Browsing articles tagged with "Mischler Financial Archives - Page 9 of 11 - Mischler Financial Group"
Mischler Muni Market Update Week of 07-25-16
July 2016      Debt Market Commentary, Muni Market   

Mischler Muni Market Update for the week commencing 07.25.16 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 $972.6 million for Presence Health Network issued by Illinois Finance Authority.  The competitive market is led by $213.0 million of Special Obligation Bonds for MiamiDade County, Florida 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-update-072516

 

A Day To Discover Discover Bank Debt Offering; Mischler Comments
July 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 07-21-16  Discover Bank Debt Offering


Investment Grade Corporate Debt New Issue Re-Cap

Global Market Recap

IG Primary Market Talking Points

Uncovering Discover Bank’s 10yr Fair Value  

New Issues Priced

Lipper Report/Fund Flows

Investment Grade Credit Spreads (by Rating/Industry)

IG Secondary Trading Lab

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 


It was a relatively quiet day in the IG primary market place with only 2 issuers pricing 3 tranches between them totaling $2b and with no all-in volume assist from the SSA space. With tomorrow’s being a Friday session, it looks as if we might fall about 12% short of this week’s syndicate midpoint average volume forecast. As of today, we’ve priced $30.40b vs. $34.70b.  This evening, stay tuned for Mischler’s deal-of-the day –  the story of Discover Bank’s new 10-year.

Global Market Recap

 

  • ECB Meeting & Draghi were the featured story today (below).
  • S. Treasuries – Big time comeback for USTs from the morning low prints.
  • 3mth Libor – Set at highest yield (0.71450%) since 5/20/09.
  • Stocks – Down day for the U.S. Europe closed mixed. Asia closed higher.
  • Economic  U.S. had more good data than bad. U.K. retail sales were weaker.
  • Currencies – Yen rallied 1 handle vs. the USD. USD tiny gains vs. the Euro & Pound.
  • Commodities – Poor day for crude oil and an up day for gold & silver.
  • CDX IG: +0.35 to 70.56
  • CDX HY: +2.22 to 389.87
  • CDX EM: -1.30 to 254.36

Swap Spreads: Had a very difficult day for a host of reasons (below)

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

-Tony Farren

 

IG Primary Market Talking Points

 

  • For the week ended July 20th, Lipper U.S. Fund Flows reported an inflow of $894.421m into Corporate Investment Grade Funds (2016 YTD net inflow of $19.323b) and a net inflow of $321.724m into High Yield Funds – the second highest ever – (2016 YTD net inflow of $9.872b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 3 IG Corporate new issues only was 22.50 bps.

 

Discovering the Uncovering of Discover Bank’s 10yr Fair Value  
Discover Bank is the nation’s third largest credit card brand with approximately 50 million cardholders.  This past Tuesday, July 19th Discover Bank’s parent company, Discover Financial (NYSE: DFS beat Q2 2016 earnings delivering $1.47 EPS or $0.05 more than consensus estimates of $1.42.  Discover’s $2.2b in revenues was $400mm more than $1.8b forecasts. That’s a great start to pricing a new issue for a market defined by ravenous investor appetite.

 

Discover Bank wasted no time capitalizing on its strong earnings by hitting the market this morning for the first time since it’s $1b 3-year Global Notes that priced on August 10th of 2015.  The relatively infrequent issuer rated Baa3/BBB/BBB+ and “stable” on all counts, announced and priced a new $1b 10-year 3(a)(2) Senior Bank Notes new issue due July 27, 2026 through joint leads Bank of America/Merrill Lynch, Citigroup (who served as B&D), Deutsche Bank and Royal Bank of Canada.  Rule 3(a)(2) makes the issue exempt from SEC registration.  Proceeds were earmarked for general corporate purposes.  But if it’s in the “QC” it’s because the issuer gave us a role today and that role was a very nice one – Mischler Financial served as an active 2.00% Co-Manager and so without further ado, let’s get to the deal drill-down.

Initial price thoughts were released in the +215-220 range before guidance tightened to +195a with “area” defined as (+/-5 bps) after which it launched and priced at the tightest side of guidance or T+190. That’s a resounding <27.5> bps of spread compression from IPTs to the launch.

 

The comp for today’s relative value study looked to the outstanding DFS 4.25% due 3/13/2026 that was T+198 bid pre-announcement this morning or G+199. That $400mm deal originally priced on March 10th, 2014.  That pegged fair value on today’s new 10-year that priced at T+190 at negative< 9 bps>! Still another way to approach fair value was to look at the DFS 3.75% due 3/04/2025 (Holdco) that was T+205 (G+214).  One can make a case that the Opco/Holdco differential is worth 15 bps so fair value would again get you to around +199 and again nailing NIC thru this approach as negative <9> bps.  Translation……..”Congratulations to Discover Treasury Funding and the group of joints leads BAML, CITI, DB and RBC!”
Today’s order book finished at $4.4b or 4.4x-times oversubscribed.

At the break, paper was framed in a 188/186 market or 2 bps tighter on the bid.

 

Discover Bank Final Pricing
DFS $1bn 3.45% due 7/27/2016 @ $99..891 to yield 3.463% or T+190
Thank yous as well as Mischler’s five-star salute go out to Team Discover’s Tim Schmidt, who it seems I’ve been working with for all my years in the diversity space, Al Agra, Krsitopher Mclachlan and Kevin Sweeney.  To no one’s surprise, a hats off to Team Citigroup Syndicate’s Peter Aherne, Jim Hennessy who ran the book and Alisha Mingo.  Additionally a kind nod to an all-around good guy at RBC Syndicate – Paul Lynch.  Thanks to each of you for the data exchanges, relative value discussions and Citigroup for working with me on orders once again today.

