897m from high yield funds (2016 YTD net outflow of $4.116bn).

Over the same period, Lipper reported an outflow of $405m from loan participation funds (2016 YTD net outflow of $2.894bn).

Emerging Market debt funds reported a net outflow of $414m (2016 YTD outflow of $1.682bn).

 

IG Secondary Trading Lab

 

BAML’s IG Master Index widened 1 bp to +209 versus +208.  +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research widened 1 bp to +253 versus +252.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $14.7b on Friday versus $18.8b Thursday and $19.4b the previous Friday.

The 10-DMA stands at $17.8b.

The top three most actively traded IG-rated issues were led by APC 6.375% due 9/15/2017 that saw client flows account for 97% of the volume.

T 4.125% due 2/17/2026 finished second with client flows representing for 62% of the volume and with sales 2.7-times purchases.

HD 3.00% due 4/01/2026 placed third displaying 71% client and affiliate trades and with sales 2:1 over buys.

 

New Issue Volume

 

Index Open Current Change
IG25 114.80 120.244 5.444
HV25 359.030 375.07 16.04
VIX 23.38 26.00 2.62
S&P 1,880 1,853 <27>
DOW 16,204 16,027 <177>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $0.00 bn DAY: $0.20 bn
WTD: $0.00 bn WTD: $0.20 bn
MTD: $6.025 bn MTD: $14.109 bn
YTD: $133.009 bn YTD: $184.233 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Labor Market Conditions January 2.0 0.4 2.9 2.3

 

Rates Trading Lab

 

Long term trend lines from 2yr to 10yr all now portend lower yields on a monthly basis. That being said, we’ve gone a long way in a short time, both nominally and on the curve so I would not be at all surprised by higher yields in the short term. We have supply starting tomorrow, but I suspect 3yrs will not be much of a problem in this rate environment. Long end supply is much more of a jump ball coming in the midst of market turmoil, a 20bp rally and Yellen’s testimony on Wednesday. Her comments should be cautiously optimistic and she’ll justify the FOMC’s December hike, likely noting the improved labor market, but it’s unlikely she will make much of a case for a March hike. Bigger question is how market will gauge her resolution to the normalization path given that it remains dependent on the evolution of the economy and global developments. If you want to formulate your opinion regarding the near-term path of rates, formulate an opinion on the European financial system and its future prospects. As the tallest midget in the global economy, we are just interested spectators on the world’s economic stage for the time being.

Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-30+ 101-11 102-08 105-14+ 110-20
RESISTANCE LEVEL 100-292 101-07+ 102-03 105-03 110-01
RESISTANCE LEVEL 100-286 101-04 101-29+ 104-25 109-15
         
SUPPORT LEVEL 100-266 100-30+ 101-20 104-10 108-14
SUPPORT LEVEL 100-25 100-26 101-14+ 104-01+ 107-24
SUPPORT LEVEL 100-23+ 100-22+ 101-08+ 103-25 106-30

 

Tomorrow’s Calendar

 

China Data: Nothing Scheduled

Japan Data: M2/M3, Machine Tool Orders

Australia: NAB Business Conditions

EU Data: GE-Dec IP/Trade U.K.-Dec Trade

S. Data: Jan NFIB, Dec W’sale Inv, Dec JOLTS

Supply: Austria 9 & 28y, German 30yIL, U.K. IL10y, U.S. 3y

Events: ECB 7d

 

 

Mischler’s “Rates” Team is: Glenn Capelo, Jon Cardilli, Tony Farren, Jim Levenson, Andy Livingston, Steve Muchnikoff and Ed Schmitt.

Above is the opening extract from Quigley’s Corner aka “QC”  Monday Feb 8 2016 Edition distributed via email to clients of Mischler Financial, the investment industry’s oldest and largest minority brokerdealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter for “2015 WSL Award, Best Research/BrokerDealer,” the QC observations provide a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate bond new issuance and market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

To receive Quigley’s Corner, please contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone:

*Sources: Bank of America/Merrill Lynch, Bloomberg, Bond Radar, Dow Jones Newswire, IFR, Informa Global Markets, Internal Mischler, LCDNews, Market News International, Prospect News, Standard & Poor’s Ratings Services, Stone & McCarthy Research, Thomson Reuters and of course, a career of sources, contacts, movers and shakers from syndicate desks to accounts; from issuers to originators; from academicians to heads of research, and a host of financial journalists, et al.

 

Mischler Financial Group’s “U.S. Syndicate Closing Commentary”  is produced weekly by Mischler Financial Group. No part of this document may be 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.   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 and the Mischler Financial Group

(more…)

High Yield Debt Issuance Rules The Day-Mischler
February 2016      Debt Market Commentary   

Quigley’s Corner 02.04.16- High Yield Bond Issuance: Biggest Daily Volume in 3 Months

 

Investment Grade Corporate Debt New Issue Re-Cap –Praxair is Lone IG Corporate Issuer

Global Macro- Turkish-Syrian War Means War on the Doorstep for the EU

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Market Trade Lab

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

 

The IG dollar primary markets suffered from further global market volatility with Praxair, the largest industrial gases company in North and South America the lone, issuer to price a deal.  The tally was meager with I deal totaling $250mm.  3 SSA prints contributed another $1.5b between them bringing the all0-in day total to 4 issuers, 4 tranches and $1.75b.  We have senior seasoned professionals here in our Mischler Stamford office, each with over 25 years of experience or more.  All say the same thing and mirror what you’re probably hearing as well – “I have never seen markets like this……EVER!” Another said, “2008 was pretty bad but this market is right there.” Still a third quipped, “I have never seen a market with more people having less conviction than now.  People just don’t know what to do.” Those are comments from a senior rates trader, a guy who spent most of his life covering Central Banks and a Structured Products wiz.  I spoke with a reporter this morning who wrote, “What can I say? I walk in with stocks +70 and 90 minutes later they’re down 50.  I thought we’d have a solid day of issuance but now, I’m not sure of anything.”

