Browsing articles tagged with "Mischler Financial Archives - Page 8 of 11 - Mischler Financial Group"
ManyPeopleAreSaying Geo-Political Storm on The Horizon, Debt Market View
August 2016      Debt Market Commentary   

Quigley’s Corner 08.11.16 : ManyPeopleAreSaying  “Its Always Calm Before The Storm”

 

Investment Grade Corporate Debt New Issue Re-Cap – A Day of Broken Records

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

You know the adage – records are meant to be broken.  Well, we broke several today beginning with the DOW, the S&P and Nasdaq all which ended the session at their all-time highs.  The last time all three established new record highs on the same day was 17 years ago back in 1999.  As for our IG dollar primary credit markets, we set a new August monthly record for IG Corporate-only issuance $86.455b vs. $71.565b (2007) and another record for all-in or IG Corps plus SSA new issuance $95.505b vs. $90.356b (2007).

What’s scary about all this is our little focused world of credit and equities just seems so hunky dory doesn’t it?  However, there calm-before-storm-mischler-debt-market-viewremains a whole lot of pain out there though.  Things are heating up again in Crimea between Ukraine and Russia and the South China Sea Islands are turning into a fiasco for the Pacific side of things. The EU seems intent on dividing between a Southern and Northern Euro Zone harkening back to my forecast for  a Northern and Southern Euro made years ago right here in the “QC.” I might have to re-run that edition soon enough!

 

Anyway, here’s the global market re-cap:

 

Global Market Recap

 

  • S. Treasuries – Terrible day for USTs.
  • Stocks – S&P & Dow traded at all-time highs. NASDAQ is knocking on the door.
  • Record Closes – S&P, Dow & NASDAQ closed at record highs. Last time this happened was 1999.
  • Overseas Stocks – Europe rallied & has recovered all Brexit losses. China down.
  • Economic – Claims remained solid, Import price index less negative y/y & mortgage data better.
  • Currencies – USD outperformed Euro, Pound & Yen but lost vs. CAD (crude rally).
  • Commodities – Big rally in crude oil sent the CRB higher. Gold closed down.
  • CDX IG: -1.03 to 71.11
  • CDX HY: -4.37 to 387.01
  • CDX EM: -1.89 to 237.60

*CDX levels are as of the 3PM ET UST close.

-Tony Farren


IG Primary & Secondary Market Talking Points

 

  • A rarity: Fidelity National Information Services Inc. added a new 30-year tranche to today’s earlier announced two-part 5s/10s.
  • Qwest Corp. upsized today’s 40NC5 $25 par Senior Notes to $850mm from $200mm and at the tightest side of guidance range.
  • The average spread compression through price evolution of today’s 11 IG Corporate new issues was 19.77 bps.
  • Including today’s IG-rated Entergy Louisiana LLC $25 par CTMBs, spread compression from IPTs thru the launch/final pricing of today’s 12 new issues was 18.65 bps.
  • BAML’s IG Master Index tightened 1 bp to +146 versus +147.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +199 versus +200.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.6b on Wednesday versus $16.2b Tuesday and $17.8b the previous Wednesday.
  • The 10-DMA stands at $15b.

 

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

 

IG Corporate New Issuance This Week
8/08-8/12
vs. Current
WTD – $37.505b
August 2016 vs. Current
MTD – $86.455b
Low-End Avg. $21.76b 172.36% $60.48b 142.95%
Midpoint Avg. $22.80b 164.50% $61.13b 141.43%
High-End Avg. $24.93b 150.44% $61.78b 139.94%
The Low $15b 250.03% $45b 192.12%
The High $30b 125.02% $75b 115.27%

 

 

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…)

Strong Demand For Yield Yields Upsize Day for IG Corporate Debt
August 2016      Debt Market Commentary   

Quigley’s Corner 08.09.16- Strong Demand Yields Upsize Day

 

Investment Grade Corporate Debt New Issue Re-Cap

Rates on the Rise?…Think Again.

Global Market Recap

IG Primary & Secondary Market Talking Points – Three Deals Upsize on Strong Demand

New Issues Priced

Lipper Report/Fund Flows

Investment Grade Credit Spreads (by Rating/Industry)

Economic Data Releases

Rates Trading Lab-Sellers Hibernating

New Issue Pipeline

M&A Pipeline

 

Today things slowed down a bit for the IG dollar DCM but it was still a formidable line-up. We featured 5 IG Corporate Debt issuers that priced 9 tranches between them totaling $7.66b.  The Asian Development Bank priced its expected two-part 3s/10s new issue in the SSA space that totaled $1.3b bringing today’s all-in IG tally to 6 issuers, 11 tranches for $8.96b.

WTD we have now priced 85% of the syndicate midpoint average forecast for the week or $19.46b vs. $22.80b.
MTD we eclipsed the syndicate estimate for the month after only 7 sessions or $68.41b vs. $61.13b.

The big deal of the day in the IG Corporate Debt space was Duke Energy Corp. $3.75b 3-part 5s/10s/30s issued to finance a portion of costs in connection with Duke’s acquisition of Piedmont Natural Gas Company Inc.   Last week Duke Energy (NYSE:DUK) announced it mandated Barclays, Credit Suisse, Mizuho, MUFG Securities and UBS as joint leads to arrange investor calls after which a transaction could soon follow.  As has been written in the “QC” pipeline for a while, on Friday, January 22nd, shareholders of Piedmont Natural Gas (A2/A) voted to approve the Company’s acquisition by Duke Energy (A3/BBB+).  66.8% of voting shares supported the acquisition.  In late October 2015, Duke Energy, (A3/BBB+) the nation’s largest utility, announced that it will buy Piedmont Natural Gas (A2/A) for $4.9b in cash.  Both companies are partners in the $5b Atlantic Coast Pipeline.  The purchase adds one million new rate payers to Duke Energy’s customer base.  Congrats to Duke!

Rates on the Rise?…Think Again.

Today the U.S. Treasury held a 3-year notes auction.  It was one of the strongest in years.  Investors or buyers, for that matter, fly into the safety of USTs motivated by fear and desire for safety.  No one flies into 3yr Notes for the 0.85% yield.  You want my money?  Let’s talk about 5-8% and we can discuss it.  So, when I heard the 3yr auction was so wildly successful I pulled up a chair next to my rates guru Mr. Tony Farren to discuss the matter.  Here are the prescient takeaways:

  • The auction stopped thru 1.2 bps which is a big stop for a 3yr auction.
  • Dealers bought 33.7% of it versus the 6-month average of 38.2%.
  • The bid-to-cover or oversubscription rate was 2.98x versus the 6-month average of 2.76x.
  • Bidders at the auction yield (stopped 1.2 bps thru) only received 54.18% of their size bid for (so, if you bid for $100mm you only wound up buying $54.18mm).

What does it all mean?  Lower-for-longer.  The Fed is not raising rates anytime soon folks.  Taking rate volatility off the table means dive int the stock market readers.  Get back in now.

Global Market Recap

 

  • S. Treasuries – The Gilts buyback kick started the Treasury rally. 30yr leads the UST rally.
  • 3mth Libor – Set at another high yield since May 2009 (0.81600%).
  • Stocks – U.S. stocks are mixed & little changed at 3:15pm.
  • Stock all-time highs – New record highs reached today for the S&P & NASDAQ.
  • Overseas Stocks – Europe rallied led by the DAX. Japan & China also rallied.
  • Economic – Productivity & unit labor cost disappointed & other data was positive.
  • Overseas Economic – China PPI improved. U.K. GDP estimate heads south.
  • Currencies – The USD lost ground vs. 4 of the Big 5 only outperforming the Pound.
  • Commodities – Gold up while the CRB, crude oil, natural gas & copper closed down.
  • CDX IG: unchanged at 71.34
  • CDX HY: -2.17 to 389.02
  • CDX EM: -0.31 to 241.04

*CDX levels are as of the 3PM ET UST close.

-Tony Farren


IG Primary & Secondary Market Talking Points – Three Deals Upsize on Strong Demand

 

  • The Asian Development Bank upsized the 5-year tranche of today’s new two-part 5s/10s to $800mm from $500mm and at a tighter launch.
  • Kimco Realty Corp. increased today’s 10-year Senior Unsecured Notes new issue to $500mm from $400mm at the launch and at the tightest side of guidance.
  • Entergy Arkansas bumped up $25par 50NC5 FMB’s today to $410mm from $200mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 8 IG Corporate new issue was 21.875 bps.
  • Including today’s IG-rated Entergy Arkansas $25 par FMBs, spread compression from IPTs thru the launch/final pricing of today’s 9 new issues was 19.44 bps.
  • BAML’s IG Master Index tightened 2 bps to +147 versus +149.  +106 represents the post-Crisis low dating back to July 2007.
  • *Standard & Poor’s Global Fixed Income Research widened 6 bps to +197 versus +191.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12.4b on Friday versus $12.6b Thursday and $13.9b the previous Thursday.

