Browsing articles tagged with "Mischler Financial Archives - Page 7 of 10 - Mischler Financial Group"
Twas The Eve Before the US Presidential Election and the Debt Markets Indicated..
November 2016      Debt Market Commentary   

Quigley’s Corner 11.04.16 “’ Twas the Eve Before the Election..and Debt Markets Indicated Volatility Risk … ”

“…Please be mindful that this event could give rise to volatile market conditions; consequently, there is a risk of FX and Rates markets trading in wide ranges during the period.  Voice and electronic trading desks will endeavor to operate at as close to normal levels of service as conditions allow.  With respect to electronic trading specifically, you should bear in mind that low levels of liquidity or high volatility during the period could impact bid-offer spreads, or result in potential delays in order execution…” Head of Rates Trading,  Primary Dealer/Global Investment Bank

 “QC” Call to “Get Out and Vote” next Tuesday November 8th

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

Potential Election Day Trade Volatility

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

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

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 November 2nd  

Investment Grade Corporate Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Your humble fixed income servant already voted in my home state of Connecticut via absentee ballot two weeks ago, as I would not have made it in time to cast my ballot traveling back from Phoenix on Election Day.  Each of us understands what a contentious election this one is.  Whoever floats your boat please just get out and cast yours on Tuesday the 8th or hopefully you sent in your ballot in your home state. If you do not vote you do not have a right to complain.  It’s not the voting that is democracy rather it’s the counting.  SO, GET OUT AND VOTE – IT’S A CIVIC SACRAMENT! For those of us blessed enough to have been called to citizenship in a country in which we govern ourselves by choosing our own leaders, voting is one of the duties of our vocation. Enough said.

Sunrise and sunset will be about 1 hour earlier on Nov 6, 2016 than the day before. There will be more light in the morning. Thank Goodness!

Investment Grade New Issue Re-Cap

Bank of America was the sole visitor to today’s IG dollar DCM printing a $1bn 4NC3 Senior Notes new issue due 11/09/2020.  The “Green Bond” is callable after 3 years on 11/09/2019 at par.  BAML was the sole book runner.  Proceeds from the transaction will be used to fund renewable energy projects including the financings of or investments in equipment and systems that facilitate the use of energy from renewable sources such as solar, wind and geothermal energy.

Please continue through the below right into the “Best & Brightest’s” IG Corporate new issue supply forecasts for next week from the street’s top syndicate gurus.  I have all their numbers and thoughts about next week’s Election Day/Veteran’s Day influenced and shortened week waiting for you. It’s all here folks and I make it easy – I write it, I talk to all of them and conveniently deliver it to your desktop or hand held device free of charge!  I’m told it’s good and so, naturally I think it’s good but why listen to me? Wall Street Letter has awarded the “QC” it Best Broker Dealer research for three years in a row – 2014, 2015 and 2016.  What’s not to like about that? I mean really! So, relax, be informed and have yourselves a great weekend!

Global Market Recap

 

  • S. Treasuries – The 30yr lead the UST rally despite the solid Employment Report.
  • Overseas Bonds – Gilts led the core EU bond rally while Peripheral sold off.
  • Stocks – U.S. stocks with small losses at 3:45pm. Bad day for Nikkei & Europe.
  • Economic – The U.S. Employment Report was solid. The trade balance improved.
  • Currencies – USD lost vs. Euro & Pound but had a small gain vs. the Yen, CAD & AUD.
  • Commodities – The crude oil sell off continued. Gold was unchanged.
  • CDX IG: +0.15 to 80.85
  • CDX HY: -2.52 to 433.56
  • CDX EM: -2.76 to 250.86

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 23 deals that printed, 11 tightened versus NIP for a 00% improvement rate while only 8 widened (35.00%) 4 were trading flat (17.00%).
  • For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue was 10.00 bps.
  • BAML’s IG Master Index widened 1 bp to +141 vs. +140.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +135.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +186 vs. +185.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.9b on Thursday versus $17.5b Wednesday and $20.3b the previous Thursday.
  • The 10-DMA stands at $16.8b.

 

Note About Potential Election Day Trade Volatility

I thank my Corporate Secondary trader, Annie Bonner for the following prescient note that she sent around today and that definitely has a place in the “QC”.
It is self-explanatory:

As we saw with Brexit, dealers are sending out notices to prep for Election Day markets.

 

For example, from one Primary Dealer wrote:

“……….Please be mindful that this event could give rise to volatile market conditions; consequently, there is a risk of FX and Rates markets trading in wide ranges during the period.  Voice and electronic trading desks will endeavor to operate at as close to normal levels of service as conditions allow.  With respect to electronic trading specifically, you should bear in mind that low levels of liquidity or high volatility during the period could impact bid-offer spreads, or result in potential delays in order execution.”

 

As Annie concluded, “We’ll probably be seeing more of these today & Monday.”

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

 

IG Corporate New Issuance This Week
10/31-11/04
vs. Current
WTD – $11.791b
November 2016 vs. Current
MTD – $7.466b
Low-End Avg. $24.26b 48.60% $90.70b 8.23%
Midpoint Avg. $25.13b 46.92% $92.11b 8.11%
High-End Avg. $26.00b 45.35% $93.52b 7.98%
The Low $15b 78.61% $71b 10.52%
The High $35b 33.69% $110b 6.79%

 

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

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  22 of those participants are among 2016’s top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  The participating desks represent 80.93% 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 the third consecutive year! That’s 2014, 2015 and 2016 !!  More importantly, however, you are helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

The question posed to the “Best and the Brightest” early this morning was prefaced with the following:

If anyone says the U.S. Presidential election is not important in our inextricably linked new world order just point to our IG dollar DCM this week in which we managed to price a mere 42% of this week’s syndicate midpoint average forecast or $10.79b vs. $25.13b.

Here are some impactful events coming up next week that should keep a damper on issuance……among other things:

  • Mon thru Wed. 11/7-11/09 – EEI’s 51st Annual Financial Conference in Phoenix taking Utility issuers off the radar.
  • Tuesday, 11/08 – U.S. Presidential Election
  • Friday, 11/11 – Veteran’s Day (Federal Holiday, many leave work a bit earlier the day before – Thursday 11/10).


Here are this week’s five IG Corporate-only key primary market driver averages:

 

  • NICS:  <0.92> bps
  • Oversubscription Rates: 3.33x
  • Tenors:  11.33 years
  • Tranche Sizes: $469mm
  • Spread Compression from IPTs to the Launch: <178.26> bps

Versus last Friday’s key primary market driver averages, NICs widened a mere 0.06 bps to <0.92> vs. <0.98> bps while over subscription or bid-to-cover rates grew 0.72x to 3.33x vs. 2.61x last week.  Average tenors moved way out 3.62 years to 11.33 yrs vs. 7.71yrs while tranche sizes decreased by a lot – by $357mm to $469mm vs. $826mm.  

Standard and Poor’s Investment Grade Composite Spreads widened 5 bps to +186 versus last Friday’s +181.

For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).

Week-on-week, BAML’s IG Master Index widened 4 bps to +141 vs. last Friday’s +137 close.  Spreads across the four IG asset classes also widened 3.75 bps to 32 vs. 28.25 as measured against their post-Crisis lows.  Looking at the 19 major industry sectors, spreads widened 4.58 bps to 37.42 vs. 32.84 also against their post-Crisis lows.
Please let me know your number and most importantly your thoughts for next week’s IG Corporate issuance.  

