Browsing articles tagged with "mischler Archives - Mischler Financial Group"
Municipal Debt Deals Week of April 03- Mischler Muni Market Update
April 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 04.03.17 looks back to last week’s metrics and provides a lens focused on pending municipal debt deals scheduled. As always, the Mischler Muni Market snapshot provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads, money flows and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $5.1 billion.  This week volume is expected to be $7.3 billion.  The negotiated market is led by $778.0 million general obligation bonds for The Commonwealth of Massachusetts, including $100 million new money green bonds.  The competitive market does not have any deals over $100 million.

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 belowmuni-market-mischler

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

To illustrate our presence within the Debt Capital Markets space: since 2014 alone,  Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

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

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



Rate Hike Coming..Beige Book Talking Points-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.01.17-Rate Hike IS Coming; Fed Beige Book Talking Points


Investment Grade New Issue Re-Cap – Dow Breaks 21,000 – Odds of March Rate Hike Rise From 40% to 80% in 3 Sessions!

IG Primary & Secondary Market Talking Points

Global Market Recap

The Federal Reserve Beige Book Talking Points – All You Need to Know

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 22nd    

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

7 IG Corporate issuers tapped the dollar DCM today pricing 12 tranches between them totaling $9.275b.  The SSA space hosted 2 issuers across 4 tranches including a $5b 3-part from the Sultanate of Oman that pumped up the all-in IG day totals to 9 issuers, 16 tranches and $14.625b. March has certainly started off on the right foot.
The WTD total is now 52% more than this week’s syndicate midpoint average forecast or $38.825b vs. $25.44b.
The all-in (IG Corporate plus SSA WTD volume total is now $51.425b.

Deregulation, cutting corporate taxes, focusing on American manufacturing and jobs while negotiating with America’s interests first and building a strong national defense equates to GROWTH.  Growth will cause rates to rise, rising rates will swell the stock market and bank stocks should get back to a semblance of their true values among many other things.
IG Primary & Secondary Market Talking Points


  • Mercury General Corp. upped its 10-year Senior Notes new issue to $375mm from $350mm at the launch and at the tightest side of guidance.
  • Telus Corp. increased its 10-year Senior Notes new issue to $500mm from $350mm at the launch.
  • Brixmor Operating Partnership LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <19.00> bps.
  • BAML’s IG Master Index tightened 1 bp to +121 vs. +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.15 vs. 1.16 setting yet another new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $22.7b on Tuesday versus $15.8b on Monday and $17.8b the previous Tuesday.
  • The 10-DMA stands at $20b.


Global Market Recap


  • U.S. Treasuries – had a very difficult day thanks to the Fed Speak & President Trump.
  • Overseas Bonds – Europe hit hard with USTs and JGB’s also closed in the red.
  • 3mth Libor – Set at the highest yield (1.09278%) since April 2009.
  • Stocks – Big rally for U.S. stocks as S&P, Dow & NASDAQ traded at all-time highs.
  • Overseas Stocks – Very strong day for Europe & the Nikkei. China & HS with small gains.
  • Economic – Full U.S. calendar with some very good & not so good data.
  • Fed’s Beige Book at odds with the very hawkish Fed Speak this week.
  • Overseas Economic – The data in China, Japan & Europe overall was positive.
  • Currencies – Big rally for USD overnight & gave a little back during NY hours.
  • Commodities – CRB, copper & wheat were higher while crude oil & gold were lower.
  • CDX IG: -2.57 to 60.01 (trade at 59.856 the tightest since 2014)
  • CDX HY: -11.47 to 305.44
  • CDX EM: -7.51 to 213.30

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

-Tony Farren

 The Federal Reserve Beige Book Talking Points – All You Need to Know


  • Near-term business optimism eased since the last report.
  • Economy grew at a modest to moderate pace through mid-February.
  • Job market is tight amid little price pressure change.
  • There were a few districts that saw a pickup in wage growth.
  • Businesses expect prices to rise modestly in the months ahead.
  • Most Fed regions say prices were up modestly to moderately.
  • Some districts saw widening labor shortages.
  • Employment expanded moderately in most of the country.
  • Staffing firms saw a “brisk business for this time of year”.
  • Energy, home-building and house sales are all growing moderately.
  • Auto sales were up in most districts; tourism mostly stronger.
  • New York Fed prepared the Beige Book from early January to February 17th.