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

 

IG Corporate New Issuance This Week
7/18-7/22
vs. Current
WTD – $30.40b
July 2016 vs. Current
MTD – $69.50b
Low-End Avg. $33.68b 90.26% $90.09b 77.15%
Midpoint Avg. $34.70b 87.61% $91.17b 76.23%
High-End Avg. $35.73b 85.08% $92.26b 75.33%
The Low $25b 121.60% $60b 115.83%
The High $41b 74.15% $125b 55.60%

 

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 (more…)

Memorial Day Pledge by Mischler Provides High Yield Return for VetEdChallenge
June 2016      Company News, Giving Back, News and Information   

2016 Memorial Day Pledge by Mischler Financial Group Provides High Yield Return for VetEdChallenge Crowdfund Campaign

Mischler-Veterans-Education-Challenge

(from left) Avis and Bruce Richards, Founders of VetEdChallenge, MFG Analyst Jonathon Herrick, Mischler Financial CEO Dean Chamberlain

Stamford, CT— June 22, 2016 —Memorial Day and Veterans Day are the two US Holidays dedicated to honoring those who have served within the US military and those who have made the ultimate sacrifice while defending our country. At Mischler Financial Group, a debt market specialist and the securities industry’s oldest broker-dealer owned and operated by Service-Disabled Veterans, these two national holidays represent more than just a time for remembrance, they are a call to arms and the inspiration for month-long missions during which the firm and its squad of military veterans-now-financial industry veterans go beyond the call of duty. During the months of May and November, the firm allocates a portion of the months’ entire commission revenue to carefully-vetted programs dedicated to helping US military veterans and their families.

On May 1, Mischler made its annual Memorial Day Month pledge to Veterans Education Challenge, aka @VetEdChallenge, the crowdfund campaign launched on Veterans Day 2015 and committed to providing veteran educational scholarships with a preference to Pell-eligible undergraduate and graduate students. This week, Mischler CEO Dean Chamberlain and Mischler Financial Group founder Walt Mischler, both graduates of the US Military Academy at West Point, and both certified SDVs who have since risen to the top ranks of the financial industry, announced that the firm has delivered a check in the amount of $22,000 to the Veterans Education Challenge campaign. The first $1million raised before Veterans Day 2016 will be matched by philanthropists Bruce and Avis Richards. Mr. Richards is a co-founder of Marathon Asset Management, the $13bil AUM fund specializing in global credit and fixed income.

CEO Dean Chamberlain

CEO Dean Chamberlain

Stated Dean Chamberlain, “We evaluate philanthropies similar to the way top investment managers analyze financial market opportunities; the goal is to achieve the highest risk adjusted returns when compared to alternatives.” Added Chamberlain, “Until we’re proven wrong, we believe that investing in the education of disciplined and determined veteran students provides the greatest return on capital for those students, their families, the enterprises they go to work for and the communities in which they live.”

Contributions to Veterans Education Challenge will go towards veteran scholarship awards that go beyond the provisions of the GI Bill and will be based on financial need with a priority and preference to Pell-eligible undergraduate and graduate students. Veterans will be eligible to renew awards based on financial need and standing with their universities.

About Mischler Financial Group Inc.

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) was the first FINRA minority broker-dealer member to be designated as a Service-Disabled-Veteran-Owned Business Enterprise (SDVOB). The firm is now widely-recognized by Fortune corporate treasurers and leading investment managers for “punching above its weight class” while serving as a boutique investment bank and conflict-free institutional brokerage. Mischler is unique among its peers for its capital markets capabilities as well as the firm’s year-round advocacy and support of veteran-centric causes. Mischler maintains offices in 8 major cities and is staffed by more than 50 securities industry veterans whose expertise extends across virtually all primary and secondary debt and equity capital market silos. In addition to traditional DCM and ECM services and secondary market best execution, Mischler administers corporate share repurchase programs for leading Fortune companies, cash management for government entities and corporations, and asset management programs for liquid and alternative investment strategies.

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For additional information:

Dean Chamberlain, Chief Executive Officer

(T) 203.276.6646

Email: dchamberlain@mischlerfinancial.com

 

 

To Honor Memorial Day, Mischler Pledges Profits to VetEdChallenge
May 2016      Company News, Giving Back, News and Information   

vetedchallenge-crowdrise-mischlerNewport Beach, CA & Stamford, CT, May 12, 2016–Mischler Financial Group (“MFG”), the financial industry’s oldest minority investment bank and institutional brokerage owned and operated by Service-Disabled Veterans, announced today that in recognition of the upcoming Memorial Day celebration, the firm has pledged a percentage of its entire May profits to Veterans Education Challenge, (“VetEdChallenge”) a donation-based crowdfund campaign. The philanthropic initiative is dedicated to providing need-based college scholarships to ex-military students pursuing higher education so they can get better access to a broad range of career development opportunities.

Veterans Education Challenge was established in November 2015 by investment management industry veteran Bruce Richards and his wife Avis. Mr. Richards is personally matching the first $1million in donations made to the “VetEdChallenge” campaign via crowdfund platform “Crowdrise.” He  is co-founder, CEO and managing partner of Marathon Asset Management, the $12.5 billion investment firm specializing in global credit and fixed income markets.

“This Memorial Day Month we’ve embraced a more contemporary approach to paying it forward via the VetEdChallenge program”, said Mischler Financial Group CEO Dean Chamberlain, a graduate of the U.S. Military Academy at West Point who himself earned his MBA via a work-scholarship program at Northwestern University’s Kellogg School of Management. “Our annual, entire month of May pledge in honor of Memorial Day, as well as our annual Veteran’s Day Month pledge has typically focused on traditional, best-in-class philanthropies and we believe the VetEdCballenge is an ideal vehicle to directly impact the future of returning veterans, as higher education can provide a material lift in the course of pursuing opportunities.”