Of course, we are sure of one thing, the world is a confused mess.  This morning BOE Governor Mark Carney announced that the U.K.’s Monetary Policy Committee voted unanimously to hold rates at 0.50% citing an “unforgiving global environment and sustained financial market turbulence.” The BOE Governor cut forecasts yet again saying inflation will average 0.8% in 2016 crawling to 2.00% sometime in 2018.

After the BOE announcement, I spoke at length about our current market environment with a very reputable European account that I cover.  This person has been in the markets for over 30 years. Here’s what he shared – “I haven’t experienced markets like this and I’ve been in the business since 1981.  The biggest issues are that there are no longer buyers of last resort, cost of capital at banks is prohibitive, risk and compliance run today’s firms and regulators have made it impossible for anyone to make money.  There aren’t many prop desks around anymore either.  Bottom line is today’s markets have no stops; no one to say this has gone too far.”

 

Turkish-Syrian War Means War on the Doorstep for the EU

 

Days like these also pull other global event risks into focus. For example, in today’s early session Russia’s Defense Ministry spokesman Igor Konashenkov said, “We have reason to believe that Turkey is actively preparing for a military invasion of a sovereign state – the Syrian Arab Republic.  We’re detecting more and more signs of Turkish armed forces being engaged in covert preparations for direct military actions in Syria.”  Now THAT is something Europe does not want.  There is a reason why Turkey never gained EU membership.  Politicos can say what they will but Europeans do not want Turkey in the EU, which is already showing signs of coming undone. The EU in and of itself is a clash of different cultures, languages and histories let alone welcoming the gateway to Islam.  I know that may sound harsh at first read but it is true.  Turkey is the gateway to Islam; the bridge connecting Asia with Europe; the doorway through which a lot of trouble can manifest itself.  Simply put, the headline for a war between Turkey and Syria would read, “EU – War on the Doorstep.”  Of course this is all tempered by the fact that the Russian Defense Ministry is yet just another mouthpiece for former FSB agent Vlad-the-Terrible Putin.  Still, it’s more bad news the world doesn’t need.

 

Recap

 

USTs – Treasuries closed with small gains heading into the Employment Report.

Stocks – U.S. higher, Europe mixed, Nikkei red and China & Hang Seng rallied.

Economic – U.S. data continues to disappoint. U.S. Employment Report tomorrow.

Currencies – USD & DXY Index hit hard for the 2nd day in a row.

Commodities – Crude oil started bid but rolled over. Gold in rally mode.

CDX IG: +1.67 to 109.37

CDX HY: +7.12 to 529.43

CDX EM: -1.33 to 374.22

o   Swaps: 5yr thru 30yr spreads had a delayed reaction to the Tsy coupon cuts from yesterday

-Tony Farren

 

IG Primary Market Talking Points

 

Word to the wise – today was the highest volume day for High Yield new issuance in two months with three transactions printing a total of $2.49b.

Praxair Inc. (NYSE:PX) upsized a tap of today’s Senior Notes new issue to $275mm from $250mm which also launched and priced at the tightest side of guidance.

The average spread compression across today’s 1 IG Corporate-only new issues was 12 bps from IPTs to the launch.

 

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

 

IG Corporate New Issuance Next Week
2/01-2/05
vs. Current
WTD – $6.025b
February 2016 vs. Current
MTD – $6.025b
Low-End Avg. $23.75b $25.37% $90.9375b $6.63%
Midpoint Avg. $24.375b $24.72% $92.1875b $6.54%
High-End Avg. $25.00b $24.10% $93.4375b $6.45%
The Low $15b $40.17% $60b $10.04%
The High $35b $17.21% $110b $5.48%

 

 

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.

 

NICs, Bid-to-Covers, Tenors and Sizes

 

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

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/01
TUES.
2/02
WED.
2/03
TH.
2/04
LAST WEEK’S
AVERAGES
AVERAGES
Week 1/18
AVERAGES
Week 1/11
AVERAGES
Week 1/04
New Issue Concessions 10.5 bps 4.5 bps 7.67 bps 3 bps 21.77 bps 14.25 bps 12.66 bps 7.62 bps
Oversubscription Rates 4.35x 3x 2.74x 2x 2.71x 1.96x 2.39x 3.09x
Tenors 5 yrs 5 yrs 9.29 yrs 10 yrs 7.43 yrs 5.33 yrs 7.41 yrs 6.76 yrs
Tranche Sizes $500mm $400mm $621mm $275mm $940mm $1,235mm $1,901mm $866mm

 

New Issues Priced

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

Please note that for ratings I use the better two of Moody’s, S&P or Fitch.

 

IG

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Praxair Inc. (tap) A2/A 3.20% 1/30/2026 275 +120a +110a (+/-2) +108 +108 JPM/MIZ/WFS

                                                               

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
IBRD Aaa/AAA FRN 2/11/2021 500 3mL +28 3mL+28 3mL+28 3mL+28 BAML-sole
JFM A1/A+ 2.125% 2/12/2021 500 MS +95a MS +95a MS+95 +92 BARC/CITI/NOM

 

Lipper Report/Fund Flows

 

For the week ended January 27th , Lipper U.S. Fund Flows reported an outflow of $1.187bn from corporate investment grade funds (2016 YTD net outflow of $3.495bn) and a net inflow of $883.3m from high yield funds (2016 YTD net outflow of $4.076bn).