 

*The S&P Global investment-grade composite spread widened six basis points to 197 bps largely for idiosyncratic reasons, wherein the spreads on a number of investment-grade rated Non-Bank Financial Institutions and Utilities saw particularly sharp movements in their spreads (day-to-day changes), impacting the aggregate composite spread overall. The speculative-grade composite spread, on the other hand, tightened six basis points to 595 bps, commensurate with the recent shift in risk pricing of credit markets overall over the past few days. It should be noted that the S&P Global investment-grade and speculative-grade spreads are composite figures (composed of all bonds meeting our criteria for inclusion and aggregated using statistical measures) and are not an index (with a fixed, managed set of index constituents designed to represent the broader market).  – Sudeep Kesh S&P, Analyst

 

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

 

IG Corporate New Issuance This Week
8/08-8/12
vs. Current
WTD – $19.46b
August 2016 vs. Current
MTD – $68.41b
Low-End Avg. $21.76b 89.43% $60.48b 113.11%
Midpoint Avg. $22.80b 85.35% $61.13b 111.91%
High-End Avg. $24.93b 78.06% $61.78b 110.73%
The Low $15b 129.73% $45b 152.02%
The High $30b 64.87% $75b 91.21%

 

 

Have a great evening!
Ron

Ronald M. 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…)

Mischler Muni Market Update Week of 08-08-16; Regents of University of California
August 2016      Muni Market   

Mischler Muni Market Update for the week commencing 08.08.16 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.

The negotiated market is led by $1.05 billion tax-exempt and taxable Medical Center Pooled Revenue Bonds for The Regents of the University of California. The competitive market is led by $1.2 billion GO’s for the Commonwealth of Pennsylvania 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-deal-offerings-aug-8-2016

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 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.

Corporate Debt Issuers in Deal Mode; Mischler Comments
August 2016      Debt Market Commentary   

Quigley’s Corner 08.04.16 : Corporate Debt Issuers Positioning for Deals

 

Investment Grade Corporate Debt New Issue Re-Cap – Dominion Prints $1.3b in Part to Fund Questar Merger

A Word About Utilities Amidst a “Lower-for-Longer” Environment
Duke Energy Announces Meetings for Potential Large Utility Deal

BOE Cuts Rates to Lowest Level in 7 Years

Global Market Recap

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week ending August 3rd

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

The IG Corporate primary markets continued unabated, surprising all to the upside today as 5 issuers priced 9 tranches between them totaling $4.75b. Today we surpassed the highest syndicate estimate of $45b by 8%.  The WTD IG Corporate only talent is now $48.65b representing 80% of the syndicate estimate for the entire month of August after only 4 business days or $48.65b vs. $61.13b!  There was no SSA issuance today. Dominion Resources Inc. “D” (Baa2/BBB+) announced on Monday, February 1st, that it would acquire Questar Corporation “STR” (A-/S&P) for $4.4b in cash.  “D” agreed to pay “STR” shareholders $25 per share and assume its debt. The deal will be funded with equity, convertibles and debt and was always expected to close by the end of 2016. RBC and Mizuho  provided the financing and acted as financial advisors to Dominion.  They were today’s two joint active book runners.  Today’s $1.3b 3-part issue will fund in part, Dominion’s merger with Questar.

 

A Word About Utilities Amidst a “Lower-for-Longer” Environment

The credit outlook for utility sector remains very stable.  Regulated electrics are growing at a healthy pace by investing in regulated rate base.  Thanks to the low rate environment combined with lower fuel costs and low inflation the second half of 2016 promises to host a continuation of horizontal mergers in the sector, vertical integrations in natural gas and divestitures of non-regulated generation.  Cheap capital translates into a great opportunity for utility infrastructure plays.  We witnessed Dominion for Questar.  Up ahead is Southern Company for Kinder Morgan; Duke for Piedmont Natural Gas; Empire District Electric for Algonquin; Fortis for ITC and NextEra Energy wasted no time replacing broken talks with Hawaii Electric with a purchase of Oncor Delivery.  Investor demand for safe haven, better-rated IG credits remains voracious. The utility sector’s defensive nature insulates it as the perfect home for money to secure the highest return in the safest asset class.

Duke Energy Announces Meetings for Potential Large Utility Deal

Today, Duke Energy (NYSE:DUK) announced it mandated Barclays, Credit Suisse, Mizuho, MUFG Securities and UBS as joint leads to arrange investor calls after which a transaction could soon follow.  As has been written in the “QC” pipeline for a while, on Friday, January 22nd, shareholders of Piedmont Natural Gas (A2/A) voted to approve the Company’s acquisition by Duke Energy (A3/BBB+).  66.8% of voting shares supported the acquisition.  In late October 2015, Duke Energy, (A3/BBB+) the nation’s largest utility, announced that it will buy Piedmont Natural Gas (A2/A) for $4.9b in cash.  Both companies are partners in the $5b Atlantic Coast Pipeline.  The purchase, pending regulatory approval, will add one million new rate payers to Duke Energy’s customer base.  We’re in August and it sounds as if there is a new issue on the horizon.

            

BOE Cuts Rates to Lowest Level in 7 Years

 

  • BOE Cuts Benchmark 25 bps to record low 0.25% as result of BREXIT.
  • Will purchase £10b IG-rated Corporate Bonds of companies headquartered in the U.K. and could increase that amount to £100b.
  • Monetary Policy Committee will buy £60b of government bonds over 6 months.
  • BOE’S Carney: “I am not a fan of negative interest rates.”
  • Doesn’t see a scenario where negative rates will be discussed.
  • Says, “ I don’t see the merit in helicopter money.”
  • “All elements of the stimulus package have the scope to be increased.”

 

Global Market Recap

 

  • Super Thursday: BOE broke out the kitchen sink of tools to combat Brexit ramifications.
  • S. Treasuries – Rallied with Gilts. The rally was tempered with Employment tomorrow.
  • 3mth Libor – Set at highest yield (0.78760%) since May 2009.
  • Stocks – U.S. stocks were little changed. Europe & Asia rallied.
  • Economic – Data took a back seat to the BOE. U.S. Employment Report tomorrow.
  • Currencies – The Pound was smashed on the BOE. USD closed mixed vs. the Big 5.
  • Commodities – Back-to-back good days for the CRB & crude oil.
  • CDX IG: -1.68 to 73.27
  • CDX HY: -7.27 to 401.31
  • CDX EM: -3.64 to 255.42

*CDX levels are as of the 3PM ET UST close.

-Tony Farren


IG Primary Market Talking Points – Mischler Co-Manages for JPM and UBS

 

  • Caterpillar Financial Services Corp. dropped the 5yr FRN tranche from today’s 5s/10s new issuance having secured ample funding from the 5yr Fixed tranche.
  • Bancomext upsized today’s 10NC5 Fixed-to-Floating Subordinated Preferred Capital Notes new issue to $700mm from $500mm at the launch and at the tightest side of guidance.
  • For the week ended August 3rd, Lipper U.S. Fund Flows reported an inflow of $2.472b into Corporate Investment Grade Funds (2016 YTD net inflow of $23.27b) and a net outflow of $2.464b into High Yield Funds (2016 YTD net inflow of $7.232b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 9 IG Corporate new issues was 20.89 bps.

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $48.65b
August 2016 vs. Current
MTD – $48.65b
Low-End Avg. $25.13b 193.59% $60.48b 80.44%
Midpoint Avg. $26.22b 185.55% $61.13b 79.58%
High-End Avg. $27.30b 178.21% $61.78b 78.75%
The Low $15b 324.33% $45b 108.11%
The High $45b 108.00% $75b 64.87%

 
Have a great evening!
Ron

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…)

GOOGL: The ABC’s of Successful Corporate Debt Issuance; Mischler Comment
August 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 08.02.16- Alphabet Inc: ABC’s of a Successful Corporate Debt Issuance

 

Investment Grade Corporate Debt New Issue Re-Cap

Global Market Recap

IG Primary Market Talking Points: 

New Debt Issues Priced- Alphabet Inc (NASDAQ:GOOGL); Hershey Co (NYSE:HSY); Intl Paper (NYSE:IP); Mattel Inc (NASDAQ: MAT)

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases
Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

9 IG Corporate issuers priced 12 tranches between them totaling $9b.  One AFDB tap for $250mm in the SSA space brought today’s all-in IG day totals to 10 issuers, 13 tranches and $9.25b.  What’s more astonishing, however, is that the first two days of August have already priced 53% of syndicate desk’s midpoint average forecast for IG Corporate new issuance for the entire month or $32.40b vs. $61.13bWTD we priced 23% above this week’s syndicate average estimate or $32.40b versus $26.22b.