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


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

Corporate Bond New Issuance Elasticity: Get It While Its Hot
January 2017      Debt Market Commentary   

Quigley’s Corner 01.06.17 Weekend Edition: Investment Grade Corpoate Bond New Issuance & Spread Elasticity: Get It While It’s Hot


Investment Grade New Issue Re-Cap 

My Thoughts re: Next Week’s Issuance

IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates for January 

The Best and the Brightest” – Investment Grade New Issuance Forecasts Next Week 

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

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

Lipper Report/Fund Flows – Week ending January 4th     

IG Credit Spreads by Rating / Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab


It was a no-print Friday today and a well-deserved one at that considering yesterday was the 4th busiest ever in our dollar IG DCM. We priced $53.233b in new IG Corporate-only product this week in just three days and $65.233b including SSA issuance!  What a heck of a start to the New Year!  This morning’s NFP number was another very strong one posting a 156k payroll increase versus 175k estimates or 17% better than expected.  You know what that means…….with labor shortages expected throughout 2017, wages will increase and when wages increase people spend more money and when people spend more money the Fed is more likely to raise rates!  But let’s not get ahead of ourselves.  We have a big January 20th inauguration ahead of us that should make for great TV before Trump & Co. institute rapid change with a Republican controlled Beltway. But before that our U.S. six-pack big FIGs release earnings beginning on January 13th thru the 18th which leaves next week open prior to that deluge.  In speaking to the “Best and the Brightest” in the world of syndicate this morning it’s looking like we drop off a lot from this week but then again $30b, $35b, $40b speaks volumes about just how incredible this week was.  Allow me to opine therein and then let’s re-cap things first before I invite you all to join me as we visit with each of the top 23 syndicate desks in our IG dollar DCM to hear their thoughts, numbers and ranges for next week.


My Thoughts re: Next Week’s Issuance

Tuesday’s deals were tighter, and Wednesday’s deals were tighter BUT some widened while yesterday’s deals were 48% wider? What’s it mean? It means “get it while it’s hot,” and the hotter it gets, the more they compress spreads and the more they compress spreads the more likely they are to leak out. So, with the U.S. six-pack banks set to release earnings beginning on January 13th thru the 18th, we have a bit before that money center bank deluge happens. In the interim, next week will seem like a drop off in issuance but why wouldn’t it? We priced the 4th busiest day in history for both IG Corporate AND for IG Corporates and SSA yesterday ($53.233b and $65.233b respectively). By those standards any other week will pale in comparison. However, I believe things hold in and we get $40bn-plus of all-in Corp + SSA issuance next week. Call IG Corporates $35b.


IG Primary & Secondary Market Talking Points


  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 67 deals that printed, 38 tightened versus NIP for a 56.50% improvement rate while 16 widened (24.00%) and 13 were flat (19.50%).
  • For the week ended January 4th, Lipper U.S. Fund Flows reported an inflow of $2.186b into Corporate Investment Grade Funds (2016 YTD net inflow of $2.186b) and a net inflow of $734.107 into High Yield Funds (2016 YTD net inflow of $734.107b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s XX IG Corporate-only new issues was XX.XX bps.
  • BAML’s IG Master Index widened 1 bp to +129 vs. +128.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +122 vs. +121.  The “LUACOAS” wide since 2012 is +215. The tight is +122.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +167 vs. +166.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $22b on Thursday (7th highest day since 2006) versus $22.4b on Wednesday (6th highest volume day) and $4.1b the previous Thursday.
  • The 10-DMA stands at $9.6b.


Syndicate IG Corporate-only Volume Estimates for January 


IG Corporate New Issuance January 2017
vs. Current
MTD – $53.233b
Low-End Avg. $107.87b 49.35%
Midpoint Avg. $108.41b 49.10%
High-End Avg. $108.96b 48.86%
The Low $80b 66.54%
The High $145b 36.71%


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

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  22 of those participants are among 2016’s top 24 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  The participating desks represent 81.59% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.