Over the same period, Lipper reported an outflow of $783.7m from loan participation funds (2016 YTD net outflow of $2.489bn).

Emerging Market debt funds reported a net outflow of $407.7m (2016 YTD outflow of $1.268bn).

 

IG Secondary Trading Lab

 

BAML’s IG Master Index widened 2 bps to +208 versus +206.  +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research widened 1 bp to +252 versus +251.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $18.3b on Wednesday versus $19.1b Tuesday and $17.9b the previous Wednesday.

The 10-DMA stands at $18.4b.

The top three most actively traded IG-rated issues were led by ABIBB 4.90% due 2/01/2046 that saw evenly weighted client flows account for 88% of the volume.

ABIBB 2.65% due 2/01/2021 finished second with two-way client and affiliate flows representing for 87% of the volume.

AIG 4.875% due 6/01/2022 placed third displaying 100% client flows and with sales outweighing purchases by a 3:2 margin.

 

New Issue Volume

 

Index Open Current Change  
IG25 107.695 109.574 1.879
HV25 360.50 356.175 4.325
VIX 21.65 21.84 0.19  
S&P 1,912 1,915 3
DOW 16,336 16,416 80  

 

USD IG Corporates USD Total IG (+ SSA)
DAY: $0.275 bn DAY: $1.275 bn
WTD: $6.025 bn WTD: $13.409 bn
MTD: $6.025 bn MTD: $13.409 bn
YTD: $133.009 bn YTD: $183.533 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Challenger Job Cuts YoY January —- 41.6% <27.6%> —-
Nonfarm Productivity Q4 <2.0%> <3.0%> 2.2% 2.1%
Unit Labor Costs Q4 4.3% 4.5% 1.8% 1.9%
Initial Jobless Claims Jan. 30 278k 285k 278k 277k
Continuing Claims Jan. 23 2240k 2255k 2268k 2273k
Bloomberg Consumer Comfort Jan. 31 —- 44.2 44.6 —-
Factory Orders December <2.8%> <2.9%> <0.2%> <0.7%>
Factory Orders Ex Trans December —- <0.8%> <0.3%> <0.7%>
Durable Goods Orders December <4.5%> <5.0%> <5.1%> —-
Durables Ex Transportation December —- <1.0%> <1.2%> —-
Cap Goods Orders Nondef Ex Air December —- <4.3%> <4.3%> —-
Cap Goods Ship Nondef Ex Air December —- 0.2% <0.2%> —-

 

Rates Trading Lab

 

Treasuries seem to have a bid on every back-up. Of course tomorrow’s number matters, but it will take a VERY strong number to get rates to rise significantly, and even if they do, there will likely be buyers. A weak number will only continue the trend we have seen and take tightening out of the picture altogether. That doesn’t mean we cannot correct, however. There have been lots of whispers pointing out the risks to weaker payroll numbers tomorrow. These include the weaker ISM Manufacturing employment component, claims data, Challenger job cuts, and the difference between “Jobs-Hard-to-Get” and “Jobs Plentiful,” which decreased to -0.6 in January vs. -0.3 December. I can’t tell you what’s going to happen, only that tomorrow will be a tough trading day. 10yr support comes in at 1.89, 1.95 and 1.98. 1.64 is the ultimate target for the bulls at the moment, but I’d be sure we will do a lot of work around 1.75 first. Interestingly, 1.88 is the 23.6% Fibonacci correction from 1.64 to 2.55 (see attached chart). We have also been holding true to technical levels in TY on an intra-day basis, so I will update those in the AM.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-262 100-276 101-12 104-03 107-06
RESISTANCE LEVEL 100-24+ 100-24 101-07 103-25 106-30
RESISTANCE LEVEL 100-23+ 100-22 101-03+ 103-18+ 106-16
           
SUPPORT LEVEL 100-192 100-166 100-30 103-01 105-15+
SUPPORT LEVEL 100-17 100-13 100-26 102-23+ 104-16
SUPPORT LEVEL 100-15+ 100-102 100-22 102-16+ 104-01+

 

Tomorrow’s Calendar

 

China Data: Nothing Scheduled

Japan Data: Official Reserve Assets, Leading Index CI, Coincident Index

Australia: AiG Perf of Construction Index, Retail Sales,Foreign Reserves

EU Data: GE-Dec Man Ords

S. Data: Jan NFP, Dec Trade, Dec Cons Cred

Supply: Nothing Scheduled

Events: RBA Statement on Monetary Policy

Speeches: Mester tonight in NYC, Constancio, Nouy (more…)

Debt Capital Markets: Think Like Fink!
February 2016      Debt Market Commentary   

Quigley’s Corner 02.03.16 Think Like Fink (as in Larry Fink!)

 

Investment Grade Corporate Debt New Issue Re-Cap – Think Like Fink

IG Primary Market Talking Points

Lipper Report/Fund Flows

IG Secondary Market Trading Lab

New Issue Volume

Rates Trading Lab

New Issues Priced-Drilling Down Into Home Depot’s $3bil, 3-part

New Issue Pipeline

M&A Pipeline-$642.985 Billion

Investment Grade Credit Spreads (by Industry/Rating)

 

It was yet another volatile day that started off with U.S. futures mixed, Europe in the red and Asia’s Nikkei and HS hit hard.  At 2pm ET the DOW staged an over 300 point rally in a session defined by a dramatic intra-day swing of 419 points on the exchange. Look, when you see these kinds of intra-day moves for no apparent reason, it’s wise to stand down and sideline one self.  How do you price a deal in this environment with any modicum of confidence and/or conviction?  Perhaps it’s why a guy like Larry Fink, CEO of the world’s largest global money manager – BlackRock – with $4.6 trillion AUM, came out yesterday to say he’s not giving out quarterly outlooks anymore.  The market and the world for that matter are so unpredictable that given outlooks that are inaccurate could result in a half trillion dollars flying out of BlackRock as we all know there are plenty of other homes for that money to be managed.