             

Global Market Recap

 

  • JGB’s: 3 very poor days in a row.
  • S. Treasuries – USTs, Bunds & Gilts were led down by JGB’s (again).
  • 3mth Libor – Set at highest yield since May 2009 (0.76760%).
  • Stocks – Dow headed for 7th losing session in a row (3:30pm).
  • Overseas Stocks – Banks lead Europe lower. Nikkei down & Shanghai higher.
  • Economic – U.S. inflation data was low. EU PPI remained negative but improved.
  • Currencies – Bad day for the USD & DXY Index. Strong day for Yen & Pound.
  • Commodities – CRB & crude oil down (lows since April), gold well bid & wheat low since 2006.
  • CDX IG: +1.75 to 76.98
  • CDX HY: +7.95 to 418.20
  • CDX EM: +1.76 to 265.02

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 12 IG Corporate new issues only was 16.17 bps.

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $32.40b
August 2016 vs. Current
MTD – $32.40b
Low-End Avg. $25.13b 128.93% $60.48b 53.57%
Midpoint Avg. $26.22b 123.57% $61.13b 53.00%
High-End Avg. $27.30b 118.68% $61.78b 52.44%
The Low $15b 216.00% $45b 72.00%
The High $45b 72.00% $75b 43.20%

alphabet-google-debt-issuance

Mischler Financial was happy to have been named an active Co-Manager for Alphabet Inc. today, parent company of Google among others.  The Aa2/AA issuer priced a new $2b 10-year Senior Notes offering that started price evolution with IPTs in the +80 “area” before tightening 10 bps into +70a (+/-2) guidance after which it launched and priced at the tightest side orT+68.  For fair value I looked at the outstanding GOOGL 3.375% due 2/25/2024 that was G+61.  Applying 10 bps for the 8s/10s curve gets you to T+71 fair value versus today’s T+68 final pricing inferring a new issue concession of negative 3 bps.   The final order book was $3.5b for a bid-to-cover or oversubscription rate of 1.75-times. Bonds were seen T+67 bid or 1 bp tighter closing the session.

What’s more today’s new Alphabet 10-year represents the fourth lowest ever IG-rated Corporate coupon in debt capital markets history!

Here’s a look at the top 4 low “A”-rated coupons:

 

  • Walt Disney 1.85% due 7/30/2026
  • IBM Credit $1bn 1.875% due 8/01/2022
  • Colgate $500mm 1.95% due 2/01/2023
  • Alphabet Inc. $2bn 1.998% due 8/15/2026

 

Thank yous go out to Alphabet’s Treasury/Funding team and for today’s achievement and opportunity.
Have a great evening!
Ron

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 over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
8/01
AVERAGES
WEEK 7/25
AVERAGES
WEEK 7/18
AVERAGES
WEEK 7/11
AVERAGES
WEEK 7/04
New Issue Concessions 1.16 bps 1.23 bps 3.95 bps 0.82 bps 0.73 bps
Oversubscription Rates 2.48x 3.63x 3.42x 4.73x 3.82x
Tenors 15.70 yrs 13.45 yrs 7.95 yrs 9.58 yrs 9.72 yrs
Tranche Sizes $1,671mm $875mm $1,482mm $887mm $770mm

 

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
Alphabet Inc. Aa2/AA 1.998% 8/15/2026 2,000 +80a +70a (+/-2) +68 +68 JPM/MS(a) + 4 (p)
ENAP Baa3/BBB- 3.75% 8/05/2026 700 +high 200s
(+287.5)
+250a (+/-10) +240 +240 CITI/JPM
Hershey Company A1/A 2.30% 8/15/2026 500 +90a +85a (+/-5) +80 +80 BAML/CITI/JPM/RBC
Hershey Company A1/A 3.375% 8/15/2046 300 +120a +110a (+/-5) +110 +110 BAML/CITI/JPM/RBC
International Paper Baa2/BBB 3.00% 2/15/2027 1,100 +175a +155a (+/-5) +150 +150 DB/JPM (a) + 8 (p)
International Paper Baa2/BBB 4.40% 8/15/2047 1,200 +235a +215a (+/-5) +210 +210 DB/JPM (a) + 8 (p)
Mattel Inc. Baa1/BBB+ 2.35% 8/15/2021 350 +mid-100s
(+150a)
+135a (+/-5) +130 +130 BAML/CITI/MS/WFS
National Grid
Keyspan Gas East Corp.
A2/A- 2.742% 8/15/2026 700 +125a +120 the # +120 +120 BNY/CITI/HSBC/MUFG/TD
National Grid
Massachusetts Electric Co.
A3/A- 2.304% 8/15/2046 500 +160a +175a (+/-5) +170 +170 BNY/CITI/HSBC/MUFG/TD
Rabobank UA/NY Aa2/A+ FRN 8/09/2019 400 3mL+equiv 3mL+equiv 3mL+51 3mL51 BAML/BARC/MS/UBS
Rabobank UA/NY Aa2/A+ 1.375% 8/09/2019 1,000 +80a +72a (+/-2) +70 +70 BAML/BARC/MS/UBS
Weingarten Realty Inv. Baa1/BBB 3.25% 8/15/2026 250 +212.5 +185a (+/-2) +183 +183 BAML/JPM/REG/USB

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
African Development Bank
(tap) New total: $1,250mm
Aaa/AAA 1.00% 5/19/2019 250 MS+2a MS+2 MS+2 +19.3 BNPP/RBC

 

Lipper Report/Fund Flows – Week ending July 27th     

 

  • For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).
  • Over the same period, Lipper reported a net outflow of $15.422m from Loan Participation Funds (2016 YTD net outflow of $5.389b).
  • Emerging Market debt funds reported a net inflow of $1.382b (2016 YTD inflow of $3.717b).

 

IG Secondary Trading Lab

 

  • BAML’s IG Master Index was unchanged at +150.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 6 bps to +202 versus +196.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.9b on Friday versus $14.5b Thursday and $11.5b the previous Friday.

 

New Issue Volume

 

Index Open Current Change
IG26 75.231 76.833 1.602
HV26 202.90 206.915 4.015
VIX 12.44 13.37 0.93
S&P 2,170 2,157 <13>
DOW 18,404 18,313 <91>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $9.00 bn DAY: $9.25 bn
WTD: $32.40 bn WTD: $32.65 bn
MTD: $32.40 bn MTD: $32.65 bn
YTD: $843.591 bn YTD: $1,077.377 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Personal Income June 0.3% 0.2% 0.2% —-
Personal Spending June 0.3% 0.4% 0.4% —-
Real Personal Spending June 0.2% 0.3% 0.3% 0.2%
PCE Deflator MoM June 0.2% 0.1% 0.2% —-
PCE Deflator YoY June 0.9% 0.9% 0.9% —-
PCE Core MoM June 0.1% 0.1% 0.2% —-
PCE Core YoY June 1.6% 1.6% 1.6% —-
ISM New York July —- 60.7 45.4 —-
Wards Domestic Vehicle Sales July 13.06m 13.77m 12.76m —-
Wards Total Vehicle Sales July 17.30m 17.77m 16.61m —-

 

Rates Trading Lab

 

Neutral day for TYU6s Monday with the flat Value Area.  Larger technicals remain constructive (see the chart in MP package and the Bull Trend Channel ) — note though,  this situation is highly dependent on the major 132-17 Support remaining intact.   The 132-17 level was Friday’s GDP launch level that started a huge 9-tic Buying Tail, it also sits near the lower boundary of the just mentioned Bull Trend Channel; a break here would do technical damage, and it would signify a loss of upside momentum.