Added Chamberlain, “Because we are always mentoring returning veterans, we know first-hand about the challenges these men and women face as they assimilate back into the mainstream and find themselves working multiple jobs to put aside funds for educational degrees beyond their pre-military academic background. We’re proud to partner with Bruce Richards and be affiliated with his truly thought-leading program. We encourage our institutional clients to help us support this initiative via our trading desk(s) and/or directly via the Veterans Education Challenge crowdfund program.

Other philanthropic organizations that Mischler Financial Group supports are displayed on the firm’s website via this link.

About Mischler Financial Group

Mischler Financial Group is headquartered in Newport Beach, California with regional offices in major cities throughout the United States. MFG is a federally-certified minority broker-dealer and a Service-Disabled Veterans Business Enterprise (SDVBE). We provide capital markets services across primary debt and equity markets, secondary market agency-only execution within the global equities and fixed income markets and asset management for liquid and alternative investment strategies. Clients of the firm include leading institutional investment managers, Fortune corporate and municipal treasurers, public plan sponsors, endowments, and foundations. The firm’s website is located at http://www.mischlerfinancial.com

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Super Mario Day-ECB To Buy IG Corporate Debt
March 2016      Debt Market Commentary   

Quigley’s Corner 03.10.16 Super Mario Day

 

Investment Grade New Issue Re-Cap

Super Mario Day! You Gotta Be Kiddin’ Me, Right?…No, its Wrong!

Global Market Recap

IG Primary Market Talking Points

New Issues Priced

Lipper Report/Fund Flows – Week of March 10th

IG Secondary Trading Lab

Investment Grade Credit Spreads (by Industry/Rating)

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

 

It was a subdued day today for the IG dollar primary markets as eager anticipation surrounded ECB President Mario Draghi’s latest and greatest tool kit inventions and implementations. No multi-tranche transaction would price in the face of the predictably unpredictable ECB today.  More on that in a bit.  3 IG Corporate issuers printed 5 tranches between them totaling $2.7b assisted by the SSA’s lone Republic of Panama’s $1b 12-year bringing the all-in IG day total to 4 issuers, 6 tranches and $3.7b.

 

Super Mario Day! You Gotta Be Kiddin’ Me, Right?……….Wrong!

 super-mario-mischler-debt-market

 

Now before you think I’ve gone completely nuts, you need to read this.  It’s from the Mario Day website.  You know, the REAL Super Mario, as opposed to the impostor at the ECB. It reads, “In recognition of everyone’s favorite pizza-loving Nintendo character, today, Thursday, March 10th is “Mario Day.”  I kid you not.  It continues, “..with plenty of ideas, games and activities to choose from, such as fancy dress parties and mushroom stomping competitions, you can be sure to make “Mario Day” a day to remember.”  I repeat, this is NOT a joke.

 

“Back it up!  No wait…Get a Bigger Truck……..Draghi’s Doing the Driving!”

 

….However, I was thinking that perhaps in a frenzy of jealousy/envy the other Super Mario…. you know, this guy:
mario-draghi-mischler-debt-market

…I might have taken it all a bit too personally.  For today was all about the ECB’s Mario Draghi.  Here’s a nice sound bite from friend, former BNP Paribas colleague and Bloomberg’s First Word European Primary Market Strategist, Paul Cohen, who nicely sums up today’s Euro IG primary markets, “There were no syndicated primary deals in Europe today as the market awaited the ECB’s latest rates decision. It’s the first day without a deal since February 9th and ends 8 consecutive business days of non-financial corporate issuance.” As someone quipped post this morning’s ECB conference, “I think it’s time to back the truck up, or maybe even get a bigger truck.  Mr. Draghi is doing the driving.” And boy, did he do some driving today. Let’s take a look:

 

My Take on the EU?  Did Someone Say, “Nightmare?” E-Break?

 

The ECB cut its three key interest rates and will buy investment-grade euro-denominated corporate bonds. The ECB’s main refi rate was lowered by 5 bps to 0%, its marginal lending rate was also cut by 5 bps to 0.25%; its deposit rate was cut by 10 bps to -0.4%. The ECB also said it will increase the pace of its monthly asset purchases by €20b to €80b from €60b starting in April, and will add investment-grade euro denominated bonds issued by non-bank corporations to the list of eligible assets.  The ECB CANNOT buy richer yields than the ECB’s deposit rate.  So, by moving their deposit rate to -0.4% from -0.3% and by increasing their monthly purchases to €80b from €60b it necessitates that they start to buy corporates.  Hence, the announcement of their new Euro-denominated corporate bond purchase tool.

It’s as if Draghi tore a page out Mario Day festivities because his ECB announcement certainly provided plenty of ideas, games and activities to choose from.  There were no fancy dress parties nor were there any mushroom stomping competitions but Draghi’s “tool kit” was introduced “on-the-fly” not after a long trial and error period as in R&D. What he unveiled to the world has never been done before…….for good reason – it’s a desperate move to salvage the unsalvageable. As you all know here, the EU is facing a terrible aging population dilemma, an immigration issue resulting in border controls and national demarcation lines being re-introduced, spreading Nationalism and a terrorist concern that resulted in today’s French travel advisory warning on the British government’s website:

“There is a high threat from terrorism. Due to ongoing threats to France by Islamist terrorist groups, and recent French military intervention against Daesh (formerly referred to as ISIL), the French government has warned the public to be especially vigilant and has reinforced its security measures.”

 

As one longtime trusted market relationship wrote to me this afternoon, “first off, I didn’t think there was that much “non-bank” corporate debt in the euro-universe! The Committee will decide if the asset (possibly a Financial, but not a BANK?) is eligible for purchase. I foresee corporate bond spreads tightening, but by how much and will they go negative?” Now, it seems however, that the ECB is a player in the market and companies are directing their fixed payments to them. In other words, they are being paid to hold specific companies’ debt — of their choosing. This comment sounds rather like “Sure, I’ll take that off your hands — for a price.” The role of the ECB seems even more questionably large – call it “outsized”  in that they’re setting rates, regulating banks (SSM) and now playing the market?