By his  penning a letter that he subsequently sent to every single CEO of the S&P 500 yesterday, Fink urged them to stop releasing quarterly estimates to the public.  He is essentially commenting on the near-term high volatility we are seeing and the trap companies are facing by missing earnings by $0.01 in our new world order.  Companies are in the game for the long haul not for a quarter. They need to release earnings for the regulators (SEC) because that’s the way it is.  I don’t disagree with him.  The world is simply too dysfunctional with myriad global event risk factors unlike any we’ve ever seen before playing out at the same time.  The system in which companies are operating today, including the extravagant regulatory oversight and with Central Banks the world over changing the rules of engagement, collectively make today’s markets a completely different operating environment.  You’ve been reading about that here for a long time.

Sometimes, USC Trojans actually do agree with UCLA Bruins. There is TREMENDOUS merit to Larry’s point.  I think we should all jump on the “Think Like Fink” bandwagon.  In my opinion, the guy is absolutely right and his suggestion would eliminate lots of pressure from the shoulders of those atop Corporate America……….the world’s engine.  

Today 4 IG Corporate issuers braved the challenging and volatile waters of our dollar DCM to print 7 deals between them totaling $4.35b with SSA assists in the form of 2 issuers, 2 tranches and another $1.7b bringing the all-in IG day total to 6 issuers, 9 tranches and $6.05b. One of today’s 4 IG Corporate deals –  Regions Financial Corp. – backed up a nickel from IPTs to the launch.  It’s a difficult environment in here that requires more than one morning of a mixed bag of economic data and technicals to decide if issuers should “go” or “stand down.”  Be prudent; be patient and DON’T GET BURNED!  The street has a memory like an elephant.

 

Recap

USTs – Treasuries closed mixed with a steeper curve in an extremely volatile day.

Stocks – S&P’s & Dow rallied while the NASDAQ lost ground.

Overseas Stocks – Poor day in Europe, Nikkei & Hang Seng. China closed mixed.

Economic – ADP employment was solid while the ISM non-manufacturing was weaker.

Overseas Economic – Positive PMI data in China & Japan. Mixed data in Europe.

Currencies – The USD was clobbered vs. all of the Big 5 (worst day in 7 years).

Commodities – Very strong session for commodities led by crude oil.

CDX IG: -0.38 to 108.27 (day range: 107.92 to 112.08)

CDX HY: -11.86 to 524.58 (day range: 522.45 to 541.81)

CDX EM: -8.55 to 378.13 (day range: 376.13 to 385.11)

-Tony Farren

 

IG Primary Market Talking Points

 

The Home Depot Inc. (NYSE:HD) added a $350mm tap of its outstanding 4.25% Senior Unsecured notes issue at the launch of today’s new two-part 5s/10s.

First Republic Bank upsized its new $25 par PerpNC5 Preferred transaction today at the launch to $150mm from $100mm and at the tightest side of guidance.

Regions Financial Corp. saw its 5-year Senior Notes new issue widen 5 bps from +190 “area” IPTs to launch at T+195.

The average spread compression across today’s 6 IG Corporate-only new issues was 11.77 bps from IPTs to the launch.

 

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

 

IG Corporate New Issuance Next Week
2/01-2/05
vs. Current
WTD – $5.75b
February 2016 vs. Current
MTD – $5.75b
Low-End Avg. $23.75b $24.21b $90.9375b $6.32b
Midpoint Avg. $24.375b $23.59b $92.1875b $6.24b
High-End Avg. $25.00b $23.00b $93.4375b $6.15b
The Low $15b $38.33b $60b $9.58b
The High $35b $16.43b $110b $5.23b

 

 

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.

 

NICs, Bid-to-Covers, Tenors and Sizes

 

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

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/01
TUES.
2/02
LAST WEEK’S
AVERAGES
AVERAGES
Week 1/18
AVERAGES
Week 1/11
AVERAGES
Week 1/04
New Issue Concessions 10.5 bps 4.5 bps 21.77 bps 14.25 bps 12.66 bps 7.62 bps
Oversubscription Rates 6.5x 3x 2.71x 1.96x 2.39x 3.09x
Tenors 5 yrs 5 yrs 7.43 yrs 5.33 yrs 7.41 yrs 6.76 yrs
Tranche Sizes $500mm $400mm $940mm $1,235mm $1,901mm $866mm

 

Lipper Report/Fund Flows

 

For the week ended January 27th , Lipper U.S. Fund Flows reported an outflow of $1.187bn from corporate investment grade funds (2016 YTD net outflow of $3.495bn) and a net inflow of $883.3m from high yield funds (2016 YTD net outflow of $4.076bn).

Over the same period, Lipper reported an outflow of $783.7m from loan participation funds (2016 YTD net outflow of $2.489bn).

Emerging Market debt funds reported a net outflow of $407.7m (2016 YTD outflow of $1.268bn).

 

IG Secondary Trading Lab

 

BAML’s IG Master Index widened 4 bps to +206 versus +202.  +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research widened 1 bp to +251 versus +250.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $19.1b on Tuesday versus $15.4b Monday and $20.8b the previous Tuesday.