-Steven Muchnikoff

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-00+ 100-182 99-24 101-15 106-30
RESISTANCE LEVEL 99-31 100-16 99-21 101-10+ 106-08
RESISTANCE LEVEL 99-296 100-102 99-13+ 101-00 105-12
         
SUPPORT LEVEL 99-26 100-04 99-05 100-20+ 104-01
SUPPORT LEVEL 99-246 99-306 98-29+ 100-10+ 103-20
SUPPORT LEVEL 99-222 99-266 98-24+ 100-03 102-31

 

Tomorrow’s Calendar

 

  • S. Data: Jun PI/PS/PCE, Jul NY ISM, Aug IBD-TIPP, Jul Vehicles
  • Supply: Nothing Scheduled
  • Events: Nothing Scheduled
  • Speeches: Nothing Scheduled

(more…)

MSFT Leads USD 23.4bil Blockbuster Bond Issuance Day; Mischler Comment
August 2016      Debt Market Commentary, Recent Deals, Recent Deals   

Quigley’s Corner 08.01.16 Blockbuster Corporate Bond Issuance Day; MSFT Sets Standard for Diversity & Inclusion

 

Investment Grade New Issue Re-Cap –Blockbuster Bond Day; $23.4bil  via 7 IG Issuers; 14 Tranches

IG Corporate Primary Market :Microsoft (NASDAQ:MSFT); Synchrony Financial (NYSE:SYF)

Global Market Recap

IG Primary Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

Well, at 7:25pm this evening, my second job started.  You know the one where I extoll the virtues of investment grade corporate bond issuance, a Company’s D&I mandate, the famous “QC” shout-outs and the all-important relative studies of today’s new issues that Mischler Financial participated in.  But first what else is there say I mean – “what a whale of a day!”  IG Corporate primary markets were on FIYA-AHHHHH today!  Literally En Fuego!  7 IG issues priced a total of 14 transactions totaling $23.40b.  Now let’s put that into the proper perspective.  You all read last Friday’s “Best and Brightest” edition. In it THE top syndicate desks offered their thoughts on this week’s IG Corporate new issue volume as well as their forecasts for supply total for all of August.  Before any new month begins I always walk you into a section titled “Knowing the Past for the Future” in which I look at historical IG Corporate and SSA issuance over a decade for any given new month.  Here’s what the numbers look like for August:

Across the past ten years, all-in dollar-denominated IG Corporate plus SSA August new bond issuance averaged $63.53b.

 

  • Over the past five years, all-in IG August new issuance averaged $61.17b.
  • Over the past three years, all-in IG August issuance has averaged $60.79b.
  • The past three years of August saw IG Corporate only issuance average $49.46b.
  • August SSA issuance has averaged $11.33b across the last three years.

 

……..and here’s the August chart I put together:

August
(Year)
All-in IG Issuance (bn) IG Corps
only (bn)
SSA
only (bn)
2015 59.80 49.75 10.05
2014 55.47 46.55 8.92
2013 67.09 52.07 15.02
2012 63.76 57.46 6.30
2011 59.74 47.06 12.68
2010 84.84 69.82 15.02
2009 59.61 50.25 9.36
2008 36.63 23.65 12.98
2007 90.36 71.56 18.80
2006 57.97 51.72 6.25

 

It’s helpful and what’s more, we’re a numbers loving society. We like knowing “the best of this” and “the best of that” and “the top 10 of anything” for that matter. Today the $23.40b in new IG Corporate-only supply that priced represents 47.31% of the past 3-year average for August…………and it’s only August 1st!

This week the syndicate midpoint average forecast for IG Corporate issuance is $26.22b.  We priced 89% of that today alone.  What’s more, the estimate for overall August new IG supply is $61.13b!  We priced over 38% of THAT today! Mischler was there again this time featured in active roles for both Microsoft’s mega $19.75b 7-part 3s/5s/7s/10s/20s/30s and 40-year new issue as well as for Synchrony Financial’s new $500mm 10-year.

 

Some talking points first:

  • Today’s $23.40b volume makes it the 5th busiest day of the year.
  • Microsoft’s $19.75b 7-part ranks as the 5th largest U.S. issue of all-time.
  • Today’s MSFT new issue represents 2.37% of all 2016 YTD issuance!
  • The session’s $23.40b ranks just outside of the top 10 busiest days of all-time.


Okay ready or not, let’s get to it:

msft-corporate-debt-mischlerMicrosoft Corp. (NASDAQ:MSFT) takes great pride in its own products, and advances to improve the quality of people’s lives through innovative products and it does all it can to help foster a workplace and corporate culture reflective of the world’s changing demographics.  It’s called Diversity and Inclusion at MSFT and it starts from the top down from inside the office of Microsoft’s Indian-born American CEO, Satya Nadella.  Today the internal D&I mandate at the world’s third largest company by market capitalization at $434b. was passed over to the Treasury/Funding team at Microsoft.  Our liaison guided us through an important deal for our Debt Capital Markets.  You see, it wasn’t only about the immense size and multi-tranches of today’s new issue rather it reflected Microsoft’s commitment to our diverse world.  There were a total of 13 diversity firms on today’s transactions.  Along with Mischler Financial, the nation’s oldest Service Disabled Veteran broker dealer were a dozen other diverse financial services companies whose certifications ranged from, African-American, Hispanic-American, Woman-owned and Veteran-owned firms. It may just be one of the most diverse landmark investment grade rated corporate deals ever executed.

But that should come as no surprise. It reflects Microsoft’s work with myriad diverse employee networks rooted in its 100,000 employee workforce.  Here is a list of 42 diverse Microsoft networks that the Company features among its unique socially responsible corporate family:
Africans, Arabs, Attention Deficit Disorder Network, Bangladeshi, Blacks, Boomers, Brazilians, Chinese, Dads, Egyptians, Ex-Yugoslavians, Filipinos, French, Friends of Japanese, Hellenes, Hong Kong Employees, Deaf and Hard of Hearing Employees, Indians, Israelis, Koreans, Malaysians, Microsoft Adoption, Asian Professional Society, Microsoft Nepali, Military Reservists, Moms at Microsoft, Native Americans, New Zealanders, Pakistanis, Persians, Portuguese, Romanians, Russian-speaking employees, Singaporeans, Taiwanese, Thais, Turks, Ukrainians, U.S. Military Veterans, Vietnamese, Visually Impaired Persons and Working Parents at Microsoft.

Are you getting this?  In the financial services industry “deal day” means distribution, banking, coverage, relative value, oversubscription rates, book builds, etcetera, but it means so much more when diversity firms such as Mischler can prove to be a meaningful part of diversity at work.  Just witness our account base that introduced over 140 new orders and  over $500mil book to Microsoft.

Diversity and inclusion are critical underpinnings to the evolving culture at Microsoft and powerful bridges to the marketplace. They can be determining factors in whether or not talented people go to work for them and whether people buy their products.  Microsoft works to increase the pipeline of diverse talent, increase retention and match talent to job opportunities – and it is in its industry’s interest to be transparent about the current state and get on with the solutions. Along with its corporate peers, MSFT continues working together to land thoughtful, enduring and practical diversity and inclusion initiatives that transform its workforce, its suppliers and its vendors for the benefit of the industry, its employees and its customers.

As Microsoft transforms its business and culture, the value proposition for diversity and inclusion within Microsoft is increasingly clear — diversity and inclusion will yield better products and solutions for our customers, and better experiences for its employees.  Diversity gains will not be sustained unless everyone does their part to encourage new and different perspectives, solutions and innovative ideas to surface.  Being inclusive is not something that is simply done, rather it stands for who we are and what a Company is. It’s about transforming culture.

To that end, this past fiscal year, Microsoft put more focus and thought into advancing its diversity and inclusion agenda within the company. Microsoft developed and rolled out key priorities, which have now been woven into the Global Diversity & Inclusion Strategy and approved by its Board of Directors. The new strategy has four specific areas of focus:

  • Transform the Culture
  • Empower Our People
  • Expand our Talent Pipeline
  • Delight our Customers

 

Microsoft’s Deal Mechanics

Here’s a look at price compression from early morning initial price thoughts through guidance and the launch and final pricing of today’s mega deal.  The five tranches posted a cumulative average contraction of 20 bps from start to finish.

Here’s a look at how it all evolved:

 

MSFT Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
3yr +55a +40a (+/-5) +35 +35 <20> bps <4> 33/31 <2>
5yr +70a +55a (+/-5) +50 +50 <20> bps <4> 49/47 <1>
7yr +90a +75a (+/-5) +70 +70 <20> bps +3 69/67 <1>
10yr +110a +95a (+/-5) +90 +90 <20> bps +5 88/86 <2>
20yr +140a +125a (+/-5) +120 +120 <20> bps +1.5 119/117 <1>
30yr +165a +150a (+/-5) +145 +145 <20> bps +3 143/141 <2>
40yr +200a +185a (+/-5) +180 +180 <20> bps +5 179/177 <2>

 

………and here’s a look at final book sizes and oversubscription rates:

 

AAPL Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
3yr 2,500 5,200b 2.08
5yr 2,750 6,700b 2.44x
7yr 1,500 4,860b 3.24x
10yr 4,000 11,060b 2.76
20yr 2,250 5,960b 2.65x
30yr 4,500 11,000b 2.44x
40yr 2,250 6,140b 2.73x
Total Book 19.75 50.92b 2.58x

 

Microsoft (Aaa/AAA) and LinkedIn Corp. (BB+/NR) announced on June 13th that they entered into a definitive agreement in which MSFT will purchase LKND for $196 per share for a total transaction valued at $26.2b.  Today’s deal will use proceeds for the LinkedIn acquisition and for general corporate purposes.