 

That’s not that far off folks.  Living for the moment is never a good plan.  Let’s think, however, about the likely resultant paths for the EU.  There is NO sign of inflation in the EU.  There are signs of DEFLATION.  History shows that the “D” word is a country killer and a war creator.  Draghi gets to be Super Mario for another day and rates/currencies traders who make a living moment by moment, have more movement to capitalize on but, in the end, this means the EU is more of a disaster than everyone thought.  (I am an exception as I’ve always maintained that it’s full speed ahead for them straight into a brick wall).  It’s desperation time.  As European banks suffer, today’s news should come as yet another major alarm as to just how bad the situation is over there.  Negative rates mean that the problem will persist perhaps forever.  Yes, I did say “forever.”  EU leadership began at the onset of the Financial Crisis playing “kick-the-can” with good old fashioned procrastination and government and bureaucratic delay tactics until that game became an embarrassment.  Now it’s a whole new ball-game.  They are changing many more rules of engagement to postpone the inevitable. It will end badly…..really badly.  The Schengen Agreement has already fallen to the wayside and that’s one the EU’s two legs that it stands on. The other leg being the single currency itself. EU problems are profoundly foundational.  They need to raise the house and re-do their foundation and then reset the broken home.  It’s THAT bad.  I still maintain that the EU crumbles into two-parts a Northern Euro and a Southern Euro.  Been saying that for over five years.

It’s a proverbial E-Break.

So, where’s that leave us?  Well, despite the comedic caucuses taking place in this election year, the Unites States of America is the world’s finest tuned engine.  It’s the best story and most stable of the myriad global event risk factors out there.  As for our IG primary markets, it’s very clear. Perhaps, clearer than ever before.  Your eyes should be focused on the 1.93% CT10 yield.  Digest the fact that across the 4 major IG asset classes spreads have tightened 22.25 bps in 3 ½ weeks since February 12th. Low UST rates plus tightening spreads equals one thing readers [treasurers, bankers and syndicate managers] and simply put: PRINT NOW.

 

Global Market Recap

 

ECB Meeting/Draghi: ECB pulls out all stops & what was Draghi thinking?

USTs – Treasuries continue to struggle but strong 30yr auction helped the back end.

Stocks – U.S. small losses heading into the close.

Overseas Stocks – Poor day in Europe. Nikkei rallied & China closed down.

Economic – Claims data continues to impress but today belonged to the ECB/Draghi.

Currencies – Big day for Euro & bad day for DXY Index with wide trading ranges.

Commodities – Crude oil down and gold up.

CDX IG: -4.68 to 91.53

CDX HY: -15.97 to 462.32

CDX EM: -3.47 to 333.40

 

IG Primary Market Talking Points

 

KKR & Co. LP upsized today’s $25 par PerpNC5 to $300mm from $150mm.

For the week ended March 10th, Lipper U.S. Fund Flows reported an inflow of $2.176b from corporate investment grade funds (2016 YTD net outflow of $3.961b) and a net inflow of $1.796b from high yield funds (2016 YTD net inflow of $4.403b).

The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate-only new issues and one IG-rated Preferred was 25.90 bps.

 

Syndicate IG Corporate-only Volume Estimates for March

 

IG Corporate New Issuance March 2016 vs. Current
MTD – $61.12b
Low-End Avg. $115.59b 52.88%
Midpoint Avg. $116.13b 52.63%
High-End Avg. $116.67b 52.39%
The Low $100b 61.12%
The High $150b 40.75%

 

Have a great evening!

Ron Quigley

 

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

Debt Capital Markets: The Day For Duke
March 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 03.08.16 A Salute to Women; Voracious Demand For Duke Energy Carolinas


Definition of “Female” FE = Iron + Male = Iron Man! Happy 8th Annual International Women’s Day

Investment Grade Corporate Debt New Issue Re-Cap

Duke Energy Carolinas Lights Up Mischler

IG Primary Market Talking Points – New Issue Concessions (NICs) Go Negative

New Issues Priced

Lipper Report/Fund Flows

Economic Data Reports

Rates Trading Lab

New Issue Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

M&A Pipeline

 

Fact: Women are half of the world’s population, they work two-thirds of the world’s working hours, receiving 10% of the world’s income and they own less than 1% of the world’s property.  Staggering isn’t it?  Today is the 8th annual International Women’s Day.  Let those numbers sink in.  Think about that and the women in your lives and the influences they have on you and the stability they bring to your life. They are rocks of stability, reliability, they are beauty, they are life. Congratulations to all the women out there breaking down barriers by ignoring all limits.  Dick Van Dyke once said, “women will never be as successful as men, because they have no wives to advise them.” An interesting point! Also congratulations to all the firms out there in Corporate America continually moving the needle forward for women’s equality in the work force.

Investment Grade New Issue Re-Cap

It was another primary market bombardment.  Yesterday marked the first day in a long time that average NICs turned negative overall.  Bid-to-cover rates have been rising from 3x to the high 3s all week and we’re seeing more and more of previously shelved announcements hit the tapes in this perfect environment for strong issuance.  Today was led by Berkshire Hathaway’s 7-part $9b offering with proceeds used to refinance a $10b bank loan that was used to finance a portion of BRK’s acquisition of Precision Castparts Corp. and for other purposes.

The final tally on today’s avalanche of IG Corporate issuance was 8 separate issuing entities, 15 tranches and a total of $14.375b.  SSA also had a prolific day adding 5 issuers, 5 tranches and $7.3b to the mix bringing the all-in IG day total to 13 issuers, 20 tranches and a resounding $21.675b.  We are now over 47% of the way to the syndicate midpoint average forecasts for the entire month of March or $54.82b vs. $116.13b.  The MTD IG Corporate plus SSA total is: $76.37b.