As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for the third consecutive year! That’s 2014, 2015 and 2016 !!   

To best frame our weekly poll i.e.  projected new issue activity, we posed the following to our  Best & Brightest”respondents:

This week’s $53.233b of IG Corporate only new issue volume ranks as the 4th largest of all-time.

  • This week’s $65.233b of all-in (IG Corporate and SSA) issuance also ranks as the 4th highest of all-time. 
  • This week’s IG Corporate only volume total ($53.233b) represents just over 49% of the syndicate midpoint average forecast for all of January ($108.41) after only 3 sessions!  

Here are this week’s five IG Corporate-only key primary market driver averages after the close of yesterday’s: 

o   NICS:  2.25 bps

o   Oversubscription Rates: 2.45x

o   Tenors:  6.52 years

o   Tranche Sizes: $859mm

o   Spread Compression from IPTs to the Launch: <15.27> bps

Here’s the performance data comparing this week’s averages versus those of the week ending December 15th:


  • NICs widened 1.75 bps to 2.25 bps vs. <0.50> bps..
  • Over subscription or bid-to-cover rates increased marginally by 0.04x to 2.45x vs. 2.41x. 
  • Average tenors shortened dramatically by 4.15 years to 6.52 years vs. 10.67 years.
  • Tranche sizes increased noticeably by $151mm to $859mm vs. $708mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 62 IG Corporate new issues widened by <1.90> bps to <15.27> vs. <17.17>.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 2 bps to +167 vs. +169.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +129 versus +130 on Thursday, December 15th
  • Spreads across the four IG asset classes tightened by 0.75 bps to 20.00 vs. 22.00 bps on Thursday, December 15th and as measured against their post-Crisis lows. 
  • Looking at the 19 major industry sectors, spreads tightened 1.57 bps to 26.32 vs. 27.89 on Thursday, December 15th, also against their post-Crisis lows.


……and now for the first time of 2017, I’d like to know your thoughts and your numbers for next week’s IG Corporate new issue volume. You all know that I greatly appreciate your participation week in and week out.
Thanks very much, Ron!


The “Best and the Brightest” in Their Own Words


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

Veterans Firm Mischler Applies Military Focus In Munis-Bond Buyer
November 2016      Company News, Muni Market, News and Information   

Bond Buyer Nov 10 2016 coverage of Mischler Financial Group re-published in parts with permission



Chip Barnett, BondBuyer

Duty. Honor. Country.

Gen. Douglas MacArthur’s words aren’t just a Veterans Day slogan for Mischler Financial Group.

MFG is America’s oldest institutional brokerage and investment bank certified as a Service-Disabled Veterans Business Enterprise (SDVOBE). The minority broker-dealer was founded in 1994 and certified by the State of California in 1995. It is also one of the first FINRA members certified by the US Department of Veterans Affairs, the State of New York and the Commonwealth of Massachusetts. MFG is 100% employee owned and operated and takes a value-added approach to its public sector business.

“We are unequaled in our command of the financial market terrains in which we operate, and unmatched in our sense of duty, discipline, integrity, and honor… in every undertaking. We leave no client behind,” according to the firm’s mission statement.


Mgn. Dir. Rick Tilghman (l), CEO Dean Chamberlain (r)

MFG’s public finance department includes new issue underwriting and full service secondary market trading of both general obligation and revenue bonds. The firm trades over $14 billion a month in fixed income alone. And it has extensive experience in the public finance underwriting field; the company underwrote its first municipal bond issue in 1999 for the Los Angeles State Building Authority. Today approximately 15% of its underwriting activity is municipal bonds. The firm is also a two-time counterparty to the New York Federal Reserve Bank.

Some of MFG’s recent deals include serving as: co-manager on DASNY’s $1.11 billion of state personal income tax revenue bond sale in October; co-manager on the Regents of the University of California’s $1.05 billion of Medical Center pooled revenue bond deal in August; co-manager on the Los Angeles Department of Water and Power’s $628.62 million sale of water and revenue bonds in April; and as a selling group member on New York City’s $800.06 million general obligation bond deal in August and on NYC’s $800.45 million GO deal in May.

Walter Mischler, MFG’s founder and chairman, and Dean Chamberlain, its chief executive officer, are both graduates of the U.S. Military Academy.