The 10-DMA stands at $18.4b.

The top three most actively traded IG-rated issues were led by GE 3.25% due 8/01/2020 that evenly weighted client flows account for 100% of the volume and with one large ticket per side.

ABIBB 3.65% due 2/01/2026 finished second with two-way client and affiliate flows representing for 65% of the volume.

ABIBB 4.90% due 2/01/2046 placed third displaying 93% client and affiliate trades.

 

New Issue Volume

 

Index Open Current Change  
IG25 108.652 107.695 <0.957>
HV25 365.10 360.50 <4.60>
VIX 21.98 21.65 <0.33>  
S&P 1,903 1,912 9
DOW 16,153 16,336 183  

 

USD IG Corporates USD Total IG (+ SSA)
DAY: $4.35 bn DAY: $6.05 bn
WTD: $5.75 bn WTD: $12.134 bn
MTD: $5.75 bn MTD: $12.134 bn
YTD: $132.734 bn YTD: $182.258 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
MBA Mortgage Applications Jan. 29 —- <2.6%> 8.8% —-
ADP Employment Change January 195k 205k 257k 267k
Markit US Services PMI January 53.7 53.2 53.7 —-
Markit US Composite PMI January —- 53.2 53.7 —-
ISM Non-Manufacturing Composite January 55.1 53.5 55.3 55.8

 

Rates Trading Lab

 

Certainly the drubbing that took place in European financial stocks influenced our markets but, bigger picture, it is all tied to how things will pan out in China. The subject of the debate is how Chinese policy makers can counter capital outflows and prop up CNY as foreign currency reserves diminish, while keeping borrowing costs low enough to stimulate economic growth and facilitate debt servicing. Seems like an impossible task and it may very well be. It certainly is fueling short-selling in the currency. The implications for every global economy are profound. It will make the prospect of rates rising any time soon seem remote and pushes the FOMC out of the picture.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-262 100-27+ 101-07+ 103-31 107-13
RESISTANCE LEVEL 100-24+ 100-24 101-04 103-25 106-30+
RESISTANCE LEVEL 100-226 100-202 100-30+ 103-17+ 106-13
           
SUPPORT LEVEL 100-20 100-13+ 100-25 103-04 105-18
SUPPORT LEVEL 100-18+ 100-10+ 100-22 102-29+ 105-01
SUPPORT LEVEL 100-166 100-072 100-18 102-23 104-16

 

Tomorrow’s Calendar

 

China Data: Nothing Scheduled

Japan Data: Japan Foreign Bond Buying

Australia: NAB Business Confidence

EU Data: Nothing Scheduled

S. Data: Jan Challenger, Q4 Prod/ULC, Claims, Cons Comf, Dec Fact Ords, Dec Dur Goods

Supply Spain IL3y (€0.25-0.75bn), Spain 10,21 y (€2.5-3.5bn), France 9,10,22y (€7.5-8.5bn), Sweden 7 & 10y Buyback, (Skr4bn)

Events U.K. MPC/QIR, ECB Monthly

Speeches: Draghi, Knot, Mersch, Rosengren, Mester, Kaplan (more…)

Investment Grade Credit Investor Conundrum-Mischler Comment
February 2016      Debt Market Commentary   

Quigley’s Corner 02.02.16 Credit Investors Confused

 

Investment Grade Corporate Debt New Issue Re-Cap 

IG Primary Market Talking Points

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

New IG Issues Priced

New Issue Pipeline

M&A Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

 

 Thanks to the Export-Import Bank of Korea’s $400mm 5-year Green Bond, the IG Corporate DCM prevented another mid-week goose egg.  The tally on today’s dull market was 1 deal and a total of $400mm.  Supply was boosted by SSA issuance to the tune of 3 issuers, 3 tranches and $4.68b bringing the all-in IG day total to 4 prints and $5.084b.  Why?  Simple. Oil was hammered again, down 5% this morning and off 4% at noon to close the session $1.73 or down <5.47%>.  The eight major European exchanges closed the session down an average 2.21%. DOW futures were down 125 pointing to a much lower open after which it nose-dived more than 200 points.  It was <258> at mid-day and closed <296>.  Picking up on yesterday’s “QC” in which I discussed the RRG functionality that showed a rotation out of financials and energy and into defensive sectors namely Utilities, Telecoms and Consumer Staples, markets continued that trend today. The VIX rose 2.05 or 10.26% to close at 22.03 vs. 19.98.  The S&P lost 36. CDXIG 525 widened 4.63 bps.

The T10 is yielding 1.85% a first dating back to April 2015. At what point do UST yields begin to entice issuers despite recent spread widening.

 

With global growth slowing and negative rates in the EU and now Japan, once we do eventually see decent enough market tone in which to price new deals, both large and small investors will flock in unprecedented volumes into higher yielding and safer IG credits.  It WILL happen we just need to see signs of stability and that, as we’ve been witnessing, has become a daily challenge and why one of the Best and Brightest of the Best and the Brightest wrote in response to last Friday’s syndicate forecast poll……”Ron, I can honestly say I have absolutely no idea.”  In markets such as these, that is a very understandable reply. We have currently priced 5.89% of this week’s syndicate midpoint average forecast or $1.4b vs. $23.75b.

 

IG Primary Market Talking Points

 

  • The average spread compression across today’s 1 IG Corporate-only new issues was 17.50 bps from IPTs to the launch.