 

Duke Energy Carolinas Lights Up Mischler

Now let’s get down and dirty with the story and relative study…………………….

As you can see from the below table, spread compression from IPTs to the launch was dramatic.  Both the 7- and 20-yr tranches tightened 20.5 bps with the two also pricing at the tightest side of guidance.  The preliminary sounders on size was that Duke would definitely be printing two “index eligible” transactions (a minimum $250mm each) at the low end by that they definitely had the flexibility to grow with an intention on equally splitting the two tranches…..and so it was. Today’s 7s/30s each grew to $500mm on very strong demand for perhaps the highest quality utility on the planet.

 

Duke Energy Carolinas LLC Aa2/AA- 2.50% 3/15/2023 500 +105-110 +90a (+/-3) +87 +87 BNPP/CITI/RBC/TD/UBS
Duke Energy Carolinas LLC Aa2/AA- 3.875% 3/15/2046 500 +145-150 +130a (+/-3) +127 +127 BNPP/CITI/RBC/TD/UBS

 

I prefer straight-line comparables if they’re available and with the size of Duke (NYSE:DUK) and their outstanding issuances they were indeed available. It was a simple relative value study that all began with the Duke Carolinas “DUK” 3.75% due 6/01/2045.  These Secured Global Bonds were T+125 bid pre-announcement inferring a small 2 bps NIC on today’s new 30-year that priced at T+127.  By applying the 40 bp adjustment for the standard 7s/30s utility curve gets you to fair value of T+85 versus today’s 7yr final pricing of T+87 also a 2bp NIC.

Demand was voracious for Duke.  The 7yr finished with a $1.8b final order book or 3.6-times oversubscribed while the 30s ended at $1.9b for a 3.8x bid-to-cover rate.

The new 7s went out framed in an 86/84 market round lots per side and 2bps better bid. The 30s were 126/124.

That right there folks is a great story of a very well-priced deal and at the perfect time. So, kudos once again to Team Duke Treasury/Funding.  They sure do know power and energy at Duke, but they equally know numbers and timing.

Thanks again to all the accounts that participated.  We appreciate the expediency with which you were able to do your credit work today and get your orders in. Thanks also to Peter Aherne’s top notch syndicate team with shout outs to Mr. Kevin O’Sullivan and of course the dynamic duo I simply refer to as “Alitza Mingonado!” Otherwise known as Alisha Mingo and Maritza Maldonado. You gals are the best and I wish you and all the fine ladies at Team Citi who help move the needle every day for Diversity & Inclusion a very happy International Women’s Day!   Fight On!

IG Primary Market Talking Points – Some Strong Optics from Today’s Deals.

Discovery Communications LLC (NASDAQ:DISCA) upsized today’s new 10-year Senior Notes to $500mm from $450mm at the launch and at the tightest side of guidance.

The average spread compression from IPTs thru the launch/final pricing of today’s 15 IG Corporate-only new issues and one IG-rated Preferred was 20.67 bps.

 

Syndicate IG Corporate-only Volume Estimates for March

 

IG Corporate New Issuance March 2016 vs. Current
MTD – $54.82b
Low-End Avg. $115.59b 47.43%
Midpoint Avg. $116.13b 47.21%
High-End Avg. $116.67b 46.99%
The Low $100b 54.82%
The High $150b 36.55%

 

And now I’m off to spend the rest of this chaotic day with my two favorite ladies on International Women’s Day…wife and daughter! Enjoy folks!

 

Have a great evening!

Ron Quigley

 

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

Corporate Debt Issuance: A Day of Optics
March 2016      Debt Market Commentary   

Quigley’s Corner 03.07.16- DCM Optics Indicate Underlying Strength…For Now

 

Investment Grade Corporate Debt New Issue Re-Cap

IG Primary Market Talking Points – Some Strong Optics from Today’s Deals

New Issues Priced

Lipper Report/Fund Flows

IG Secondary Trading Lab

Economic Data Releases

Rates Trading Lab

Investment Grade Credit Spreads (by Industry/Rating)

New Issue Pipeline

M&A Pipeline

 

9 IG Corporate issuers priced 13 tranches between them totaling $6.77b.  Assists came in the form of 2 SSA prints that added another $3.75b bringing the all-in IG day total to 11 issuers, 15 tranches and $10.52b.

IG Primary Market Talking Points – Some Strong Optics from Today’s Deals.

Today’s HY-rated Bank of America fixed-to-floating rate non-cumulative PerpNC10 Preferred Series “DD” was increased to $1b from $750mm.  The deal launched without guidance at 6.30% or 32.5 bps tighter than 6.625% “area” IPTs. Mischler Financial is proud to announce that it was named a Jr. Co-Manager on today’s Bank of America PerpNC10 fixed-to-floating rate $1,000 par non-cumulative preferred stock offering series “DD”.  We thank the entire crew up, down and sideways at Bank of America/ Merrill Lynch.  Thanks everyone! We greatly appreciate your patronage.

Perrigo Finance Unlimited Co. launched tighter than the tightest side of guidance which is a rarity.  The 5yr went from the +220a (+/-3) to launch at +210 while the 30yr went from +260a (+/-3) to +250.

Entergy Louisiana LLC upsized today’s tap of its 4.95% Secured Bonds due 1/15/2045 to $200mm from $100mm and launched it at the tightest side of guidance. The new deal total is now $450mm.

For the week ended March 2nd, Lipper U.S. Fund Flows reported an outflow of $761.406m from corporate investment grade funds (2016 YTD net outflow of $6.137bn) and a net inflow of $4.97bn from high yield funds (2016 YTD net inflow of $2.607bn).

The average spread compression from IPTs thru the launch/final pricing of today’s 13 IG Corporate-only new issues and one IG-rated Preferred was 20.85 bps.