……and here are their formidable responses:

(this section available exclusively to Quigley’s Corner distribution list recipients)

 

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

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

 

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

Please note: The below table averages for this week includes today’s BAML 4NC3 new issue. As a result, the numbers differ ever so slightly from the averages in my question to the “Best & Brightest” which was written and sent at the open this morning.  Thanks! -RQ

Here is this week’s day-by-day re-cap of the five key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/31
TUES.
11/01
WED.
11/02
TH.
11/03
FRI.
11/04
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
New Issue Concessions 0.50 bps <2.29> bps 3 bps <3.75> bps flat or 0 bps <0.87> bps <0.51> bps 3.31 bps 1.87 bps
Oversubscription Rates 2.99x 2.90x 2.73x 4.80x 3.25x 3.32x 2.61x 3.05x 3.28x
Tenors 8.39 yrs 11.93 yrs 11.30 yrs 15.50 yrs 4 yrs 11.33 yrs 7.77 yrs 9.16 yrs 11.51 yrs
Tranche Sizes $721mm $379mm $393mm $370mm $1,000mm $491mm $818mm $1,137mm $640mm
Avg. Spd. Compression
IPTs to Launch
<14.21> bps <17.71> bps <22.50> bps <22.20> bps <10> bps <17.87> yrs <17.42> bps    

 

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

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 23 deals that printed, 11 tightened versus NIP for a 48.00% improvement rate while only 8 widened (35.00%) 4 were trading flat (17.00%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom.  Thanks! –RQ

 

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED TRADING
Johns Hopkins University Aa3/AA- 3.837% 5/15/2046 500 +135a N/A +123 +123 127/125
Principal Finc’l. Group Inc. Baa1/BBB+ 3.10% 11/15/2026 350 +160a +130-135 +130 +130 129/127
Principal Finc’l. Group Inc. Baa1/BBB+ 4.30% 11/15/2046 300 +200a +170-175 +170 +170 165/162
PSE&G Baa2/BBB 1.60% 11/15/2019 400 +85-90 +70a (+/-2) +68 +68 66/64
PSE&G Baa2/BBB 2.00% 11/15/2021 300 +95-100 +80a (+/-2) +78 +78 76/74
Bank of Nova Scotia Aa3/A+ FRN 11/01/2018 166 N/A N/A N/A 3mL+45 3mL+47/45
Children’s Hosp. Med. Ctr. Aa2/AA 2.853% 11/15/2026 100 N/A N/A N/A +105 106/104
Danske Bank A/S A2/A FRN 11/10/2020 200 N/A N/A N/A 3mL+73 3mL+73/70
Occidental Petroleum A3/A 3.00% 2/15/2027 750 +145a +130a (+/-5) +125 +125 122/120
Occidental Petroleum A3/A 4.10% 2/15/2047 750 +180a +160a (+/-5) +155 +155 152/150
EQT Midstream Partners LP BBB-/BBB- 4.125% 12/01/2026 500 +262.5a +245a (+/-5) +240 +240 240/238
Kimco Realty Baa1/BBB+ 2.70% 3/01/2024 400 +130-135 +120a (+/-3) +117 +117 118/116
Kimco Realty Baa1/BBB+ 4.125% 12/01/2046 350 +180-185 +165a (+/-5) +160 +160 159/157
Lazard Group LLC A-/BBB+ 3.625% 3/01/2027 300 +200a +190a (+/-5) +185 +185 189/187
Rogers Communications Inc. Baa1/BBB+ 2.90% 11/15/2026 500 +125a N/A +125 +125 130/128
Ryder System Inc. Baa1/A- 2.25% 9/01/2021 300 +120-125 +100a (+/-3) +97 +97 97/95
Southwest Airlines Co. Baa1/BBB+ 3.00% 11/15/2026 300 +mid-100s/+150a +130a (+/-3) +127 +127 128/126
Axis Capital Holdings Ltd. Baa3/BBB 5.50% PerpNC5 550 N/A N/A5.50-5.625%a
+5.5625%a
5.50% $25 Pfd $25.75/.80
CMS Energy Corp. Baa2/BBB 2.95% 2/15/2027 275 +135a +120a (+/-5) +115 +115 115/113
Illinois Tool Works A2/A+ 2.65% 11/15/2026 1,000 +95a +85 the # +85 +85 80/78
Proctor & Gamble Co. Aa3/AA- 1.70% 11/03/2021 875 +55a +45a (+/-2) +43 +43 42/40
Proctor & Gamble Co. Aa3/AA- 2.45% 11/03/2026 875 +75a +65a (+/-2) +63 +63 62/60
Wabtec Baa3/BBB 3.45% 11/15/2026 750 +187.5a +165a (+/-2.5) +162.5 +162.5 158/155

 

Indexes and New Issue Volume

Please note that Index levels are as of 4:15pm ET

Index Open Current Change  
LUACOAS 1.35 1.35 0  
IG27 80.702 80.967 0.265
HV27 179.245 180.23 0.985
VIX 22.08 22.91 0.83  
S&P 2,088 2,085 <3>
DOW 17,930 17,888 <42>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $1.00 bn DAY: $1.00 bn
WTD: $11.791 bn WTD: $11.791 bn
MTD: $7.466 bn MTD: $7.466 bn
YTD: $1,176.247 bn YTD: $1,506.131 bn

 

Lipper Report/Fund Flows – Week ending November 2nd  

     

  • For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).
  • Over the same period, Lipper reported a net inflow of $146.468m into Loan Participation Funds (2016 YTD net outflow of $1.518b).
  • Emerging Market debt funds reported a net outflow of $345.7m (2016 YTD inflow of $7.337b).

 

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are an average 32.00 bps wider versus their post-Crisis lows!

 

ASSET CLASS 11/03 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 1-Day Change 10-Day Trend PC
low
IG Avg. 141 140 139 138 137 136 136 135 135 135 +1 +6 106
“AAA” 83 83 82 82 80 80 80 78 78 77 0 +6 50
“AA” 87 87 86 86 85 85 84 83 83 83 0 +4 63
“A” 112 112 111 111 110 109 109 108 108 108 0 +4 81
“BBB” 182 181 180 178 176 175 176 175 174 175 +1 +7 142
IG vs. HY 374 375 366 353 339 333 330 325 325 327 <1> +47 228

 

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:

Spreads across the major industry sectors are an average 37.42 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 11/03 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 1-Day Change 10-Day Trend PC
low
Automotive 120 122 121 120 119 119 119 117 117 117 <2> +3 67
Banking 130 130 129 129 128 127 128 127 127 127 0 +3 98
Basic Industry 181 181 180 179 179 178 179 177 177 179 0 +2 143
Cap Goods 106 106 105 105 103 102 102 101 101 101 0 +5 84
Cons. Prod. 112 112 111 110 109 108 108 107 105 105 0 +7 85
Energy 183 183 180 179 177 176 176 175 174 175 0 +8 133
Financials 166 165 164 162 160 159 160 160 160 160 +1 +6 97
Healthcare 124 123 122 120 118 117 117 115 114 114 +1 +10 83
Industrials 143 143 141 140 139 138 138 137 136 136 0 +7 109
Insurance 154 153 153 153 153 153 153 154 154 155 +1 <1> 120
Leisure 138 138 138 138 138 137 138 137 136 135 0 +3 115
Media 166 165 164 162 160 160 159 157 157 157 +1 +9 113
Real Estate 146 146 146 146 146 146 146 147 147 147 0 <1> 112
Retail 123 122 121 120 118 117 117 116 115 114 +1 +9 92
Services 130 130 129 129 129 128 128 128 128 128 0 +2 120
Technology 120 120 119 117 115 114 115 113 112 112 0 +8 76
Telecom 172 172 170 168 167 165 165 163 162 161 0 +11 122
Transportation 140 139 138 137 137 136 136 136 136 136 +1 +4 109
Utility 139 138 138 138 137 136 136 136 136 137 +1 +2 104

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Trade Balance September <$38.0b> <$36.4b> <$40.7b> <$40.5b>
Change in Nonfarm Payrolls October 173k 161k 156k 191k
Two-Month Payroll Net Revisions October —- 44k <7k> —-
Change in Private Payrolls October 170k 142k 167k 188k
Change in Manufacturing Payrolls October <4k> <9k> <13k> —-
Unemployment Rate October 4.9% 4.9% 5.0% —-
Average Hourly Earnings MoM October 0.3% 0.4% 0.2% 0.3%
Average Hourly Earnings YoY October 2.6% 2.8% 2.6% 2.7%
Average Weekly Hours All Employees October 34.4 34.4 34.4 —-
Change in Household Employment October —- <43.0> 354.0 —-
Labor Force Participation Rate October —- 62.8% 62.9% —-
Underemployment Rate October —- 9.5% 9.7% —-

  (more…)

IG Corporate Spreads Widen as Clinton-Trump Spread Tightens
November 2016      Debt Market Commentary   

Quigley’s Corner 11.03.16 : IG Corporate Spreads Widen as Presidential Election Spread Narrows

 

Investment Grade New Issue Re-Cap  : Gaming Spreads as Presidential Polls Yield Uncertainty

Global Market Recap

BOE Rate Decision Talking Points

IG Primary & Secondary Market Talking Points

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 26th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

With only five days detached from what could be the single most pivotal U.S. Presidential election in our nation’s history, definitely the most contentious, the slow pace of our IG DCM reflects just how critical this election is to the world.  4 IG Corporate issuers priced 5 tranches between them totaling only $1.85b.  The IG Corporate WTD total is now only 42% of this week’s syndicate midpoint average forecast or $10.791b vs. $25.13b.