 

  • In terms of relative value leads pointed to the outstanding MSFT 4.00% due 2/12/2055 that was T+175 pegging 40-year NIC as 5 bps against today’s new 40-year T+180 pricing.
  • The 30-year comparable was the MSFT 4.45% due 11/03/2045 that was T+142 versus today’s new 30-year final pricing at T+145 or 3 bps concession.
  • Fair value for today’s new 20-year that printed at T+120 was the MSFT 4.20% due 11/03/2035 carrying a T+104 bid this morning but also featuring a more dramatic 20s/30s curve conveyed as between 15-20 bps let’s split the difference and call it 17.5 bps so, T+121.5 fair value for a 1.5 bps NIC vs T+120 pricing.
  • For a 10-year study there was the outstanding MSFT 3.125% due 11/03/2025 seen G+85 bid pre-announcement nailing concession as a nickel or 5 bps against the T+90 final print.
  • New MSFT 7s turned to the 2.65% of 11/03/2022 G+67 for a 3 bps NIC vs. T+70.
  • 5-year MSFT comped between the MSFT 2.375% due 2/12/2022 (G+64) and the MSFT 2.00% due 11/03/2020 that was G+44.  The average between the two is G+54 pointing to a negative 4 bps NIC on the new 5-year final T+50 spread level.
  • 3yr. NIC was also negative 4 bps.

 

Microsoft Final Pricing

MSFT $2.5bn 1.10% due 8/8/19 @ $99.897 to yield 1.135% or T+35 MW+7.5

MSFT $2.75bn 1.55% due 8/8/21 @ $99.895 to yield 1.572% or T+50. MW+10

MSFT $1.5bn 2.00% due 8/8/23 @ $99.701 to yield 2.046% or T+70. MW+12.5

MSFT $4bn 2.40% due 8/8/26 @ $99.814 to yield 2.421% or T+90. MW+15

MSFT $2.25bn 3.45% due 8/8/36 @ $99.613 to yield 3.477% or T+120. MW+20

MSFT $4.5bn 3.70% due 8/8/46 @ $99.515 to yield 3.727% or T+145. MW+25

MSFT $2.25bn 3.95% due 8/8/56 @ $97.505 to yield 4.077% or T+180. MW+30

 

Who to thank?

Thank you to Microsoft Corp. Treasury/Funding and particularly Joel Combs for maximizing the business impact of global diversity and inclusion to empower people, and to transform culture and business. You are the recipient of this evening’s Mischler five-star salute.  We all thank you.

Genesis of the Five-Point Star
Yesteryear’s “bond Gods” Seth Waugh and Jimmy Quigley introduced the concept of our financial services first ever “mini-me” full service broker-dealer  back in 1993 with the advent of African-American-owned Utendahl Capital Partners L.P.  From that one firm in the early 1990s, we have witnessed a mushrooming of diversity firms who have subsequently learned through the school of hard knocks how to build into more formidable and sustainable broker dealers with a firm eye on maintaining and growing firm capital, leveraging their opportunities to make a concerted effort to create a value-added distribution proposition with formidable capital markets coverage from senior seasoned talent.  Add to that the diversity overlay with lasting certifications and give-back components and wrap it all up with great back office synergies that don’t fail the customer or the client after the deal is priced.  That is the five-point star we embrace here at Team Mischler.  Seth Waugh is back in our industry as of April 25th earlier this year as a non-executive chairman of Alex, Brown, a division of Raymond James, once it closes the acquisition of the U.S. Private Client Services unit of Deutsche Bank Wealth management expected sometime next month.  Seth was formerly CEO of Deutsche Bank Americas.  As for the other Mr. Quigley, he travels the world spreading the good news of BAML to the world outside the U.S. as that bank’s most senior international relationship manager and Executive Vice Chairman.  Together those two characters personified all that was good about Wall Street PRIOR to the financial crisis and those black box products that no one ever understood and that wound up blowing up the world resulting in the new restrictive regulatory environment.  It wasn’t on their watch though.  They were two revolutionary thinkers who changed the face of Wall Street by imagining, creating and promoting diversity in the financial services industry.  Think about that and those 12 diversity firms on today’s Microsoft deal.  It’s a mandate for the way our inextricably global-linked world economy works.  It did have a beginning folks and those two guys were front and center at its genesis.

Today that spirit continues to shine and was personified by joint lead and B&D Bank of America/Merrill Lynch Origination and Syndicate.  Again from the top down from the offices of Andrew Karp, Managing Director and Head of Americas Investment Grade Capital Markets to Dan Mead,  M.D. and Head of IG Debt Syndicate and the team of Maureen O’Connor, Kevin Barthelmes, Greg Baker and Andrew Kurz.  We appreciate the access, the two-way info and data exchanges, and for rewarding our distribution network with paper today. By holding us to your high standards, you challenge us to live up to our promise of formidable middle market placement opportunities, for the issuers we serve.  That kind of example and reward for our performance motivates us to deliver as we did today – an order book of over $500mm across 140 total individual orders.

See that folks!  I had to start back to Seth and Jimmy because that’s where this space all began.  It began with two forward thinking well-liked good guys and their call to social responsibility.  It is on us today to constantly improve upon this wonderful mandate; to give back as we were given and to continue the long American legacy of diversity.  Thank you BAML Syndicate!

 

Staying in Sync with Synchrony Financial

Mischler was also a 2% active Co-Manager on today’s new 10-year for Synchrony Financial.  “SYF” contracted a nickel or 5 bps from IPTs in the +230 “area” before launching and pricing at +225.  The final order book today was $870mm or 1.74-times oversubscribed.  Paper was issue bid or T+225 at the end of the day.  For comps we looked to the outstanding SYF 4.50% due 7/23/2025 that was T+212 (G+218) pegging concession as 7 bps versus on today’s 10-year Senior Notes new issue that priced at T+225.

Thank you to Chris Coffey, Director of Long-Term Funding, Corporate Treasury at Synchrony Financial.  Chris as many of you know is also one of the legends who helped steer the DCM’s most prolific D&I mandate for years at GECC.  Ahhh, all the legends in this evening’s “QC.”  Thanks Chris!   

BAML served as joint lead and B&D of SYF so, I have most of the same group of people in Syndicate and Origination to thank.  Andrew Karp, Dan Mead, Greg Baker and Andrew Kurz but this time I also add  “The Dragon” himself Mr. Rob Kasel who gets a special shout-out as he ran the book at the big house!  Thanks everyone. 

Synchrony Final Pricing 

SYF $500mm 3.70% due 8/04/2026 @ $99.619 to yield 3.746% or T+225 MW+35

               

Global Market Recap

 

o   U.S. Treasuries – Down day for USTs, JGB’s, Gilts & Bunds.

o   3mth Libor was unchanged at highest yield since May 2009 (0.75910%).

o   Stocks – U.S. mixed, Europe down, Nikkei higher & China red.

o   Economic – U.S. data was a touch weaker than expected.

o   Overseas Economic – Global data mixed tilted to down side.

o   Currencies – USD outperformed all of the Big 5.

o   Commodities – Bad day for commodities as crude oil enters a bear market.

o   CDX IG: +3.16 to 75.19

o   CDX HY: +16.33 to 411.04

o   CDX EM: +3.74 to 263.41

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 14 IG Corporate new issues only was 15.84 bps.

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $23.40b
August 2016 vs. Current
MTD – $23.40b
Low-End Avg. $25.13b 93.12% $60.48b 38.69%
Midpoint Avg. $26.22b 89.24% $61.13b 38.28%
High-End Avg. $27.30b 85.71% $61.78b 37.88%
The Low $15b 156.00% $45b 52.00%
The High $45b 52.00% $75b 31.20%

 

It’s 12:25a.m.  I’ll be back at the Corner later this morning!