 

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

 

IG Corporate New Issuance Next Week
2/01-2/05
vs. Current
WTD – $1.40b
February 2016 vs. Current
MTD – $1.40b
Low-End Avg. $23.75b $5.89b $90.9375b $1.54b
Midpoint Avg. $24.375b $5.74b $92.1875b $1.52b
High-End Avg. $25.00b $5.60b $93.4375b $1.50b
The Low $15b $9.33b $60b 2.33b
The High $35b $4.00b $110b $1.27b

 

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.

 

NICs, Bid-to-Covers, Tenors and Sizes

 

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

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/01
LAST WEEK’S
AVERAGES
AVERAGES
Week 1/18
AVERAGES
Week 1/11
AVERAGES
Week 1/04
New Issue Concessions 10.5 bps 21.77 bps 14.25 bps 12.66 bps 7.62 bps
Oversubscription Rates 6.5x 2.71x 1.96x 2.39x 3.09x
Tenors 5 yrs 7.43 yrs 5.33 yrs 7.41 yrs 6.76 yrs
Tranche Sizes $500mm $940mm $1,235mm $1,901mm $866mm

 

Lipper Report/Fund Flows

 

For the week ended January 27th , Lipper U.S. Fund Flows reported an outflow of $1.187bn from corporate investment grade funds (2016 YTD net outflow of $3.495bn) and a net inflow of $883.3m from high yield funds (2016 YTD net outflow of $4.076bn).

Over the same period, Lipper reported an outflow of $783.7m from loan participation funds (2016 YTD net outflow of $2.489bn).

Emerging Market debt funds reported a net outflow of $407.7m (2016 YTD outflow of $1.268bn).

 

IG Secondary Trading Lab

 

BAML’s IG Master Index was unchanged at +202.  +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research widened 2 bps to +250 versus +248.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $15.4b on Monday versus $19.4b Friday and $14b the previous Monday.

The 10-DMA stands at $18b.

The top three most actively traded IG-rated issues were led by T 4.125% due 2/17/2026 that saw client and affiliate flows account for 81% of the volume and with client purchases 1.5-times sales.

ABIBB 4.90% due 2/01/2046 finished second with two-way client and affiliate flows representing for 70% of the volume.

T 5.65% due 2/15/2047 placed third displaying 68% client and affiliate trades.

 

New Issue Volume

 

Index Open Current Change
IG25 104.02 108.652 4.632
HV25 347.76 365.16 17.40
VIX 19.98 22.03 2.05
S&P 1,939 1,903 <36>
DOW 16,449 16,153 <296>  

 

USD IG Corporates USD Total IG (+ SSA)
DAY: $1.40 bn DAY: $5.084 bn
WTD: $1.40 bn WTD: $6.084 bn
MTD: $1.40 bn MTD: $6.084 bn
YTD: $128.384 bn YTD: $176.208 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
ISM New York January —- 54.6 62.0 —-
IBD/TIPP Economic Optimism February 47.6 47.8 47.3 —-
Wards Domestic Vehicle Sales January 13.70m 13.79m 13.46m —-
Wards Total Vehicle Sales January 17.30m 17.46m 17.22m —-

 

Rates Trading Lab

 

Things feel pretty bad right now, but it’s still important to keep things in context. The levels we are at are all significant: 1.86 in 10yrs, S&P 1900, CLH6 $30. However, the risk markets lack sponsorship and there are some large bets being placed in vol space banking on (or hedging) continued pressure in them (VIX March 30/40 call spread traded 30k all day) {VIX Index GP <GO>} Tech guys point to this level in TY (130) as an objective, but right now there is no reason to sell anything because demand is there. We all know that can change in a heartbeat, and can also be exacerbated by the fact that there aren’t a lot of shorts left in the market, so I would be very cautious if I was long here. Earlier today, there was a piece I sent out examining the parallels to Jan 2015. However, while central banks rode to the rescue then, it remains uncertain how much firepower they have left and, more importantly, how they are going to use it. Still would like to buy a pullback, though.

-Jim Levenson

 

Recap

 

USTs – Huge rally for Treasurys as risk assets sold off hard.

Stocks – Terrible day in the U.S. & Europe. Nikkei & HS closed red and China rallied.

Economic – Light day in the U.S. U.S. employment data tomorrow and Friday.

Currencies – Mixed session for USD vs. Big 5 & DXY Index closed with a small loss.

Commodities – Crude oil closed below 30 after trading as high as 34.82 last week.

CDX IG: +4.58 to 108.60

CDX HY: +26.60 to 536.66

CDX EM: +16.25 to 386.68

-Tony Farren

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-226 100-21+ 101-11+ 104-08 108-21
RESISTANCE LEVEL 100-216 100-186 101-06 103-31+ 108-02
RESISTANCE LEVEL 100-20 100-162 101-00+ 103-21 106-30
         
SUPPORT LEVEL 100-166 100-13 100-26+ 103-06 106-09
SUPPORT LEVEL 100-152 100-10+ 100-22+ 102-31+ 105-29
SUPPORT LEVEL 100-13+ 100-08+ 100-18 102-23+ 105-17+

 

Tomorrow’s Calendar

 

China Data: Caixin China PMI Services/Composite

Japan Data: Nikkei Japan PMI Services/Composite, Consumer Confidence Index

Australia: AiG Perf of Services Index, Trade Balance, Building Approval

EU Data: EU-Jan Services PMI, Dec Ret Sales

S. Data: U.K. Jan Services PMI

Supply: German 5y, U.K. Buyback (£1.4bn 7-15y)

Events: ECB 7d$

Speeches: Kuroda (more…)

Mischler Fixed Income Forecast and Comments: Let Economists Forecast The Weather?
January 2015      Debt Market Commentary   

Quigley’s Corner 01.26.15 : Should We Let Economists Forecast The Weather??