 

Global Market Recap

 

  • S. Treasuries – USTs & European bonds closed mixed & steeper. JGB’s were closed.
  • Stocks – S&P & NASDAQ posted their 8th losing session in a row.
  • Overseas Stocks – Europe & Asia closed mixed.
  • Economic – Today’s U.S. data summed up the economic recovery: Some good & some bad.
  • Currencies – 3rd losing session in a row for DXY Index. Big rally for the Pound.
  • Commodities – How low can crude oil go? Gold gave back some of its recent gains.
  • CDX IG: -0.28 to 79.69
  • CDX HY: -0.51 to 431.75
  • CDX EM: -2.06 to 251.58

CDX spreads mover wider after 3pm

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

-Tony Farren

 

BOE Rate Decision Talking Points

 

  • BOE keeps benchmark interest rate at 0.25%; vote 9-0.
  • Keeps gilt-purchase program at £435 bn; vote 9-0.
  • Keeps corporate-bond plan at £10 bn; vote 9-0.
  • MPC drops signal that another rate cut likely this year.
  • Policy can respond “in either direction” to outlook change.
  • Persistent uncertainty on EU deal to weigh on U.K. Economy.
  • Says MPC has limited tolerance for above-target inflation.
  • Sees inflation breaching 2% target in Q2 2017.
  • Sees inflation staying above 2% to end of forecast period.
  • Raises 2017 CPI forecast to 2.7% vs. 2%; 2018 to 2.7% vs. 2.4%.
  • Says medium-term slowdown due to CPI squeeze on consumers.
  • Sees 4Q GDP at 0.4%, raises 2016 forecast to 2.2%.
  • Raises 2017 GDP to 1.4% vs. 0.8%; cuts 2018 to 1.5% vs. 1.8%.
  • Says near-term outlook stronger, medium-term weaker.
  • GBP impact on CPI temporary, policy offset may have costs.
  • GBP impact on CPI “adversely affected” MPC trade-off.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate-only new issues that displayed price evolution was 22.20 bps.
  • BAML’s IG Master Index widened 1 bp to +140 vs. +139.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bps to +135 from +134.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 2 bps to +185 vs. +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.5b on Wednesday versus $19.8b Tuesday and $18.9b the previous Wednesday.
  • The 10-DMA stands at $16.9b.

 

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

 

IG Corporate New Issuance This Week
10/31-11/04
vs. Current
WTD – $10.791b
November 2016 vs. Current
MTD – $6.466b
Low-End Avg. $24.26b 44.48% $90.70b 7.13%
Midpoint Avg. $25.13b 42.94% $92.11b 7.02%
High-End Avg. $26.00b 41.50% $93.52b 6.91%
The Low $15b 71.94% $71b 9.11%
The High $35b 30.83% $110b 5.88%

 

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

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

 

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

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/31
TUES.
11/01
WED.
11/02
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
New Issue Concessions 0.50 bps <2.29> bps 3 bps <0.51> bps 3.31 bps 1.87 bps 4.36 bps
Oversubscription Rates 2.99x 2.90x 2.73x 2.61x 3.05x 3.28x 4.20x
Tenors 8.39 yrs 11.93 yrs 11.30 yrs 7.77 yrs 9.16 yrs 11.51 yrs 12.16 yrs
Tranche Sizes $721mm $379mm $393mm $818mm $1,137mm $640mm $523mm
Avg. Spd. Compression
IPTs to Launch
<14.21> bps <17.71> bps <22.50> bps <17.42> bps      

 

New Issues Priced

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

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
Johns Hopkins University Aa3/AA- 3.837% 5/15/2046 500 +135a N/A +123 +123 JEFF/JPM
Principal Finc’l. Group Inc. Baa1/BBB+ 3.10% 11/15/2026 350 +160a +130-135 +130 +130 CITI/CS/HSBC
Principal Finc’l. Group Inc. Baa1/BBB+ 4.30% 11/15/2046 300 +200a +170-175 +170 +170 CITI/CS/HSBC
PSE&G Baa2/BBB 1.60% 11/15/2019 400 +85-90 +70a (+/-2) +68 +68 BARC/JPM/RBC
PSE&G Baa2/BBB 2.00% 11/15/2021 300 +95-100 +80a (+/-2) +78 +78 BARC/JPM/RBC

 

Indexes and New Issue Volume

Please note that Index levels are as of 4:45pm ET.

Index Open Current Change  
LUACOAS 1.35 1.35 0  
IG27 79.977 80.702 0.725
HV27 178.86 179.72 0.86
VIX 19.32 22.08 2.76  
S&P 2,097 2,088 <9>
DOW 17,959 17,930 <29>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $1.85 bn DAY: $1.85 bn
WTD: $10.791 bn WTD: $10.791 bn
MTD: $6.466 bn MTD: $6.466 bn
YTD: $1,175.247 bn YTD: $1,505.131 bn

 

Lipper Report/Fund Flows – Week ending October 26th  

     

  • For the week ended October 26th, Lipper U.S. Fund Flows reported an inflow of $1.701b into Corporate Investment Grade Funds (2016 YTD net inflow of $42.787b) and a net outflow of $48.26m from High Yield Funds (2016 YTD net inflow of $11.070b).
  • Over the same period, Lipper reported a net inflow of $290.611m into Loan Participation Funds (2016 YTD net outflow of $1.665b).
  • Emerging Market debt funds reported a net inflow of $390.9m (2016 YTD inflow of $7.723b).

 

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are an average 31.75 bps wider versus their post-Crisis lows!

 

ASSET CLASS 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 10/20 1-Day Change 10-Day Trend PC
low
IG Avg. 140 139 138 137 136 136 135 135 135 135 +1 +5 106
“AAA” 83 82 82 80 80 80 78 78 77 76 +1 +7 50
“AA” 87 86 86 85 85 84 83 83 83 83 +1 +4 63
“A” 112 111 111 110 109 109 108 108 108 108 +1 +4 81
“BBB” 181 180 178 176 175 176 175 174 175 174 +1 +7 142
IG vs. HY 375 366 353 339 333 330 325 325 327 327 +9 +48 228

 

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:  (more…)

Corporate Debt Market & The Week Before the US Presidential Election; Mischler Comment
October 2016      Debt Market Commentary   

Quigley’s Corner 10.28.16-Corporate Debt Market & The Week Before the US Presidential Election

 

Investment Grade Corporate Debt New Issue Re-Cap & Look to the Last Full Week before the Presidential Election

Global Market Recap

IG Primary & Secondary Market Talking Points

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

“Knowing the Past for the Future” – A Look at a Decade’s Worth of November IG Corporate and SSA Issuance

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

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

Investment Grade Credit Spreads

Lipper Funds Flow

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Happy Friday everyone!  The big news today is the FBI’s announcement that it is “re-opening” its probe into the Hilary Clinton private e-mail controversy.  Oh my.  This election could go down to the wire folks!  Or, FBI Director Jim Comey might have found himself boxed into a corner when he issued the late Friday email to Congress, without first determining whether the emails in question are anything new, or whether the only ‘new update’ that Comey shared is that FBI agents determined that HRC assistant Huma Abedin’s email account was installed on a device shared with her former husband and suspected pedophile, Anthony Weiner. Meaning: Nothing really new! A bunch of jerks have in theory, been able to see those emails. But, WikiLeaks already published them! Just another 9th inning curve ball that every media outlet will swing at in the course of the 2016 US Presidential elections!