 

Have a great evening!
Ron

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.
7/25
TUES.
7/26
WED.
7/27
TH.
7/28
FRI.
7/29
AVERAGES
WEEK 7/25
AVERAGES
WEEK 7/18
AVERAGES
WEEK 7/11
AVERAGES
WEEK 7/04
New Issue Concessions 2.89 bps 0.90 bps <0.4> bps 0.5 bps N/A 1.23 bps 3.95 bps 0.82 bps 0.73 bps
Oversubscription Rates 3.57x 2.61x 4.464x 3.70x N/A 3.63x 3.42x 4.73x 3.82x
Tenors 10.90 yrs 24.67 yrs 10.20 yrs 11.40 yrs N/A 13.45 yrs 7.95 yrs 9.58 yrs 9.72 yrs
Tranche Sizes $710mm $850mm $1,230mm $963mm N/A $875mm $1,482mm $887mm $770mm

 

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
Consumer’s Energy Co. A1/A+ 3.25% 8/15/2046 450 +120a +110a (+/-5) +105 +105 BAML/CITI/MIZ/MUFG/SCOT
+3 (p)
Microsoft Corp. Aaa/AAA 1.10% 8/08/2019 2,500 +55a +40a (+/-5) +35 +35 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 1.55% 8/08/2021 2,750 +70a +55a (+/-5) +50 +50 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 2.00% 8/08/2023 1,500 +90a +75a (+/-5) +70 +70 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 2.40% 8/08/2026 4,000 +110a +95a (+/-5) +90 +90 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 3.45% 8/08/2036 2,250 +140a +125a (+/-5) +120 +120 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 3.70% 8/08/2046 4,500 +165a +150a (+/-5) +145 +145 BAML/JPM/WFS (a) +4 (p)
Microsoft Corp. Aaa/AAA 3.95% 8/08/2056 2,250 +200a +185a (+/-5) +180 +180 BAML/JPM/WFS (a) +4 (p)
Northern Trust Corporation Baa1/BBB+ 4.60% PerpNC10 500 4.75%a N/A 4.60% $100.00 BAML/BARC/GS/MS
Santander UK Group Hldgs. Baa1/A 2.875% 8/05/2021 1,500 very low 200s
(+206.25)
+190a (+/-5) +185 +185 BNPP/BARC/GS/MS/SANT
Synchrony Financial BBB-/BBB- 3.70% 8/04/2026 500 +230a +225a (+/-5) +225 +225 BAML/MIZ/MUFG
Tanger Properties Baa1/BBB+ 3.125% 9/01/2026 250 +187.5a +170a (+/-2) +168 +168 BAML/WFS
Union Pacific Corporation A3/A 3.35% 8/15/2046 300 +120-125 +112a (+/-2) +112 +112 BAML/BARC/JPM
Union Pacific Corporation
(tap) New total: $650mm
A3/A 2.75% 3/01/2026 150 +75-80 +77a (+/-2) +77 +77 BAML/BARC/JPM

 

Lipper Report/Fund Flows – Week ending July 27th     

 

  • For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).
  • Over the same period, Lipper reported a net outflow of $15.422m from Loan Participation Funds (2016 YTD net outflow of $5.389b).
  • Emerging Market debt funds reported a net inflow of $1.382b (2016 YTD inflow of $3.717b).

IG Secondary Trading Lab

 

o   BAML’s IG Master Index widened 1 bp to +150 versus +149.  +106 represents the post-Crisis low dating back to July 2007.

o   Standard & Poor’s Global Fixed Income Research widened 6 bps to +202 versus +196.  The +140 reached on July 30th 2014 represents the post-Crisis low.

o   Investment grade corporate bond trading posted a final Trace count of $13.9b on Friday versus $14.5b Thursday and $11.5b the previous Friday.

 

New Issue Volume

 

Index Open Current Change
IG26 72.025 75.231 3.206
HV26 200.50 202.90 2.40
VIX 11.87 12.44 0.57
S&P 2,173 2,170 <3>
DOW 18,432 18,404 <28>
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $23.40 bn DAY: $23.40 bn
WTD: $23.40 bn WTD: $23.40 bn
MTD: $23.40 bn MTD: $23.40 bn
YTD: $834.591 bn YTD: $1,068.127 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Markit US Manufacturing PMI July 52.9 52.9 52.9 —-
Construction Spending MoM June 0.5% <0.6%> <0.8%> <0.1%>
ISM Manufacturing July 53.0 52.6 53.2 —-
ISM Prices Paid July 61.0 55.0 60.5 —-
ISM New Orders July —- 56.9 57.0 —-

 

Rates Trading Lab

 

It was a relatively static Treasury session.  Tomorrow’s another day.

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 100-046 100-24 100-02+ 102-01+ 107-22
RESISTANCE LEVEL 100-032 100-209 99-29 101-26 107-01
RESISTANCE LEVEL 100-00 100-26+ 99-24+ 101-19+ 106-09+
         
SUPPORT LEVEL 99-282 100-09 99-10 100-31+ 105-09+
SUPPORT LEVEL 99-26+ 100-07 99-05 100-25 104-13+
SUPPORT LEVEL 99-246 100-042 98-30 100-15 104-06

 

Tomorrow’s Calendar

 

o   China Data: Nothing Scheduled

o   Japan Data: Monetary Base, Consumer Confidence Index

o   Australia: Trade Balance, Building Approvals MoM

o   EU Data: EU-Jun PPI, U.K.-Jul Const PMI

o   U.S. Data: Jun PI/PS/PCE, Jul NY ISM, Aug IBD-TIPP, Jul Vehicles

o   Supply: U.K. 6y (£2.5bn)

o   Events: ECB 7d, RBA, U.K. ILTR

o   Speeches: Kaplan (more…)

Mischler Muni Market Update; GO New York & Pending Deals Week of Aug 1 2016
August 2016      Debt Market Commentary, Muni Market   

Mischler Muni Market Update for the week commencing 08.01.16 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 week, the negotiated market is led by $855.6 million GOs for The City of New York. The competitive market is led by $780.4 million for the State of Minnesota on Tuesday with 3 bids.

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-aug-1

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 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

US GDP-Big Miss; Rates: Lower For Longer; Mischler Weekend Update
July 2016      Debt Market Commentary   

Quigley’s Corner 07.29.16- U.S. GDP: A Big Miss; Rates: Lower for Longer

 

Investment Grade Corporate Debt New Issue Re-Cap – U.S. Misses GDP Big Time.  You Know What That Means..

Global Market Recap

IG Primary Market Talking Points

Lipper Fund Flows

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

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

Decades’ Worth of August IG Corporate and SSA Issuance-“Knowing the Past for the Future”

Investment Grade Credit Spreads (by Rating/Industry)

IG Secondary Market Trade Lab

Economic Data Releases

Rates Trading Lab-“Buy Dips; Rinse. Repeat. Rinse. Repeat.”

New Issue Pipeline

M&A Pipeline

 

TGIF folks!  It was a no print Friday readers and it’s been a whale of a week for Team Mischler. We‘d just like to thank Apple (NASDAQ:AAPL), Verizon (NYSE:VZ) and Goldman Sachs (NYSE:GS) once again for working with us this week.  I’d also like to thank the MFG institutional accounts that were responsive to our capital market initiatives this week.  You all know who you are.  None of this would be possible without you.  Trusting, believing; loyal and faithful.  That says it all and with great appreciation for helping pull our program together, we thank you.
lower-for-longer-interest-rates-mischler-
As for next week negative rates in Europe and Japan, Abe announced doubling down on ETF purchases, sorely disappointing the market that knows there is a HUGE stimulus package hovering around Japan. Fear persists in the EU and the world’s engine – the U.S. of A.  missed GDP big time this morning by more than 50% or 1.20% vs. 2.50%! The Mantra became louder today. It’s ….LOWER-for-LONGER. USTs rallied as a result. CT10 is 1.45%. Issuers are blasting out of black-outs and will be ready, willing and able to blow out deals heading into what will be a nice first half of August issuance as we head to a traditionally slow second half of the month.

Look for $25-30b to price next week in IG Corporate-land and $78b in August.  But what the heck, why listen to the guy-in-the-corner when I bring you the top syndicate desks each and every Friday to share their own thoughts and numbers with you.  Stop by Tony’s Global Recap first for a snapshot of today’s global market news (hey there it is right below) and then scroll to the “Best and the Brightest.”  They all checked into the “QC” this morning and afternoon and they are all ready to share their thoughts.  So, read all about it. 

Global Market Recap

 

  • S. Treasuries – Strong session for USTs led by the belly on the weak GDP release.
  • 3mth Libor – Set at highest since May 2009 (0.75910%).
  • Stocks – U.S. stocks mixed (3:30pm). S&P traded at all-time high & NASDAQ YTD high.
  • Overseas Stocks – Bank stocks led Europe higher. Nikkei improved & Shanghai lost.
  • Economic – U.S. GDP laid another egg. Data weak in Japan & Europe.
  • Currencies – Terrible day for the USD. Lost ground vs. all of the Big 5.
  • Yen – Rallied over 3 handles and traded with 5 handles (-3.25 to 102.02).
  • Commodities – Good day for commodities with the weaker USD. Crude higher.
  • CDX IG: -1.22 to 73.08
  • CDX HY: -3.67 to 400.48
  • CDX EM: -5.95 to 259.66

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).