  • Forecasting the Weather vs. Forecast of New Home Data
  • Investment Grade New Issue Re-Cap
  • The WTD and MTD Pace of IG Corporate New Issue Volume vs. Syndicate Forecasts
  • IG Primary Market Talking Points 
  • Vlad-the-Terrible downgraded by S&P
  • New Issues Priced
  • Pipeline
  • Everything Syndicate & Secondary from today’s Debt Capital Markets

Market participants in the NYC and Boston areas are immediately focused on forecasts from meteorologists instead of tomorrow’s new home sale forecasts!  As I write this, a Nor-Easter is blowing the hell out of the region with expectant snowfall of 24” to 30” in Westchester and Connecticut and 20’ to 30’ in New York City.  What are bankers and syndicate operatives to do?  Shut-down?  Postpone deals? Stay at home?  C’mon folks, capitalists don’t shiver, hang their heads or stay home (unless connected to their Bloomberg terminals)!  That said, and despite the prediction for a late afternoon wallop, the battle-experienced veterans here at Mischler did what Corporate America expects us to do.  We showed up and welcomed a busier schedule than was planned, and printed every deal in rapid fire succession by mid-afternoon.  The tally?   Glad you asked…….9 IG Corporate issuers printed 15 tranches totaling $10.4 billion.  Two SSA issuers added two prints totaling $900 million for an all-in IG total (Corps + SSA) of 11 issuers, 17 tranches and $11.3 billion of 45% of the syndicate forecasts for the entire week.  Ya gotta love it folks!

Tomorrow may indeed be a snow-out, followed by Wednesday’s FOMC Rate Decision and Friday’s GDP numbers.  All of this simply means is that Thursday should be a very heavy day for issuance.  There was no way any of today’s visitors to our IG dollar DCM were going to convince desks to push their issuance into next week because from my seat, and other syndicate seats on the street, February is shaping up to be a huge month.  I don’t want to front run the Best and the Brightest but I’m already calling for the most prolific February on record ($131billion+) in total Corporate and SSA issuance.

Please note that I will be traveling on business this Friday morning so, if it is that busy there may not be a Best & Brightest Friday edition this week.  I’ll have to work on getting February forecasts somehow.  Where there’s a will there’s a way!  I may have to take forecasts for next week and month on Thursday!  Stay tuned.

IG Primary Market Talking Points 

  • Mischler Financial Group, Inc. was an active 1.00% Co-Manager on today’s two-part 5yr FXD/FRN for Synchrony Financial
  • Mischler Financial was also a 0.5% active Co-Manager on today’s Credit Suisse (NY Branch two-part 3yr FXD/FRN
  • Penske Truck Leasing increased its 7yr Senior Unsecured Notes transaction to $900mm from $500mm
  • SVB Financial Group upsized its 10-year Senior Notes new issue to $350mm versus $300mm.
  • Average spread compression from IPTs to the launch of today’s BAML 10yr Sub Notes print was 8.93 bps

Vlad-the-Terrible downgraded by S&P

With his oligarch friends betraying his lustful and reckless pursuit of power, Vlad was dealt another blow as Western sanctions have caught up with him.  Today S&P cut Russia’s credit rating to “junk” to “BB+.  Wake up Russians and purge your system of Vlad.  He did wrong for you and his time is at hand. 

Vlad-the-Terrible is floundering and barely treading water.

The WTD and MTD Pace of IG Corporate New Issue Volume vs. Syndicate Forecasts

And now a look at how the WTD and MTD IG Corporate only (ex-SSA) new issue volume compares to the various syndicate forecasts: (more…)

Mischler Financial Adds To International Equities Team; Global Bank Trading Veteran Appointed to Senior Role for 24/6 Agency-Only Platform
July 2014      Company News, News and Information   

 Immediate News Release

Stamford, CT July 14, 2014—Mischler Financial Group (“MFG”), the minority broker-dealer and the securities industry’s oldest service-disabled-veteran-owned business enterprise (SDVBE), announced that Eric Michalisin, a sell-side industry veteran and a recognized specialist in international equities execution has joined the firm’s agency-only trading desk and has been appointed, Director, International Equities Sales/Trading. Mr. Michalisin will be based in the firm’s Stamford, CT office and work directly with Managing Director Rob Livio, who oversees the firm’s 24/6 international equities sales/trading platform.

During the 3 years immediately prior to joining Mischler, Mr. Michalisin was Director, International Equities for RBS Securities. During the 7 years prior, he was a senior member of the international equities desk for JP Morgan Chase. Mr. Michalisin began his sell-side career in 1996 as a Far East equities sales/trading specialist for Robert Fleming, Inc and remained with predecessor firm Jardine Fleming Securities throughout 2001.

Noted Joe Digiammo, Mischler’s global head of equities, “Eric’s major firm background, coupled with his unique insight to local market trading, as well as best execution for US-listed ADRs provides our institutional clients with yet another highly-experienced touch-point for those seeking to navigate global equities markets on a 24/6 basis.”