I think we see $30bn next week. I do have a strong tendency to err to the upside.  The next two weeks “could be” challenging thanks to these following obstacles that can typically dampen issuance:

 

  • Tuesday, 11/01 – BoJ
  • Wednesday, 11/02 – FOMC
  • Thursday, 11/03 – BOE
  • Friday, 11/04 – NFP
  • Mon thru Wed. 11/7-11/09 – EEI’s 51st Annual Financial Conference in Phoenix taking Utility issuers off the radar.
  • Tuesday, 11/08 – U.S. Presidential Election
  • Friday, 11/11 – Veteran’s Day (Federal Holiday, many leave work a bit earlier the day before – Thursday 11/10).

However, I would counter that next week also happens to be the LAST full week before the U.S. Presidential election so issuers may very well want to print before then. Despite all the hoopla about the massive rates sell-off, I simply remind you that we are at May levels. Lest we forget May 2016 is the single most prolific month of IG issuance in history at $213.4b in all-in IG Corporate plus SSA issuance. So, don’t be surprised.

Due to the election, however, ranges could be….well…..VERY rangy! I still think we get $110b in IG Corporate issuance in November.

We had one well-telegraphed $500mm tap of Banco de Bogota’s 6.25% 10-year due 5/12/2026 144a Subordinated Notes price.  The amount added to our already record October volume for all-in IG issuance. For all the pertinent data points, please scroll down to the question I posed of the 23 participating top shelf, top gun syndicate desks.  In that question lay all the gold nugget technical tidbits you want and need to know about this week’s primary markets and the potential hurdles that lay ahead for next week.  Following that, of course, are the very thoughtful responses that I am grateful to have received today from those top tier syndicate operatives.  They took their time today with nice soundbites so remember it’s not only about their forecasts for next week and for the month of November, rather it’s about their thoughts.  I also take a look at the past decade of November IG new issuance so that you can put the next week’s and month’s numbers into the proper historical context.  Of course I have today’s Global Market Re-cap first just below followed by secondary and primary market talking points, the “at-a-glance” IG issuance WTD and MTD volume table and then the “Best and the Brightest” that the world of syndicate has to offer in their own words.

So, relax, it’s Friday!  Kick up your feet, read through the “QC” or as CFO of Ford Credit, Marion Harris often does, print it out, staple it together and read it at home at your leisure.  It’s all here; it’s all for you AND the guy-in-the-corner does for free………What’s not to like about that!

 

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

Have a great weekend folks!

Ron  Quigley, Managing Director & Head of Fixed Income Syndicate

 

Global Market Recap

 

  • S. Treasuries – USTs & JGB’s mixed & steeper. Core Europe mixed & Peripherals lost.
  • Stocks – U.S. red at 3:15pm (small).
  • Overseas Stocks – Europe closed mixed, Nikkei higher & China & HS closed red.
  • Economic – GDP printed at its highest level since Q3 2014.
  • Overseas Economic – Full in Japan & Europe with more good than bad with low inflation.
  • Currencies – USD lost ground vs. the Euro, Pound & Yen. DXY Index had a poor day.
  • Commodities – CRB, crude oil & wheat down while gold, copper & silver were up.
  • CDX IG: +1.27 to 77.53
  • CDX HY: +6.27 to 418.11
  • CDX EM: +6.47 to 237.56
  • HY & EM have struggled the last 2 days

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • For the week ended October 26th, Lipper U.S. Fund Flows reported an inflow of $1.701b into Corporate Investment Grade Funds (2016 YTD net inflow of $42.787b) and a net outflow of $48.26m from High Yield Funds (2016 YTD net inflow of $11.070b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue was 30.00 bps.
  • BAML’s IG Master Index was unchanged at +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +131.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +181.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.3b on Thursday versus $18.9b Wednesday and $16.5b the previous Thursday.
  • The 10-DMA stands at $16.2b.

 

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

 

IG Corporate New Issuance This Week
10/24-10/28
vs. Current
WTD – $34.375b
October 2016 vs. Current
MTD – $102.97b
Low-End Avg. $24.61b 139.68% $87.83b 117.24%
Midpoint Avg. $25.48b 134.91% $88.59b 116.23%
High-End Avg. $26.35b 130.46% $89.35b 115.24%
The Low $15b 229.17% $75b 137.29%
The High $35b 98.21% $125b 82.38%

 

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

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  21 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  The participating desks represent 80.96% 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.

The question posed to the “Best and the Brightest” early this morning was prefaced with the following note to 30+ book-running fixed income syndicate gurus throughout Wall Street:

We some-what quietly experienced the highest volume October on record this week for all-in IG Corporate and SSA supply.  If Monday is a decent volume day, October 2016 will become the 10th busiest month of all-time for all-in issuance. WTD, we entered today’s Friday session 33% above the syndicate midpoint average estimate for the week or $33.875b vs. 25.48b.  We also eclipsed the MTD syndicate forecast by over 15% or $102.47b vs. $88.59b. Those are both for IG Corporates only. This week’s M&A calendar grew by $132.4b thanks to Qualcomm’s $47b acquisition of NXP and AT&T’s mega $85.4b purchase of Time Warner. Both will meet regulatory scrutiny but that’s a lot of debt just between those two.  The 14 highest profile M&A deals on the calendar now total $323.3b.  Debt anyone? Next week looks like it could be sizeable, but there are some Central Bank hurdles to get over.  Here they are:

 

  • Tuesday, 11/01 – BoJ
  • Wednesday, 11/02 – FOMC
  • Thursday, 11/03 – BOE
  • Friday, 11/04 – NFP
  • Mon thru Wed. 11/7-11/09 – EEI’s 51st Annual Financial Conference in Phoenix taking Utility issuers off the radar.
  • Tuesday, 11/08 – U.S. Presidential Election
  • Friday, 11/11 – Veteran’s Day (Federal Holiday, many leave work a bit earlier the day before – Thursday 11/10).


Here are this week’s IG Corporate-only key primary market driver averages:

 

  • NICS:  <0.98> bps
  • Oversubscription Rates: 2.61x
  • Tenors:  7.71 years
  • Tranche Sizes: $826mm
  • Average Spread Compression from IPTs to the Launch: <17.12> bps

 

Versus last Friday’s key primary market driver averages, NICs tightened a resounding 4.29 bps to <0.98> vs. 3.31 bps; over subscription or bid-to-cover rates narrowed by 0.44x to 2.61x vs. 3.05x last week.  Average tenors shortened by 1.45 years to 7.71 yrs vs. 9.16yrs while tranche sizes decreased a hefty $311mm to $826mm vs. $1,137mm.

For the week ended October 26th, Lipper U.S. Fund Flows reported an inflow of $1.701b into Corporate Investment Grade Funds (2016 YTD net inflow of $42.787b) and a net outflow of $48.26m from High Yield Funds (2016 YTD net inflow of $11.070b).

Week-on-week, BAML’s IG Master Index widened 1 bp to +136 vs. last Friday’s +135 close.  Spreads across the four IG asset classes also widened 1 bps to 28.25 vs. 26.25 as measured against their post-Crisis lows.  Looking at the 19 major industry sectors, spreads widened 0.73 bps to 32.84 vs.32.11 also against their post-Crisis lows.

November kicks off next Tuesday so I’d like your thoughts and numbers for BOTH November AND next week.  It’s our last full week before the Election and it should be a big one as a result.