 

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

 

IG Corporate New Issuance This Week
7/25-7/29
vs. Current
WTD – $28.00b
July 2016 vs. Current
MTD – $96.75b
Low-End Avg. $19.39b 144.40% $90.09b 107.39%
Midpoint Avg. $20.48b 136.72% $91.17b 106.12%
High-End Avg. $21.57b 129.81% $92.26b 104.87%
The Low $10b 280.00% $60b 161.25%
The High $30b 93.33% $125b 77.40%

 

“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).  Today’s cumulative underwriting percentage of the participating desks was 80.99% 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 fixed income 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’re 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:

“Good morning!  Question:  The BoJ eased its policy by doubling its ETF purchases amidst its negative rate environment; oil is flirting with below $40 per barrel and this morning, U.S. GDP grew……at a dismal 1.20% less than half the 2.5% expectations.  Europe continues to be in a shambles and well,  what’s it all mean?  LOWER-for-LONGER is remains the market mantra!  We’re entering August on Monday and it’s typically one of the slowest months of the year.  Let’s take a look at what we accomplished this week in our IG rated Corporate primary market:


This week we priced $33.94b of all-in IG Corporate and SSA issuance. IG Corps were $28.00b which eclipsed this week’s syndicate midpoint average forecast of $20.48b by 36.72%.

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

 

  • NICS:  1.23 bps
  • Oversubscription Rates: 3.63x
  • Tenors:  13.45 years
  • Tranche Sizes: $875mm

 

Week-on-week demand for IG corporate credit primary paper was off last week but remained strong posting an average bid-to-cover rate of 3.63x vs. 3.42x. Average NICs compressed by 2.72 bps to an average 1.23 bps versus last week’s 3.95 bps.  Average tranche sizes decreased to $875mm versus $1.482b last week.  Average tenors increased to 13.95 years versus last week’s 7.95 years.  For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).

Week-on-week, BAML’s IG Master Index is 2 bps wider or +149 vs. last Friday’s +147 close.  Spreads across the four IG asset classes widened 1.25 bps to 36.00 vs. 34.75. Looking at the 19 major industry sectors, spreads widened 0.47 bps to an average 45.21 bps off their post-Crisis lows versus 44.74 bps versus last Friday’s close.

               

Lastly, after all that, my two-part question is what are your thoughts and numbers for both next week’s and August’s IG Corporate issuance?  Thoughtful comments are always helpful and much appreciated especially by the issuers who YOU cover and who read this!

Many thanks in advance and best wishes for a great weekend! –Ron”

……..……and here are their formidable responses:

 

(more…)

AAPL 7bil Debt Deal Sweetened By Diversity; Mischler Comment
July 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 07.28.16 – An AAPL A Day…

 

Investment Grade New Issue Re-Cap

Apple Inc. Inks $7b 5-part

Tim Cook Talks About Commitment to D&I
Global Market Recap

IG Primary Market Talking Points

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab-All Eyes on Tokyo

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

 

It was an active day that finally put to rest all the rumors and chatter of an Apple multi-tranche new issue.  The Cupertino, California-based multinational technology company (NASDAQ:AAPL) priced a $7b 5-part that anchored today’s total of 6 IG Corporate issuers, 10 tranches and $9.625b in new supply.  As a result, the WTD IG Corporate-only volume of $28.00b eclipsed the syndicate midpoint average estimate of $20.48b by 37%.  SSA added one $1b deal bringing the all-in IG day totals to 7 issuers, 11 tranches and $10.625b.  The July MTD all-in IG Corporate only issuance total officially surpassed syndicate estimates for this month by 6% or $96.75b vs. $91.17b.

As for the IC Corporate plus SSA MTD total, we’re at a strong $127.987b.

and now onward we go to THE Deal-of-the-Day!

 

Apple of My Eye – Apple Inks $7b 5-part

All issuers are important to us here at Mischler Financial, the nation’s oldest Service Disabled Veteran broker-dealer.  However, it is really an accomplishment to secure repeat business.  Additionally to secure repeat business from the world’s largest publicly-held company as measured by market capitalization means that much more.  Today Mischler, whose Capital Markets team is on a roll, was honored to have been selected as an active diversity Co-Manager on today’s Apple Inc. $7.00b 5-part 3-year FXD/FRN, 5s, 10s and 30-year Senior Notes new issuance.

Here’s a look at price compression from early morning initial price thoughts through guidance and the launch and final pricing.  The five tranches posted a cumulative average contraction of 18 bps from start to finish. Here’s a look at how it all evolved:

 

AAPL Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
3yr FRN 3mL+equiv 3mL+equiv 3mL+14 3mL+14 <18> bps +1 N/A N/A
3yr FXD +50a +32-35 +32 +32 <18> bps +1 32/30 flat
5yr +70a +50-53 +50 +50 <20> bps <1> 50/49 flat
10yr +115a +100a (+/-2) +98 +98 <17> bps +3 98/96 flat
30yr +180a +165a (+/-2) +163 +163 <17> bps +2 162/160 <1>

 

………and here’s a look at final book sizes and oversubscription rates:

 

AAPL Issue Tranche Size Books Sizes
At-the-Top
Final Book
Size
Bid-to-Cover
Rate
3yr FRN $350mm $900mm $700mm 2x
3yr FXD $1.15b $2.9b $2.4b 2.09x
5yr $1.25b $4.6b $4.3b 3.44x
10yr $2.25b $6.8b $6.5b 2.89x
30yr $2.0b $7.6b $7.2b 3.6x

 

  • In terms of relative value leads looked at the outstanding AAPL 4.65% due2/23/2046 that was T+161 pegging concession as negative 2 bps on today’s new 30-year that priced at T+163.
  • For 10-year far value, the AAPL 3.25% due 2/23/2026 was T+92 (G+95) pre-announcement versus today’s final 10-year pricing at T+98 landing NIC at 3 bps.
  • The 5-year comps used was the AAPL 2.25% due 2/23/2021 seen T+45 bid or G+51 inferring a negative 1 bp NIC on today’s 5yr pricing at T+50.
  • Finally the 3-year looked at the AAPL 1.70% due 2/22/2019 that was T+27 (G+31) or a 1bp NIC versus today’s new T+32 3-year pricing.

 

Proceeds of today’s offering will be used for general corporate purposes, including repurchases of Apple Inc. common stock and payment of dividends under its program to return capital to shareholders, funding for working capital, capital expenditures, acquisitions, and repayment of debt, according to regulatory filings.

 

Apple Inc. Final Pricing Details

 

AAPL $350m FRNs due 8/02/19 @ $100.00 or 3mL+14

AAPL $1.15bn 1.10% due 8/2/19 @ $99.90 to yield 1.134% or T+32 MW T+10

AAPL $1.25bn 1.55% due 8/4/21 @  $99.861 to yield 1.579% or T+50 MW T+10

AAPL $2.25bn 2.45% due 8/4/26 @ $99.727 to yield 2.481% or T+98 MW T+15

AAPL $2bn 3.85% due 8/4/46 @ $99.735 to yield 3.865% or T+163 MW T+25

 

From the Top Down – Apple Inc.’s Tim Cook Talks About the Company’s Commitment to D&I

With a market cap of $560 billion that’s just too steep even for the guy-in-the-corner to take on in telling the great Diversity and Inclusion story at the world’s most valuable company.  So, instead, I turn to the head chef himself, none other than Tim Cook, CEO of Apple Inc.  It cuts to the heart of what I mean when I consistently write here in the “QC” that “D&I starts from the top down!”  What better company to illustrate that in practice for all of Mischler’s issuer relationships to read than with the world’s largest company.  And “Yes” I own an iPhone and an iPad……my wife owns an iPhone……2 to be exact…….my daughter owns an iTouch and an iPad.  So, we are loyal customers and fans alike.  Stock?  Of course there is also Apple stock in the Quigley family portfolio.  Take it away Tim:

A message from Tim Cook…AAPL-debt-issuance-mischler

Apple has always been different; a different kind of company with a different view of the world. It’s a special place where we have the opportunity to create the best products on earth — products that change lives and help shape the future. It’s a privilege we hold dear.

Diversity is critical to innovation and it is essential to Apple’s future. We aspire to do more than just make our company as diverse as the talent available to hire. We must address the broad underlying challenges, offer new opportunities, and create a future generation of employees as diverse as the world around us. We also aspire to make a difference beyond Apple.

This means fostering diversity not just at Apple but throughout our entire ecosystem, from the customers we welcome in our stores to the suppliers and developers we work with. We are committed to fostering and advancing inclusion and diversity across Apple and all the communities we’re a part of. As one example, we’re proud that our spending on women- and minority-owned businesses exceeded $650 million last year.

We want every person who joins our team, every customer visiting our stores or calling for support to feel welcome. We believe in equality for everyone, regardless of race, age, gender, gender identity, ethnicity, religion, or sexual orientation. That applies throughout our company, around the world with no exceptions.