 

Syndicate IG Corporate-only Volume Estimates for March

 

IG Corporate New Issuance March 2016 vs. Current
MTD – $40.445b
Low-End Avg. $115.59b 34.99%
Midpoint Avg. $116.13b 34.83%
High-End Avg. $116.67b 34.67%
The Low $100b 40.445%
The High $150b 26.96%

 

Have a great evening!

Ron Quigley

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

New Bond Issuance Back on Front Burner
March 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 03.01.2016 -Primary Debt Capital Markets:Bond Issuance Blockbuster

 

Investment Grade Corporate Debt New Issue Re-Cap

Global Market Recap

IG Primary Market Talking Points – SoCal Ed Includes Mischler

Lipper Fund Flows

IG Secondary Trading Market Lab

Economic Data Reports

Rates Trading Lab-Pretzel Logic Takes Hold

New Issues Priced

Investment Grade Credit Spreads (by Industry/Rating)

New Issue Pipeline

M&A Pipeline-$659bil in Pent Up Deals

The new issue machine continued to roll out deals today even more so than yesterday.  Led by HSBC’s $7b 3-part, the IG Corporate tally was 9 issuers, 12 tranches and $14.8b.  One well telegraphed SSA 5-year print from EIB added another $3.5b bringing the all-in IG day total to 10 issuers, 13 tranches and $18.30b.  What’s more, it’s only Tuesday and we’ve already priced over 98% of the syndicate estimate for the entire week or $32.2b vs. $32.76b.  There is no sign of letting up.  In only 3 days, average IG credit spreads (AAA thru BBB) have tightened 9 bps and they continue to ratchet in.   Who was that guy who wrote last Friday in the “QC”, “Next week looks like a blockbuster.  I am taking the highest end of projections and calling for over $40b.”  ……oh yeah, that was me!  We have lots more to come folks.  Big week for the IG dollar DCM…..stay tuned.

 

Global Market Recap

 

Super Tuesday – 9 primaries & 5 caucuses.

USTs – Better than expected U.S. economic data & risk asset rally crushed USTs.

Stocks – Big rally in the U.S. led by the NASDAQ. Strong day in Europe & Asia.

Economic – U.S. data better than expected but ISM manufacturing remained under 50.

Overseas Economic – Terrible China. Mixed data in Japan/EU tilted to weaker side.

Currencies – Rare poor day for the Yen, CAD very strong & the Pound improved.

Commodities – The crude oil rally continued. Wheat hit low since 2009.

CDX IG: -5.36 to 102.09

CDX HY: -24.25 to 497.02

CDX EM: -14.02 to 353.94

 

IG Primary Market Talking Points – SoCal Ed Includes Mischler

 

Team Mischler salutes Southern California Edison (NYSEMKT: SCE-E) for including us in today’s new $25 PerpNC10 fixed-to-floating rate trust preferred issue. The SCE Trust V was increased to $300mm from $150mm and it priced at tighter revised guidance or 5.45%.  The issue is DRD/QDI eligible. The transaction evolved nicely tightening 11.25 bps from initial 5.50-6.625% midpoint range to pricing.  The securities saw 76% place into institutional accounts and 24% into retail.  A resounding success for SCE.  Mischler is proud to have been recognized within SCE’s Annual Report for being a trusted partner in support of this leading utility’s diversity goals. Thank yous go out to SoCal Ed Treasury. We’d also like to show appreciation to Wells Fargo Preferred Syndicate’s Jeff, Brian and Gary.  We appreciate that all of you worked with us today.

Today’s showstopper was HSBC Holdings plc’s $7b 3-part 5yr FXD/FRN and 10s.

HCA Holdings Inc. (NYSE:HCA) upsized its 1rst Lien Senior Secured Notes new issue to $1.5b from $1b

O’Reilly Automotive Inc. (NASDAQ:ORLY) saw it’s new $500mm “no grow” 10-year Senior Notes new issue launch 5 bps thru the tightest side of guidance.  That’s a rare occurrence in our IG dollar DCM and quite notable as spreads continue to compress across IG asset classes.

 

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

 

IG Corporate New Issuance This Week
2/29-3/04
vs. Current
WTD: $32.20b
March 2016 vs. Current
MTD – $14.80b
Low-End Avg. $32.22b 99.94% $115.59b 12.80%
Midpoint Avg. $32.76b 98.29% $116.13b 12.74%
High-End Avg. $33.30b 96.70% $116.67b 12.69%
The Low $20b 161.00% $100b 14.80%
The High $41b 78.54% $150b 9.87%

 

Have a great evening!

Ron Quigley

 

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

Wells Fargo Delivery: Debt Offering; Mischler Outlook
February 2016      Debt Market Commentary   

Quigley’s Corner 02.26.16 -Wells Fargo Delivery

 

Investment Grade Corporate Debt New Issue Re-CapWells Fargo Rides the Lead

Fed Rate Hike Probability Update

IG Primary Market Talking Points

“The Best and the Brightest” –  Fixed Income Syndicate Forecasts for Next Week 

A Look at a Decade’s Worth of March IG Corporate and SSA Issuance

This Week’s IG New Issues and Where They’re Trading – Tone Improves Considerably

Lipper Report/Fund Flows

IG Secondary Market Trading Lab

Economic Data Reports

Rates Trading Lab

New Issue Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

M&A Pipeline

 

Well Fargo & Co. (NYSE:WFC) made it another active Friday today issuing a two-part $3.75b 5-year FXD/FRN Senior Holdco Notes transaction.  As a result, we eclipsed the midpoint average syndicate forecast for this week by 74% including the high-end call for $35b by 42% or $49.95b in IG Corporate volume.   Next week looks like a blockbuster.  I am taking the highest end of projections and calling for over $40b but why listen to me when you can read all about in the words of the top syndicate desks on Wall Street.  Enjoy today’s Best & Brightest below. Read it, digest it, and bring the game face next week……but first enjoy the weekend.