Many thanks for your responding with projected volumes; wishing you and yours a great weekend!  -Ron”

(responses to the weekly QC survey of projected deal activity for the upcoming week are available only to QC distribution list recipients)

 

Syndicate IG Corporate-only Volume Estimates for Next Week & November

 

IG Corporate New Issuance Next Week
10/31-11/04
November 2016
Low-End Avg. $24.26b $90.70b
Midpoint Avg. $25.13b $92.11b
High-End Avg. $26.00b $93.52b
The Low $15b $71b
The High $35b $110b

 

A Look at How the Voting Brackets Broke-Out for Next Week & November

Next Week
10/03-11/04
November
1: 15-20b 1: 71b
4: 20b 1: 75-85b
5: 20-25b 2: 80b
1: 23b 4: 85b
4: 25b 1: 85-90b
2: 25-30b 1: 80-100b
4: 30b 1:90b
2: 35b 1: 85-100b
  1: 90-95b
  2: 95b
  5: 100b
  1: 100-110b
  2: 110b

 

“Knowing the Past for the Future” – A Look at a Decade’s Worth of November IG Corporate and SSA Issuance

 

  • Across the past ten years, all-in dollar-denominated IG Corporate plus SSA November new issuance averaged $95.72b.
  • Over the past five years, all-in IG November new issuance averaged $120.05b.
  • Over the past three years, all-in IG November issuance has averaged $118.51b.
  • The past three years of November saw IG Corporate only issuance average $105.74b.
  • November SSA issuance has averaged $12.77b across the last three years.

 

August
(Year)
All-in IG Issuance (bn) IG Corps
only (bn)
SSA
only (bn)
2015 110.14 102.56 7.57
2014 138.53 118.91 19.62
2013 106.86 95.75 11.11
2012 147.87 136.91 10.96
2011 96.87 77.21 19.66
2010 67.56 63.65 3.91
2009 92.05 67.53 24.52
2008 47.75 27.35 20.40
2007 58.98 50.08 8.90
2006 90.56 73.87 16.69

Note: includes TARP/TALF & FDIC insured issuance

 

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

 

Please note that the below weekly NICs and tenors, tranche sizes and average spread compression numbers differ slightly from those included in my early morning survey question to syndicate heads due to the fact that later in the day I was able to incorporate the final data from today’s Banco de Credito tap into the averages.  For that reason average weekly NICs went from <0.98> bps to <0.51> bps, etc.  Bid-to-cover rates remained unchanged. Thank you! –Ron

 

Here’s this week’s day-by-day re-cap of the five key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/24
TUES.
10/25
WED.
10/26
THUR.
10/27
FRI.
10/28
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
New Issue Concessions 2.67 bps 1.75 bps <4.36> bps <2.71> bps 15 bps <0.51> bps 3.31 bps 1.87 bps 4.36 bps
Oversubscription Rates 2.52x 2.77x 2.13x 3.08x 2.40x 2.61x 3.05x 3.28x 4.20x
Tenors 6.75 yrs 5.71 yrs 5.64 yrs 11.29 yrs 10 yrs 7.77 yrs 9.16 yrs 11.51 yrs 12.16 yrs
Tranche Sizes $985mm $700mm $964mm $656mm $500mm $818mm $1,137mm $640mm $523mm
Avg. Spd. Compression
IPTs to Launch
<15.20> bps <15.79> bps <16.05> bps <20.21> bps <30> bps <17.42> bps      

(more…)

Central Banks and Big Government; Mischler Debt Market Comment
October 2016      Debt Market Commentary   

Quigley’s Corner 10.27.16: Central Banks and Big Government

 

Investment Grade New Issue Re-Cap 

Global Market Recap

Uncle Tony on Central Banks and Big Government

IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 19th  

Investment Grade Credit Spreads (by Rating/Issuer)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Below is the opening extract from Quigley’s Corner aka “QC” Thursday October 27, 2016 distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC observations is one of three distinctive research content pieces produced by Mischler Financial Group. The QC is 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 debt new issuance and secondary 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.

 

7 IG Corporate issuers priced 13 tranches between them totaling $8.525b bringing the WTD total to $33.875b or 33% above this week’s syndicate midpoint average estimate calling for $25.48b. What’s more the MTD total is now $102.47b surpassing the October syndicate midpoint average forecast of $88.59b by over 15%. The all-in IG MTD volume is now $149.22b furthering the new all-time October issuance record for IG Corporate plus SSA supply by 20.21%.  The old October all-in record was $124.131b set in 2015.

Global Market Recap

  • S. Treasuries – USTs traded poorly & steeper but not nearly as bad as Europe.
  • Stocks – U.S. closed in the red. Europe was mixed & Asia lost ground.
  • Economic – It is not about the data right? It is all about the Central Banks.
  • Currencies – USD outperformed all of the Big 5.
  • Commodities – CRB & crude oil improved but crude remained below 50.
  • CDX IG: +0.59 to 75.93
  • CDX HY: +4.67 to 410.68
  • CDX EM: +6.47 to 237.56

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

-Tony Farren

Uncle Tony on Central Banks and Big Government

I have 3 questions for the market:

1) Are short-term or long-term rates more important to growth?

2) Has there ever been a time when higher long-term rates were better for growth than lower-long term rates?

3) Should Central Banks be advocating higher long-term rates when growth & inflation are both below target?

The Central Banks around the world are currently getting a bad rap. Central Banks are getting blamed for the low growth low inflation environment. I may not agree with all the policies of the Central Banks but at least they are trying. Where is the fiscal stimulus? If the market wants to point fingers for the current environment it should be at the governments & not the Central Banks.

 

IG Primary & Secondary Market Talking Points

 

  • PNC Financial Services Group, Inc. upsized today’s $1,000 par FXD/FRN non-cumulative PerpNC10 preferred, Series “S” to $525mm vs. $500mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 13 IG Corporate-only new issues was 20.21 bps.
  • BAML’s IG Master Index widened 1 bp to +136 vs. +135.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +131 vs. +130.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +181 vs. +180 vs. +181.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.9b on Wednesday versus $19.5b Tuesday and $18.1b the previous Wednesday.
  • The 10-DMA stands at $16b.

 

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

 

IG Corporate New Issuance This Week
10/24-10/28
vs. Current
WTD – $33.875b
October 2016 vs. Current
MTD – $102.47b
Low-End Avg. $24.61b 137.65% $87.83b 116.67%
Midpoint Avg. $25.48b 132.95% $88.59b 115.67%
High-End Avg. $26.35b 128.56% $89.35b 114.68%
The Low $15b 225.83% $75b 136.63%
The High $35b 96.79% $125b 81.98%

 

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

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

 

NICs, Bid-to-Covers, Tenors and Sizes

Please note: I always try to find ways to incrementally increase and improve the “QC” value-added proposition.  So, this evening I have added a fifth key primary market driver average to the below daily table.  The new category tracks the daily average spread compression from IPTs to the launch of each day’s IG Corporate and IG-rated preferreds when applicable. I always use that number on calls with issuers, follow-ups and in fact, on my market update calls wherein Mischler has been a joint lead.  Treasury/Funding finds it valuable as do syndicate desks and accounts.  So, there it is – yet another reason to keep reading the “QC.”