Last year we reported the demographics of our employees for the first time externally, although we have long prioritized diversity. We promised to improve those numbers and we’re happy to report that we have made progress. In the past year we hired over 11,000 women globally, which is 65 percent more than in the previous year. In the United States, we hired more than 2,200 Black employees — a 50 percent increase over last year — and 2,700 Hispanic employees, a 66 percent increase. In total, this represents the largest group of employees we’ve ever hired from underrepresented groups in a single year. Additionally, in the first 6 months of this year, nearly 50 percent of the people we’ve hired in the United States are women, Black, Hispanic, or Native American.

As you can see, we’re working hard to expand our recruiting efforts so we continue hiring talented people from groups that are currently underrepresented in our industry. We’re supporting education with programs like the Thurgood Marshall College Fund to help students at historically black colleges and universities find opportunities in technology. ConnectED is bringing our technology to some of the most economically disadvantaged schools and communities in the United States, so more people have the opportunity to pursue their dreams. We’re also hosting hundreds of students at our annual developer conference, and we’re setting up new programs to help students learn to code.

We are proud of the progress we’ve made, and our commitment to diversity is unwavering. But we know there is a lot more work to be done.

Some people will read this and see our progress. Others will recognize how much farther we have to go. We see both. And more important than these statistics, we see tens of thousands of Apple employees all over the world, speaking dozens of languages, working together. We celebrate their differences and the many benefits we and our customers enjoy as a result.

Tim Cook

CEO, Apple Inc.

Deals that Open Doors for Diverse Financial Firms

 

Included among Apple’s Diversity Network Associations is Apple Veterans Association.  Apple launched its Supplier Diversity Program in 1988, and it’s been growing and thriving ever since. Through the program, the Company works with a variety of organizations to identify new suppliers whose values match their own. And in just the last year, Apple spent over $3 billion with more than 6000 small and diverse suppliers.  Those suppliers extend to the financial services industry. What transpired on today’s new 5-part Apple transaction was an inflection point for Team Mischler, the nation’s oldest Service Disabled Veteran broker dealer.  We were able to introduce nearly three dozen new accounts to Apple’s investor profile.  We were rewarded with allocations that touched virtually every single account.  That, in turn, creates investor confidence as well as credibility for our broker-dealer.  We take what we do seriously and we strive to be the best with each opportunity that we are given.

Apple works with many of the world’s leading financial institutions, but Apple also wants strong ideas and points of view that can only come from small, diverse firms. The Company feels it lends a broader financial picture and makes the corporation more informed by relying on these firms for some of its most crucial transactions. Today, Mischler Financial Group, Inc. (Service Disabled Veteran-owned); Lebenthal & Co., LLC (woman-owned); and Loop Capital Markets LLC and The Williams Capital Group, L.P. (both African American–owned) were active co-managers on Apple’s $7 billion bond offering.

There are many people to thank for today’s stellar opportunity to serve Apple Inc. First and foremost is Team Apple Inc. Treasury/Funding and that means Mike, Matt and Eric.  As a result, Team Apple is the recipient of Mischler Financial’s Official 5-Star Salute!

As for the joint lead that was appointed by the issuer to liaise with today’s diversity banking group, it was déjà vu all over again folks.  Goldman Sachs once again handled the D&I component of today’s transaction.  Suffice it to say I will hold back on the “kudos”, “good work”, “plaudits”, “hats off” etc, lest someone at Goldman aggressively starts pursuing me to head all public relations for the House of Gold!!  (Haha!) Suffice it to say, congrats and thank you’s to Jonny Fine, Gaurav Mathur, Tony Shan, Dan Miree, Matt Jackson and Salina Lee who I worked with today, via e-mail, phone, Bloomberg and chats.  As the saying goes “Make new friends, but keep the old; those are silver but these are gold.” Thank you Team GS!

Global Market Recap

 

  • S. Treasuries – Mixed & little changed. JGB’s closed mixed & the long end in Europe bid.
  • 3mth Libor – Set at highest yield since May 2009 (0.75650%).
  • Stocks – U.S. stocks mixed. Europe led down by bank stocks. Nikkei struggled.
  • Economic – U.S. data a bit weaker but not a factor.
  • Overseas Economic – Europe data better with higher German CPI.
  • Economic Tomorrow – Big calendars in Japan, Europe & the U.S.
  • Currencies – USD mixed vs. the Big 5 with the DXY Index weaker.
  • Commodities – Crude down while natural gas, gold, silver & copper closed higher.
  • CDX IG: +0.36 to 73.81
  • CDX HY: +4.86 to 401.99
  • CDX EM: +5.44 to 266.42

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • Canadian National Railway Co. upsized its 30-year Senior Notes new issue today to $650mm vs. $500mm at the launch and at the tightest side of guidance.
  • Split-rated Eagle Materials Inc. increased today’s 10-year Senior Notes new issue to $350mm vs. $300mm at a tighter launch and after having skipped guidance.
  • For the week ended July 27th, Lipper U.S. Fund Flows reported an inflow of $1.475b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.798b) and a net outflow of $175.430m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.696b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 9 IG Corporate new issues only was 20.06 bps.

 

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

 

IG Corporate New Issuance This Week
7/25-7/29
vs. Current
WTD – $28.00b
July 2016 vs. Current
MTD – $96.75b
Low-End Avg. $19.39b 144.40% $90.09b 107.39%
Midpoint Avg. $20.48b 136.72% $91.17b 106.12%
High-End Avg. $21.57b 129.81% $92.26b 104.87%
The Low $10b 280.00% $60b 161.25%
The High $30b 93.33% $125b 77.40%

 

 

Have a great evening!
Ron

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…)

Fixated on FOMC; Debt Markets Waiting On Latest Update-Mischler Comment
July 2016      Debt Market Commentary   

Quigley’s Corner 07.26.16: Managers Fixated on FOMC

 

Investment Grade New Issue Re-Cap

Global Market Recap

 IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows

IG Credit Spreads (by Rating/Industry)

IG Secondary Market Trading Lab

New Issue Pipeline

Economic Data Releases

Rates Trading Lab

M&A Pipeline

 

We had 5 IG Corporate issuers tap the dollar DCM today pricing 6 tranches between them totaling $5.1b.  Today’s big transaction was Citigroup’s $2.5b 2-part 5-year FXD/FRN that priced with no concession.  In the SSA space, NIB added its expected $1b 5-year boosting the all-in day totals to 6 issuers, 7 tranches and $6.1b.

The IG Corporate-only WTD total is now $12.2b or 63% of this week’s syndicate midpoint average forecast calling for $20.48b.

We expect a quiet Wednesday session ahead of tomorrow’s 2:00pm FOMC Rate Decision Statement only.  As our own rates guru, Tony Farren shared with me today, “I expect the FOMC Statement to lean dovish with a message that the Fed is data dependent with an eye on international developments (Brexit, Europe, Japan, China, etc). My call for the FOMC rate hikes in 2016 is zero to one hike. I think the FOMC wants to get in a least one rate hike this year but to do it, the stars really have to align.  Tomorrow is a Statement only meeting.  We’ll have to wait until the September 20/21st meeting for the next Projections and Press Conference.  Following tomorrow’s FOMC, focus will shift to the BOJ Meeting. The BOJ Statement is released Thursday night.”

 

Global Market Recap

 

  • S. Treasuries – Weak 5yr auction. Closed mixed & little changed but had a solid afternoon rally.
  • 3mth Libor – You guessed it another high yield since May 2009 (0.74300%).
  • Stocks – U.S. stocks are mixed & little changed but staged a solid rally off the lows of the day.
  • Overseas Stocks – Europe closed mixed. China had a solid rally & the Nikkei traded poorly.
  • Economic – U.S. economic data was mixed.
  • Currencies – Strong day for the Yen. The Euro & Pound closed little changed.
  • Commodities – Crude down but closed well above the day’s low price. Bad day for wheat.
  • CDX IG: +1.11 to 74.56
  • CDX HY: +5.84 to 401.32
  • CDX EM: +4.91 to 260.97

*CDX levels are as of the 3PM ET UST close.

-Tony Farren

 

IG Primary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate new issues only was 12.2 bps.
  • The spread compression from IPTs to the launch/final pricing across today’s 6 IG new issues – including the split-rated $25 PerpNC5 for Capital One – was 14.125 bps.

 

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

 

IG Corporate New Issuance This Week
7/25-7/29
vs. Current
WTD – $12.20b
July 2016 vs. Current
MTD – $80.95b
Low-End Avg. $19.39b 62.92% $90.09b 89.85%
Midpoint Avg. $20.48b 59.57% $91.17b 88.79%
High-End Avg. $21.57b 56.56% $92.26b 87.74%
The Low $10b 122.00% $60b 134.92%
The High $30b 40.67% $125b 64.76%

 

 

Have a great evening!
Ron

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…)