Fed Rate Hike Probability Update

 

An Unconditional Probability of hiking at the June meeting is now up to 30%; including March it is now up to roughly 50% (FRA/OIS is currently elevated by nearly 4 bps)

The Cumulative Probability of hiking in 2016 is up to 76%. The market is effectively saying that if there is NO March increase, then the question of whether we hike in June is the same thing as going at all in 2016…

The probability of a cut in 2016 is now down to 15%; it was as high as 31% in the last 2 weeks.

 

Above courtesy of Rareview Macro LLC

 

IG Primary Market Talking Points

 

  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 60 deals that printed, 52 tightened versus NIP for a 75% improvement rate while only 2 widened (3.25%) and 4 were trading flat (6.75%) and 2 were N/A or not available (3.25%).
  • For the week ended February 24th, Lipper U.S. Fund Flows reported an inflow of $141.8m from corporate investment grade funds (2016 YTD net outflow of $5.376bn) and a net inflow of $2.74bn from high yield funds (2016 YTD net outflow of $2.360bn).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 2 IG Corporate-only new issues was 12.50 bps.

 

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

 

IG Corporate New Issuance This Week
2/22-2/26
vs. Current
WTD: $49.95b
February 2016 vs. Current
MTD – $90.225b
Low-End Avg. $27.45b 181.97% $90.9375b 99.22%
Midpoint Avg. $28.70b 174.04% $92.1875b 97.87%
High-End Avg. $29.95b 166.78% $93.4375b 96.56%
The Low $20b 249.75% $60b 150.37%
The High $35b 142.71% $110b 82.02%

 

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

 

I am happy to announce that, once again, the “QC” received unanimous participation from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  The participants include 16 of 2016’s top 17 ranked syndicate desks according to Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, 22 of today’s desks finished in the top 24 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 77.67% 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!

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

“The IG $ DCM managed to bang out the most prolific Jan/Feb volume in history ($273.2b Corps + SSA).  Impressive!

Not counting today’s WFS two-part, the 51 IG Corporates that priced this week posted the following averages:

  • NICS: 8 .20 bps
  • Oversubscription Rates: 3.37x
  • Tenors: 10.16 yrs
  • Tranche Sizes: $906mm

What are your thoughts for next week AND for March?

……and here are their formidable responses:

(the responses from the 20 fixed income syndicates are available to recipients of the email version of Quigley’s Corner. To be added to the QC DL, please contact Ron Quigley, Managing Director via rquigley@misclerfinancial.com

 

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

Across the past ten years, all-in dollar-denominated IG Corporate plus SSA March new issuance averaged $120.923b.

Over the past five years, all-in IG March new issuance averaged $141.244b.

Over the past three years, all-in IG March issuance has averaged $141.15b.

The past three years of March saw IG Corporate only issuance average $116.35b.

March SSA issuance has averaged $24.80b across the last three years.

 

March
(Year)
All-in IG Issuance (bn) IG Corps
only (bn)
SSA
only (bn)
2015 176.47 143.27 33.2
2014 141.72 121.28 20.44
2013 105.26 84.51 20.75
2012 149.33 123.58 25.75
2011 133.44
2010 116.22
2009 155.85
2008 58.67
2007 100.98
2006 71.29

 

……and here’s how the voting brackets broke-out for next week and March:

 

Next Week March ($)
1: 20-25bb 4: 100b
1: 25b 3: 105b
10: 30b 2: 110b
1: 30-35b 1: 111b
4 :35b 1: 112.5b
3: 35-40b 3: 120b
2: 40b 3: 120b
1: 41b 5: 125b
  1: 125-150b
  1: 135b
  1: 140b

 

Syndicate IG Corporate-only Volume Estimates for Next Week and February’s Forecasts

 

IG Corporate New Issuance Next Week
2/29-3/04
March 2016
Low-End Avg. $32.22b $115.59b
Midpoint Avg. $32.76b $116.13b
High-End Avg. $33.30b $116.67b
The Low $20b $100b
The High $41b $150b

 

 

Have a great weekend!

Ron Quigley

 

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

General Motors: Bonds In Motion
February 2016      Debt Market Commentary, Recent Deals   

Quigley’s Corner 02.18.16 – General Motors Debt Issuance Rules The $6.5bil Day

 

Investment Grade Corporate Debt New Issue Re-Cap

A Great GM Story

Overall Market Recap

New Issues Priced

IG Primary Market Talking Points

Lipper Report/Fund Flows

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

Investment Grade Credit Spreads (by Industry/Rating)

M&A Pipeline

 

THE story is we have witnessed a third consecutive session with healthy issuance. 5 IG Corporate issuers tapped today’s IG dollar DCM today pricing 10 tranches between them totaling $6.5b2 SSA assists across 2 tranches totaling $2.6b brought the all-in IG day total to 7 issuers, 12 tranches and $9.1b.

The following highlights from our WTD IG issuance point to increasing investor confidence, shows that issuers continue to build momentum and that primary markets can and will defy the odds and continue to thrive in the face of extreme global discord:

Thursday:

BBB-/BBB- rated General Motors Corp. priced a $2b two-part 20s/30s that attracted order books of $5b and $5.8b yielding bid-to-cover rates of 4x and 7.73x.  The auto sector is doing well and my own middle markets book was 10.25-times oversubscribed versus our underwriting liability.  Demand from tier I accounts is one thing but seeing that kind of appetite from middle markets accounts is a signal that the best story going in the world today is Corporate America and the IG DCM is not only back but has once again illustrated its incredible resiliency in the face of so much global dysfunction.

Split-rated Standard Industries (Ba2/BBB-) added a $500mm 7NC3 tranche to its 144A Senior Notes new issue today while reducing its $650mm 5NC2 to $500mm. The cumulative deal size grew to $1b from $650mm.