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/24
TUES.
10/25
WED.
10/26
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
New Issue Concessions 2.67 bps 1.75 bps <4.36> bps 3.31 bps 1.87 bps 4.36 bps 2.71 bps
Oversubscription Rates 2.52x 2.77x 2.13x 3.05x 3.28x 4.20x 3.52x
Tenors 6.75 yrs 5.71 yrs 5.64 yrs 9.16 yrs 11.51 yrs 12.16 yrs 10.51 yrs
Tranche Sizes $985mm $700mm $964mm $1,137mm $640mm $523mm $646mm
Avg. Spd. Compression
IPTs to Launch
<15.20> bps <15.79> bps <16.05> bps        

 

New Issues Priced

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

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
Buckeye Partners LP Baa3/BBB- 3.95% 12/01/2026 600 +250a +220a (+/-5) +215 +215 BARC/JPM/STRH/WFS
Equate Petrochemical Co. Baa2/BBB+ 3.00% 3/03/2022 1,000 MS +low 200s
+212.5
MS +212.5a MS +195 +198.8 CITI/HSBC/IMI/JPM/MIZ/MUFG
NBK/SMBC
Equate Petrochemical Co. Baa2/BBB+ 4.25% 11/03/2026 1,250 MS +hi 200s-300
or +293.75
MS +287.5a MS +270 +255.2 CITI/HSBC/IMI/JPM/MIZ/MUFG
NBK/SMBC
PNC Financial Services Baa2/BBB- 5.00% PerpNC10 525 5.125%a 5.00%a (+/-5) 5.00% 3mL+330 CITI/JPM/MS/PNC
Sirius International Group BBB/BBB- 4.60% 11/01/2026 400 +300a +285 the # +285 +285 ABC/BOCOM/CITI/HSBC/HUARONG
HSBC/JPM/SHK/TD
Trinidad Generation BBB/BBB- 5.25% 11/04/2027 600 +400a +375a (+/-12.5) +362.5 +362.5 CS/SCOT
United Technologies A3/A- FRN 11/01/2019 350 3mL+equiv 3mL+equiv 3mL+35 3mL+35 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 1.50% 11/01/2019 650 +70a +55a (+/-5) +50 +50 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 1.95% 11/01/2021 750 +80a +70a (+/-5) +65 +65 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 2.65% 11/01/2026 1.150 +105a +85a (+/-2) +83 +83 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 3.75% 11/01/2046 1.100 +145a +120a (+/-2) +118 +118 BAML/CITI/GS/MIZ/MS + 5 (p)
Wake Forest Medical Ctr. A2/A 3.093% 6/01/2026 75 +135a +130a (+/-5) +125 +125 GS/MS/WFS
Wake Forest Medical Ctr. A2/A 4.175% 6/01/2046 75 +165a +160a (+/-5) +157.5 +157.5 GS/MS/WFS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
JBIC A1/A+ 2.00% 11/04/2021 1,000 MS +65a MS +64a MS +63 +65.4 BAML/JPM/MIZ/NOM
JBIC A1/A+ 2.25% 11/04/2026 1,800 MS +67a MS +65a MS +64 +49.6 BAML/JPM/MIZ/NOM
OKB Aa1/AA+ FRN 11/04/2019 600 3mL+17a 3mL +16a 3mL +16 3mL+16 GS/HSBC

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.30 1.31 0.01  
IG27 75.345 76.257 0.912
HV27 162.61 162.38 <0.23>
VIX 14.24 15.36 1.12  
S&P 2,139 2,133 <6>
DOW 18,199 18,169 <30>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $8.525 bn DAY: $11.925 bn
WTD: $33.875 bn WTD: $37.275 bn
MTD: $102.47 bn MTD: $149.22 bn
YTD: $1,166.606 bn YTD: $1,493.84 bn

 

Lipper Report/Fund Flows – Week ending October 19th  

     

  • For the week ended October 19th, Lipper U.S. Fund Flows reported an inflow of $2.431b into Corporate Investment Grade Funds (2016 YTD net inflow of $41.086b) and a net outflow of $160m from High Yield Funds (2016 YTD net inflow of $11.119b).
  • Over the same period, Lipper reported a net inflow of $514.8m into Loan Participation Funds (2016 YTD net outflow of $1.956b).
  • Emerging Market debt funds reported a net inflow of $621.7m (2016 YTD inflow of $7.333b).

 

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are an average 28.25 bps wider versus their post-Crisis lows!

 

ASSET CLASS 10/26 10/25 10/24 10/21 10/20 10/19 10/18 10/17 10/14 10/13 1-Day Change 10-Day Trend PC
low
IG Avg. 136 135 135 135 135 135 136 137 136 137 +1 <1> 106
“AAA” 80 78 78 77 76 76 76 78 78 79 +2 +1 50
“AA” 84 83 83 83 83 82 83 84 84 84 +1 0 63
“A” 109 108 108 108 108 108 109 109 109 110 +1 <1> 81
“BBB” 176 175 174 175 174 175 176 176 176 177 +1 <1> 142
IG vs. HY 330 325 325 327 327 331 336 339 336 345 +5 <15> 228

(more…)

Mischler Muni Market Update Week of 10.24.16 : NJ Transportation; Alaska Pension
October 2016      Muni Market   

Mischler Municipal Debt Market Update for the week commencing 10.24.16 looks back to last week’s metrics and provides a lens focused on selected municipal bond offerings for this week. As always, the Mischler Muni Market snapshot provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s muni bond activity, including credit spreads, money flows and a curated view of pending municipal finance offerings scheduled for this week’s pending issuance.

Last week muni volume was about $14.8 billion.  This week volume is expected to be $16.5 billion. The negotiated market is led by $2.8 billion for New Jersey Transportation Trust Fund Authority and $2.4 billion taxable POB’s for Alaska Pension Obligation Bond Corp. The competitive market is led by $693.0 million for the Maryland Department of Transportation in 2 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

mischler-muni-market-update-week-10-24

 

Mischler Financial Group debt capital market expertise, inclusive of Debt Origination, Distribution, Primary Market Access and Secondary Market trading across the full spectrum of fixed income markets is courtesy of our 18-member team of debt market veterans is what makes MFG’s Fixed Income Group a compelling partner to Fortune issuers, corporate treasurers, municipal debt issuers and the world’s leading institutional investors.

To illustrate our presence within the Debt Capital Markets space: since 2014 alone,  Mischler has led, co-managed and/or served as selling group member for more than $500 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, new companies via IPO, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE) and a recognized minority broker-dealer. Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

Mischler Muni Market Update Week of 10.24.16 : NJ Transportation; Alaska Pension

Draghi Talk; Mischler Debt Market Comment via Quigley’s Corner
October 2016      Debt Market Commentary   

Quigley’s Corner 10.20.16- Draghi Talk; The BIGGEST Oct in IG Bond History

 

Investment Grade New Issue Re-Cap 

Global Market Recap

La Dolce Vita – Draghi Talks About “The Good Life” in the EU (?!)

IG Primary & Secondary Market Talking Points

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

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 19th  

Investment Grade Corporate Debt Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Believe it or not, we very quietly slid into 9th place among the top 10 highest all-in IG issuance weeks.  All-in IG issuance combines both IG Corporates and SSA deals.  Generally speaking,  SSA weekly issuance typically accounts for about 20%-25% of all-in weekly volume, give or take.  This week, however, thanks to The Kingdom of Saudi Arabia’s $17.5b 3-part inaugural deal, EIB’s $4.5b 3yr and today’s $4.25b IBRD two-part 3s and 10s, SSA issuance has thus far eclipsed IG Corporates 50.36% vs. 49.64%.

On the day, 3 IG Corporates priced 3 deals totaling $1.4b bringing the WTD total to $28.34b vs. $23.17b or 22% above this week’s syndicate midpoint average estimate. SSA added IBRD $4.25b two-part 3s & 10s bringing the all-in IG day total to 4 issuers, 5 tranches and $5.65b.  The all-in MTD total is now $108.145b.  This month is on pace to finish as the most prolific October in IG history.

 

Global Market Recap

 

  • U.S. Treasuries – USTs closed mixed, little changed & flatter.
  • Overseas Bonds – Long end Bunds had a strong session. JGB’s were little changed.
  • 3mth Libor – Set at the highest yield since May 2009 (0.88178%).
  • Stocks – U.S. small losses (3:15pm) Europe rallied after Draghi. Nikkei well bid.
  • Economic – U.S. data fine. Germany PPI remained negative. U.K. retail sales weaker.
  • Currencies – Strong day for the USD outperforming all of the Big 5.
  • Commodities – Crude hit hard after rallying to a 15-month high yesterday.
  • CDX IG: +0.15 to 73.87
  • CDX HY: +0.66 to 398.69
  • CDX EM: -2.93 to 234.07

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

-Tony Farren

 

La Dolce Vita – Draghi Talks About “The Good Life” in the EU…..N-O-T!  