Mischler, West Point Class of 1969, served with distinction in the Vietnam theatre in the infantry during 1971-1972 before he became disabled. He founded the firm in 1994 and today continues his work with institutional investment managers, major corporations, and government agencies in the federal, state and municipal sectors.

Chamberlain, West Point Class of 1985, had his six-year tour of duty, where he held various leadership positions with the 4th Infantry Division, cut short after suffering a disabling injury during a parachute jump. He began his financial services career in 1992 at Donaldson, Lufkin & Jenrette, trading mortgage- and asset-backed securities. Before joining Mischler Financial in 2011, Chamberlain was a member of the board of directors for Nomura Securities International and served as its head of fixed income for the Americas and head of distribution in both North and South America. Previously, he was a senior executive for Bank of America Securities, where he was head of structured products distribution for the Midwest region. Chamberlain said what differentiates MFG from other firms is that “our capital is our own capital. We don’t borrow it from somebody else.” He said the company is reinvesting into the business with its own money, not with somebody else’s.

With headquarters in Stamford, Conn., and Newport Beach, Calif., the firm has offices in eight cities across the U.S. and is staffed by over 55 veterans of the securities industry.

MFG administers corporate share repurchase programs for leading companies, cash management for government entities and corporations, and asset management programs for liquid and alternative investment strategies.

“This firm has been around for over 20 years,” Chamberlain said, “but for 17 of those years did mostly secondary sales and trading in a robust client base covering cities, counties and states in the middle market.”

Over the last six years, he said, the firm has adopted a new business model that says “slow and steady wins the race, build our capital, hire veterans, hire qualified people and add value, add value, add value. And that’s done very well for all of us.”

Richard Tilghman, MFG’s Managing Director of Public Finance, exemplifies the best of that new strategy. He went to Yale University and spent 19 months in Vietnam as a Marine infantry officer.

Tilghman has been in municipal bonds since 1971. He began his career at First Boston Corp. in public finance and worked on its trading floor. He has been in munis ever since, having been employed at such firms as Greenwich Partners, First Albany, Public Resources Advisory Group, Lehman, and Ramirez & Co. He joined Mischler Financial in 2014.

He said the competitive arena was a new area that the firm has become involved in adding that the firm has already participated at the co-manager level on several bond sales.

robert-karr-mischler-financial-capital-marketsRobert Karr joined MFG in 2011, to head the firm’s capital markets group. He previously worked at Bank of America Securities and at Prudential Securities, where he ran structured finance.

Karr said he believes in the idea of a firm that does “the right thing for the customer, where you may not maximize the value [for yourself] on a given trade or deal … but you build a business and a relationship for the long term.”

Since 2011, when MFG significantly expanded its capital markets focus and staffing, the debt capital markets group has done about 750 deals with over $920 billion in issuance from 156 unique issuers. In 2015, the firm was involved in 76 municipal deals for about $32.5 billion and so far in 2016, it has been involved in about 66 deals for about $30.8 billion.

In 2015, the firm had a record breaking year, with all underwriting areas doing about $295 billion of business in 107 issues.

“Our business ethos is we want people to say ‘great firm, great origination, great trading great service, great distribution and oh, by the way, they’re a service disabled veteran firm that gives back.’ That’s what it’s all about for us,” he said.

In its charitable role, MFG will donate a percentage of the entire month of November’s profits to The Bob Woodruff Foundation, The Johnny Mac Soldiers Fund and in observance of Veterans Day 2016.

For Mischler Financial Group, the battle to add value for its clients and provide support for the country while keeping its focus on those who have served in the military, is one precept to which they will be always faithful.