About Mischler Financial Group

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) is the oldest and largest FINRA member firm certified as a Service Disabled Veterans Business Enterprise (SDVBE). Headquartered in Newport Beach, California with regional offices in Stamford, CT, Boston, MA, Chicago, IL and Detroit, MI,the firm serves leading institutional fund managers, corporate treasurers, public plan sponsors, endowments and foundations by providing agency-only execution within the global equities and fixed income markets; new issue underwriting and syndication within the US Equity and Debt capital markets; and asset management for liquid and alternative investment strategies. The firm’s website is located at http://mischlerfinancial.com

For Additional Information:
Dean Chamberlain, CEO
Tel: 203.276.6646
Email: dchamberlain@mischlerfinancial.com

Don’t Cry For Me, Crimea; Duke Energy Deal: Powered by Diversity; Mischler Comments
March 2014      Debt Market Commentary, Recent Deals   

Quigley’s Corner 03.03.2014 –Don’t Cry For Me, Crimea; Duke Energy Deal: Powered by Diversity

My wife and I had dinner at a great Croatian Restaurant in New Rochelle on Saturday evening called Dubrovnik Restaurant.  It is the first authentic Croatian Restaurant in Westchester.   Conversation was intriguing, compelling and informative in light of events in Ukraine and Crimea and the fact that the couple with us were a Croatian woman and her Russian husband.  The grilled calamari and roasted lamb as well as exceptional white wine made in Croatia helped me to keep my mouth shut and my one good ear open as conversation turned to events in Ukraine, Crimea and the former Union of Soviet Socialist Republics.  It helped make the discussion that much more meaningful knowing one had survived the Croatian War of Independence while the other was born into the Brezhnev era and is amazed at the changes that have taken place in his homeland. As Ivan said, “to understand the Russian POV one has to understand Russia.”  He continued, “The Balkan states have all been boiling over with independence for decades.” He said, “Russians feel they are at a political phase in which an orderly transition to independence is governed and dictated by law.  Once that is upheld negotiations can take place.  However, most Russians feel this is not what happened in Ukraine” according to Ivan.  He went on to say that once an orderly political protocol was broken it antagonized anti-Ukrainian sentiment within Russia and Putin now has his reason to move troops along the borders in the event of civil war…….we are always suspect power hungry leaders masquerading under a veil of democratic independence.”  Ivan does think civil war could “likely come” knowing the psyche of his people and that it “could get very ugly”……to say the least.  It’s unfortunate to have to say it but it’s true, –  there will be a continued significant flight to quality of safe havens which means the U.S. of A.  Europe’s recovery is currently at the point we were at a couple of years ago so investors aren’t exactly sending cash into French or German banks.  The money flows into Switzerland and the U.S.  folks.

Another one of my friends/accounts is actually traveling overseas this week and is currently in the Ukraine.  Not only did I have a nice order from him but today on our Duke Energy deal but I asked him if he could find the time to scribe some impressions for me of his time in the world’s newest “hot spot.” Here’s what he wrote:  “Life here in Ukraine is “normal”. People go to their jobs, students attend their classes and people are not panicking. My wife and I arrived yesterday March 2nd  to Kiev Borispol Airport at 12pm, then we drove 30 minutes to eat in a local restaurant. People are friendly here and they don’t seem worried about the situation. After lunch in Kiev we drove to Romny, which is 3 hours to the North East side of Kiev. It was a great ride, we enjoyed the beautiful landscape and we didn’t see any signs of military at all. Here in Romny, people believe that what’s happening in Crimea is a full blown occupation, and they all also believe that Russia is trying to antagonize Ukraine into a war. All, however, believe in a peaceful resolution to the current crisis.”  This is all about Vlad folks.  He’ll antagonize….poke and prod in what is a highly sensitive situation.  It’s about secession and or civil war. Should Ukraine turn West with the EU it will automatically move the NATO alliance BMD’s along its eastern border and that much closer to Russia.  Ivan agrees 100% that Russians believe the West would never attack unprovoked BUT Vlad knows something more powerful – the waft of nearby democracy will drift deeper and deeper into the Motherland.  That’s what he doesn’t want.      

Investment Grade New Issue Re-Cap

DEFENSE! DEFENSE! DEFENSE!

Some feedback I heard from accounts today was that with expectations for more issuance ahead, they did not want to take risks with many senior participants out to day in New York due to the snowstorm that impacted some living in New Jersey.  Connecticans, however, escaped unscathed as did those on Long Isalnd and living in Manhattan!  It was also noted in the same breadth that with those seniors out, the delicate situation in the Ukraine/Crimea is too fluid to take chances and they pointed to this morning’s stock market that opened down triple digits.  They had no interest in having to mark down a position in their portfolios and thereby decided to sideline themselves for the day. What with the newest global headache, it’s no wonder we saw three utilities print four tranches today.  That’s called D-E-F-E-N-S-E and those companies timed their deals impeccably.   However, there is a considerable flight to quality taking place that I wrote about last week that is further compressing spread product.  So, it was no wonder, from my standpoint, why we saw utilities front and center in today’s session.  The end result – 6 IG Corporate issuers printed 10 tranches totaling $5.20 billion to start off March issuance. 

Word out is that tomorrow will be B-U-S-Y!!!!

Utilities “Duke” it out to light up the leaderboards

Con Edison hit the tapes first followed by Public Service Colorado but it was the two-part for Duke Energy Progress Inc. that is my featured “Deal-of-the-Day!”  Why?  Simply because my CEO and I were in Charlotte on Friday to visit with Duke Energy and lo and behold Mischler Financial Group, Inc., the nation’s largest and oldest Service Disabled Veteran broker-dealer was featured as a Co-Manager.  It’s our inaugural transaction with Duke.  That’ll earn the rights each every time!  In advance of today’s drill-down, it goes without saying that Duke Energy Progress Inc’s Treasury/Funding team is the recipient of today’s Mischler five-star salute for giving us the chance to prove ourselves.

Now to the r/v study… (more…)