ECB Head Mario Draghi announced that the ECB will not stop QE without first tapering it fortifying the opinion that it will extend well beyond March 2017. Draghi said, “an abrupt ending to bond purchases is unlikely” and “it is not present in anybody’s mind.”

Here are all the pertinent talking points from today’s short news conference with ECB President Mario Draghi:

  • The ECB left its benchmark rates unchanged as expected.
  • ECB’s Main Refinancing Rate was left unchanged at 0.0% as expected.
  • The ECB’s Deposit Facility Rate persisted at -.40% ……as expected.
  • ECB’s Marginal Lending Facility Rate continued at 0.25% also as expected.
  • ECB’s Asset Purchase Target also remained unchanged at €80 bln per month.
  • Draghi sees rates at present or lower level for extended period.
  • Sees rates at present, lower level well past QE horizon.
  • Says QE will run through March 2017 or beyond if needed.
  • QE will run until inflation path is consistent with goal.
  • ECB to preserve stimulus needed to raise inflation.
  • ECB policy ensures very favorable conditions.
  • ECB ready to act using all instruments within mandate.
  • December assessment will benefit from new forecasts.
  • Council will review committee work on QE in December.
  • Baseline remains subject to downside risks.
  • Sees moderate economic growth at steady pace.
  • No signs of convincing upward trend in core inflation.
  • Sees gradual rise in inflation.
  • Inflation rates rising further in 2017, 2018.
  • Economy resilient to global, political uncertainty.
  • Domestic demand supported by policy pass-through.
  • Investment supported by favorable financing conditions.
  • Low oil prices, job gains provide support for consumers.
  • Sluggish pace of reforms also a risk.
  • Loan dynamics follow path of gradual recovery.
  • ECB measures significantly helping credit.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 3 IG Corporate-only new issues was 21.83 bps.
  • BAML’s IG Master Index tightened 1 bp to +135 vs. +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +129 vs.  +130.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Investment grade corporate bond trading posted a final Trace count of $18.1b on Wednesday versus $17.3b Tuesday and $16.7b the previous Wednesday.
  • The 10-DMA stands at $15.8b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $28.34b
October 2016 vs. Current
MTD – $64.795b
Low-End Avg. $22.30b 127.09% $87.83b 73.77%
Midpoint Avg. $23.17b 122.31% $88.59b 73.14%
High-End Avg. $24.04b 117.89% $89.35b 72.52%
The Low $15b 188.93% $75b 86.39%
The High $30b 94.47% $125b 51.836%

 

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

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

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/17
TUES.
10/18
WED.
10/19
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
New Issue Concessions 6.62 bps 3.17 bps 1.71 1.87 bps 4.36 bps 2.71 bps 0.69 bps
Oversubscription Rates 2.11x 2.91x 2.86x 3.28x 4.20x 3.52x 3.23x
Tenors 6.06 yrs 10.71 yrs 12 yrs 11.51 yrs 12.16 yrs 10.51 yrs 9.36 yrs
Tranche Sizes $1,043mm $1,050mm $1,249mm $640mm $523mm $646mm $964mm

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.30 1.29 <0.01>  
IG27 73.725 73.938 0.213
HV27 162.135 161.645 <0.49>
VIX 14.41 13.75 <0.66>  
S&P 2,144 2,141 <3>
DOW 18,202 18,162 <40>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $1.40 bn DAY: $5.65 bn
WTD: $28.34 bn WTD: $57.09 bn
MTD: $64.795 bn MTD: $108.145 bn
YTD: $1,139.531 bn YTD: $1,463.365 bn

 

Lipper Report/Fund Flows – Week ending October 19th   (more…)

Corporate Bond Issuance: Tone Is Firm and Firmer; Mischler Comment
October 2016      Debt Market Commentary   

Quigley’s Corner 10.17.16 Corporate Bond Issuance; Its About Price, Not Politics

 

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 12th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

 

6 IG Corporate issuers priced 8 tranches between them totaling $8.35b with no assist from the SSA space today and representing 37% of this week’s syndicate midpoint average forecast for $23.17b.

 

Global Market Recap

 

o   U.S. Treasuries – USTs better despite more hawkish Fed Speak (Fischer & Rosengren).

o   Overseas Bonds – Gilts hammered overnight but rallied during NY hours.

o   Stocks – U.S. stocks red (3:30pm). Down day in Europe. Asia red except the Nikkei.

o   Economic – U.S. data on weaker side. EU CPI as expected (too low) & solid data in Japan.

o   Currencies – USD lost ground vs. all of Big 5. DXY Index only had a small loss.

o   Commodities – Small down day for crude oil & small up day for gold.

o   CDX IG: +0.26 to 75.93

o   CDX HY: +1.77 to 407.45

o   CDX EM: +5.10 to 247.82

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points – Tone Goes Out Strong; Nice Set Up For Next Week

 

  • ICBC (NY Branch) dropped the 10yr tranche from today’s earlier announced two-part 5s/10s Senior Unsecured Notes new issue.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues was 15.375 bps.
  • BAML’s IG Master Index tightened 1 bp to +136 vs. +137.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to a new tight of +131 vs. +132.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $11.7b on Friday versus $17.8b Thursday and $11.2b the previous Friday.
  • The 10-DMA stands at $13.9b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $8.35b
October 2016 vs. Current
MTD – $44.805b
Low-End Avg. $22.30b 37.44% $87.83b 51.01%
Midpoint Avg. $23.17b 36.04% $88.59b 50.58%
High-End Avg. $24.04b 34.73% $89.35b 50.15%
The Low $15b 55.67% $75b 59.74%
The High $30b 27.83% $125b 35.84%

 

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

 

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

 

…..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 four week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/10
TUES.
10/11
WED.
10/12
TH.
10/13
FRI.
10/14
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
New Issue Concessions Holiday 3.19 bps 2.00 bps 0.54 bps N/A 1.87 bps 4.36 bps 2.71 bps 0.69 bps
Oversubscription Rates Holiday 3.48x 2.80x 3.17x N/A 3.28x 4.20x 3.52x 3.23x
Tenors Holiday 11.33 yrs 3 yrs 13.04 yrs N/A 11.51 yrs 12.16 yrs 10.51 yrs 9.36 yrs
Tranche Sizes Holiday $663mm $500mm $635mm N/A $640mm $523mm $646mm $964mm

 

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM: (more…)

Mischler Muni Market Outlook: $15bil Scheduled
October 2016      Muni Market   

Mischler Municipal Debt Market Update for the week commencing 10.17.16 looks back to last week’s metrics and provides a lens focused on selected municipal bond offerings for this week. As always, the Mischler Muni Market snapshot provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s muni bond activity, including credit spreads, money flows and a curated view of pending municipal finance offerings scheduled for this week’s pending issuance.

Last week muni volume was about $9.0 billion.  This week volume is expected to be $15.4 billion.  The negotiated market is led by $1.0 billion of tax-exempt and taxable bonds for New Jersey Healthcare Financing Authority for Robert Woods Johnson Barnabas Health.  The competitive market is led by $1.6 billion general obligation bonds for the State of California in 3 bids on Tuesday

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

For reading ease, please click on image below

mischler-muni-market

Mischler Financial Group debt capital market expertise, inclusive of Debt Origination, Distribution, Primary Market Access and Secondary Market trading across the full spectrum of fixed income markets is courtesy of our 18-member team of debt market veterans is what makes MFG’s Fixed Income Group a compelling partner to Fortune issuers, corporate treasurers, municipal debt issuers and the world’s leading institutional investors.