 

Wednesday:

Split-rated MPT Operating Partnership (Ba1/BBB-) upsized today’s 8NC3 Senior Notes new issue to $500mm from $400mm. Despite being priced off of a HY syndicate desk, I do count split-rated issuances in my daily IG volume totals as long as one of the IG ratings is from either Moodys, S&P or Fitch.

 

Tuesday:

Apple (NASDAQ:AAPL) and IBM (NYSE:IBM) go head-to-head on Monday with big transactions and get done.

Apple Inc. was the first trade this morning to really reopen the Investment Grade Debt Capital Markets.

At $12b across 9-tranches, it is the first “jumbo” transaction since the landmark $46b InBev transaction that priced on Wednesday January 13th.

Apple’s 7-year $1.5b tranche is the first major “Green Bond” from the U.S. corporate sector.

Goldman Sachs’ (NYSE:GS) issued a resoundingly successful 6.30% PerpNC5 $25 par preferred $25.03 bid in the secondary market.  What a great big boost for retail targeted issuance as well as FIGs. That is simply AWESOME! The deal placed 98.16% into retail yesterday and the balance was institutional.  

A Great GM Story

General Motors Company (Ba1/BBB-/BBB-) and “positive”, “stable” and “stable”, announced a new two-part 20s/30s SEC-registered Senior Unsecured Notes new issue today thru joint leads Goldman Sachs (B&D), Bank of America/Merrill Lynch, Citigroup, Deutsche Bank and Morgan Stanley.  Proceeds were earmarked to make discretionary contributions to GM’s domestic hourly pension plan and for general corporate purposes.

IPTs hit the tapes in the early session with the 20-year at T+425a and the 30-year T+437.5a. Guidance then tightened dramatically 20 bps on the 20yr to T+405a and 17.5 bps on the 30yr to T+420a with “area” defined as +/-5 bps on both tranches. Both tranches launched and priced at the tightest side of guidance or +400 and +415 respectively.  That’s an average of 23.75 bps tightening throughout price evolution versus today’s overall IG total of 19.56 bps across the session’s IG tranches……A great story right there. Order books were 4x and 7.73x oversubscribed on the GM 20s/30s respectively.

Thank you to Team Goldman Sachs for working with Mischler today.  We’re privileged to have a chance to once again prove our capabilities and work with all of you.   

The Guy-in-the-Corner Shares a Nice GM/Quigley Story!

Before I presented my order book today to GM Treasury/Funding and GS Syndicate, the lead-in told a nice story of my family’s history with GM. I’d like to share it with you:

GM has played an important part in the lives of my Quigley family history.  My late grandfather, James B. Quigley was foreman of GM’s North Tarrytown, New York plant for 50 years. He retired in the late-1960s. Gramps was there to oversee the war effort in the 1940s when GM’s Chevrolet plant produced shells, gun parts and aircraft engines.  GM’s North Tarrytown plant made around 3,000 armored cars and built a light-armor half-track that saw action in General George Patton’s North African campaign. Part of Chevy’s Tarrytown plant built 1.5-ton trucks and ambulances for the U.S. Army, while another part produced wing section and fuselage components as a subcontractor to Grumman Aircraft.  In fact, post WWII, during the early 1950s my Dad and his four brothers all worked at that same GM plant.  My Mom was a secretary at the plant before she married Dad! So, as you can see, GM has played a critical role in the Quigley’s Italian/Irish family heritage. Gramps lived his American Dreams when it was all about working a lifetime for a company to help Corporate America become what it has…..the engine that drives the world. Additionally, all of my uncles and Dad served in the U.S. Armed Services as well, which touches a chord here at Mischler Financial, the nation’s oldest SDVBE.

 

So, it’s always nice to be included on a transaction where you know we work hard for our keep, but it’s quite another thing when there’s a personal connection.

 

Overall Market Recap

 

USTS – Strong session snapped its 3 session losing streak.

Stocks – NASDAQ leading U.S. lower. EU sold off in NY hours. Nikkei/HS strong.

Economic – U.S. data mixed. China inflation data improved. Japan exports/imports weak.

Currencies – Mixed day for USD vs. Big 5 but DXY Index closed in the plus column.

Commodities – Crude oil closed basically unchanged after being better bid overnight.

CDX IG: -0.25 to 116.57

CDX HY: +4.64 to 551.61

CDX EM: +1.54 to 379.12

 

IG Primary Market Talking Points

 

Split-rated Standard Industries (Ba2/BBB-) added a $500mm 7NC3 tranche to its 144A Senior Notes new issue today while reducing its $650mm 5NC2 to $500mm. The cumulative deal size grew to $1b from $650mm.

Canadian National Railway Co. increased today’s 10-year Senior Notes new issue to $500mm from $400mm and at the tightest side of guidance.

SSA’s Nordic Investment Bank upsized today’s new 3-year Global Notes transaction to $1.25b from $1b.

Mischler Financial served as an active member of the Selling Group on yesterday’s new $2b FHLB 2-year Global Unsecured Notes issue due 3/19/2018. The deal widened 1 bp to T+14 versus original price talk of T+13. Thank yous go out to Team FHLB Treasury/Funding.   

For the week ended February 17th, Lipper U.S. Fund Flows reported an outflow of $1.122bn from corporate investment grade funds (2016 YTD net outflow of $5.518bn) and a net inflow of $65.5m from high yield funds (2016 YTD net outflow of $5.099bn).

The average spread compression across today’s 10 IG Corporate-only new issues was 19.56 bps from IPTs to the launch.

 

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

 

IG Corporate New Issuance February 2016 vs. Current
MTD – $37.375b
Low-End Avg. $90.9375b $41.10b
Midpoint Avg. $92.1875b $40.54b
High-End Avg. $93.4375b $40.00b
The Low $60b $62.29b
The High $110b $33.98b

 

Have a great evening!

Ron Quigley

 

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