To illustrate our presence within the Debt Capital Markets space: since 2014 alone,  Mischler has led, co-managed and/or served as selling group member for more than $500 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, new companies via IPO, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE) and a recognized minority broker-dealer. Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

Mischler Military Ethos: The Next Generation
October 2016      Company News, Giving Back, News and Information   

Many military families across the United States (and in other countries) boast a proud tradition of extending their military service legacy down through the generations. At Mischler Financial Group, our senior leaders, including Founder/Chairman Walt Mischler and now, Chief Executive Dean Chamberlain are intimately familiar with the sometimes bittersweet emotion experienced when our children come of age and make the life-changing decision to embrace a path that requires a commitment that can inevitably put our children in harm’s way.

With a sense of pride and admiration (and always a sense of concern), Mischler Financial Group extends a REALLY BIG HOOAH TO RACHEL CHAMBERLAIN, SCHOLAR ATHLETE-ROTC CADET-UCLA CLASS OF ’20 , Pictured below, Cadet Chamberlain (l) joins the incoming Bruin Battalion.

ucla rotc class of '20

(l) Rachel Chamberlain, UCLA ROTC CLASS ’20

 

Three’s A Crowd; Durable Goods and Debt Capital Markets-Mischler Comment
September 2016      Debt Market Commentary   

Quigley’s Corner 09.27.16 Durable Goods and Debt Capital Market Issuance

Investment Grade New Issue Re-Cap – Three’s a Crowd

Tomorrow’s Durable Goods Number Should Result in Issuance and Here’s Why:

Global Market Recap

IG Primary & Secondary Market Talking Points

Presidential Debate Ratings Set New Records

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending September 21th

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Tomorrow’s Calendar

 

Lehigh University stood alone owning today’s IG Corporate calendar with its $150mm 30-year 3(a)4exempt taxable bond, Series 2016 new issue. The reason?  Big problems in Europe.  Three issuers stood down this morning across the pond and ECB President Mario Draghi spoke of a pervasive sense of urgency in the EU in which he urged governments to “act to stem rising public discontent” adding, “they must show that the Union brings tangible benefits to people’s lives.”  (Oh Really????)  He continued with “the ECB cannot sustain the European recovery alone.” (Duh!!!!)  This, after how many years of applying a kick-the-can mentality that segued to helicopter money and a gung ho “whatever it takes the ECB, we’ll do it” attitude.  This is a change of coarse and invites a serious discussion once again about the viability and sustainability of the European Union. Further compounding continental concerns, Deutsche Bank continued as a primary focus and lynchpin to the entire European banking system.  One FIG and one industrial also stood down in the U.S. IG primary markets as well – that I am aware of.

So, when markets are somewhat volatile, as September has been despite $137b IG Corporate and $158b all-in IG, I tend to turn to “go to” contacts for a more detailed discourse.  In other words, those I’ve known forever and who have withstood the test of time.  Believe it or not there aren’t many of THEM around.  They do likewise.  I gave a ring to my favorite Scotsman Mr. Paul Cohen who during his years as a banker at Banque Paribas, BNP Paribas and Dresdner essentially covered most all corporates including some fallen angels.  Besides being an all-around very good guy, he knows his stuff and is a great person for you to reach out to have him add you to his daily disty list.  Paul is a primary market strategist who writes for Bloomberg London covering IG Euro new issuance.  In our inextricably global-linked world economy that I always write about here, minding your dollars and euros makes sense (cents!) Ask him to put you on his loop and please do tell him that the guy-in-the-corner sent you. All free and all informative for each one of YOU! Remember folks, it’s all about timely, accurate information and how you apply it that keeps you on top of your game while better understanding our markets!  So, go ahead and reach out to him.

The Three Musketeers; The Three Little Pigs; The Three Billy Goats Gruff!  Does the power of three really makes things better?  Funnier? Paul and discussed the theory of “threes” this afternoon…….the three deals that stood down that is.  Paul said, “three deals were pulled within 24 hours across the pond as market conditions changed since last week with issuers perhaps needing to be a bit more flexible in terms of their cost of funding expectations.”  He continued………”a flight-to-quality could be in the cards over the next day or two as the market digests the implications of theses pulled transactions beginning with Lufthansa, followed by NordLB and finally Korean Air.” Now, here’s the good part that cuts through the headline –  Lufthansa is a split-rated credit and perceived by many market participants to fall into the lower ratings category due to investment guidelines that typically err on the side of caution while also satisfying the ECB’s CSPP criteria by maintaining one investment grade rating.  NordLB does harbor its own particular “situation” with its shipping business and acquisition of Bremer LB.  Lastly, the Korean Air Lines pull was the result of contagion from Lufthansa.

So, at first blush, market players came in this morning hearing “3 deals were pulled in Europe…..OMG!”  Knowing the smart minds out there and having access to them with a bit of Quig-Pro-Quo thrown in for good measure, reveals a bit more story, a bit more color and a bit more understanding that’s not nearly as frightful as the words Mario Draghi uttered today or that the market is conjecturing as surrounds Deutsche Bank.  Just a helpful tip for you! And a thank you to Paul “Pablo” Cohen.

Tomorrow’s Durable Goods Number Should Result in Issuance and Here’s Why:

 

durable goods reportOn the home front, IG corporates clearly took a breather today which is a good thing.  We have a Durable Goods Orders number out at 8:30am tomorrow morning which is relatively important given recent volatility so, I suspect that number hits first after which if it’s pretty much as expected or <1.5%> we’ll see issuance. The prior number was 4.4% so perhaps it surprises to the upside.  2 out of 3 is 66% so I’ll say I don’t expect it to miss.  Wrightson, for example is generally an outlier but they also happened to be pretty good. They conjecture that tomorrow’s August Durable Goods report will be 1.5% to the upside – a nice swing versus negative expectations.  The reason?  Boeing’s August orders will translate into a 24% increase in civilian aircraft orders in seasonally adjusted terms which will make up for softness elsewhere.  Just putting it out there folks.

 

Global Market Recap

 

o   U.S. Treasuries: 30yr leads UST rally. Bunds & Gilts improved. JGB curve much steeper.

o   Stocks – Bounce back day for U.S. stocks. Europe closed down & Asia rallied.

o   Economic – U.S. consumer confidence stole the show. The strongest since 2007.

o   Overseas economic – China’s industrial profits increased the most in 3 years.

o   Currencies – U.S. outperformed the Euro but lost ground vs. the PND, Yen, CAD & AUD.

o   Commodities – CRB, crude oil, heating oil, gold, copper & silver all down.

o   CDX IG: -1.06 to 78.05

o   CDX HY: +19.57 to 415.59

o   CDX EM: -0.03 to 238.58

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue was 10.00 bps.
  • BAML’s IG Master Index widened 1 bp to +142 versus +141.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +138 versus +137.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +190 versus +189.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12.8b on Monday versus $13.3b Friday and $12b the previous Monday.
  • The 10-DMA stands at $15.5b.

 

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

 

IG Corporate New Issuance This Week
9/26-9/30
vs. Current
WTD – $5.75b
September 2016 vs. Current
MTD – $136.518b
Low-End Avg. $22.13b 25.98% $115.45b 118.25%
Midpoint Avg. $23.30b 24.68% $116.02b 117.67%
High-End Avg. $24.48b 22.49% $116.59b 117.09%
The Low $15b 38.33% $80b 170.65%
The High $36b 15.97% $150b 91.01%

 

Presidential Debate Ratings Set New Records

Yesterday, I wrote the following about last evening’s first Presidential debate between Clinton and Trump, “You can watch it on virtually any major broadcast and/or cable news network as all of them will be televising this one.  It WILL break all Presidential debate records by a LOT.” Well, the results are in.  More than 46 million people watched the debate across six broadcast networks according to preliminary Nielsen data released by Univision.  CNN published its own data confirming, along with virtually all media outlets. That’s a new record and 7.7% more than the 42.7mm viewers who watched the first Obama-Romney debate in 2012 on those same six channels.

Including cable news network ratings, the debate audience soared to 83 million viewers officially becoming the most-watched Presidential debate in history breaking the 80.6 million who watched Jimmy Carter debate Ronald Reagan back in 1980.

Yet another good reason for you to stay tuned into the daily “QC.”

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

 

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