To continue reading coverage from The Bond Buyer, please click here (more…)

Market Volatility and Utilities DCM-NO Correlation; Mischler Comments
September 2016      Debt Market Commentary   

Quigley’s Corner 09.12.16 Equities Market Volatility and Utilities DCM-NO Correlation

Investment Grade New Issue Re-Cap – Record $1 Trillion Milestone Within Reach
New Historic Volume Record Well Within Reach
Dear “Prudence” – The Beatles, Bonds and the World
Deal Dashboard for Interstate Power & Light Company
Global Market Recap
IG Primary & Secondary Market Talking Points – Little Ole Mischler Financial Lights Up the Leaderboards Today – Two Deals; Two Roles
Syndicate IG Corporate-only Volume Estimates for September
NICs, Bid-to-Covers, Tenors and Sizes
New Issues Priced
Lipper Report/Fund Flows – Week ending September 7th
Investment Grade Credit Spreads (by Rating & Industry
Economic Data Releases
Rates Trading Lab
New Issue Pipeline
M&A Pipeline

This morning a couple bulge bracket firms, one in particular, had a handful of deals waiting to go but alas with futures down 100 points and European equities in the red, issuers and leads felt volatility would rule the day on the heels of Friday’s 394 drop, the market’s lowest since June 24th. Go/No Go calls favored standing down with two exceptions – two domestic utilities, Interstate Power and Light Co. and Southern Company both of which took advantage of their sector’s defensive nature to price two very strong deals in today’s IG dollar DCM. Mischler served as active Co-Manager on Interstate P&L and was an Underwriter on Southern Company’s $25 par 60NC5 Series 2016A Junior Subordinated Notes new issue due 10/01/2076.

The session finished with only those two deals priced totaling $1.2b with a promise from the guy-in-the-corner that tomorrow WILL be a VERY busy day! Still, in only the 7th business day of September including two Friday’s, one of which preceded Labor Day weekend, we’ve already issued over 46% of the syndicate midpoint average forecast for the entire month with 14 business left to go!

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

Mischler Named Best Broker-Dealer by Wall Street Letter
February 2016      Debt Market Commentary, News and Information   

 Industry’s Oldest Minority Firm Owned and Operated By Service-Disabled Vets Awarded

“Best Broker-Dealer/ Research” by Industry Peers

2016-wsl-award-best-researchStamford, CT Feb 24–Mischler Financial Group, Inc. (“Mischler”) the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans announced today that the firm was awarded “Best Research Provider” at the fifth annual Wall Street Letter (WSL) Institutional Trading Awards this week in New York City. This is the third year in which Mischler was recognized for distinction in this category. The firm was also nominated for “Best Broker-Dealer Overall”, along with industry icons Bloomberg Tradebook and Interactive Brokers.

The WSL’s Institutional Trading Awards recognizes “excellence among providers to the institutional trading industry specifically rewarding brokerage firms, exchanges and financial technology companies for achievements and innovation.” The Wall Street Letter’s audience consists of top management at securities broker/dealers, including executive management, research heads, corporate finance officials, retail heads and trading desk heads.

Ron Quigley, Managing Director of Fixed Income Syndicate at Mischler, who pens the firm’s debt market publication “Quigley’s Corner”, one of several content pieces distributed to Fortune Treasury clients and leading investment managers stated, “It’s a great honor to be selected as a contender, no less to be designated the winner of the WSL award when considering the pedigree of the firms that were nominated. It’s always good to be in good company, and it is a real tribute to be recognized by industry leaders for our capabilities.”

The full list of nominees and winners of Wall Street Letter 5th Annual Institutional Trading Awards is available via this link

About Mischler Financial Group, Inc.

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) was the first FINRA-certified minority broker-dealer to be designated as a Service-Disabled-Veteran-Business Enterprise (SDVBE).  Today, Mischler is recognized as a leading boutique within the financial market ecosystem. The firm is co-headquartered in Newport Beach, CA and Stamford, CT and maintains offices in 6 major cities. The firm is staffed by more than 50 securities industry veterans and specializes in primary and secondary capital market transactions across debt and equities markets. Mischler operates as a conflict-free, institutional brokerage and investment banking platform and serves Fortune Treasury teams, leading investment managers and public plan sponsors. The firm’s website is

For Additional Information:

Dean Chamberlain, Chief Executive Officer

Tel: 203.276.6646



Corporate Debt Issuance Market Suffers Cold Spell
February 2016      Debt Market Commentary   

Quigley’s Corner 02.10.16 -Corporate Debt Issuance Suffers Cold Spell


Investment Grade New Issue Re-Cap – Timing is Everything – The Go/No Go Conundrum

Overall Market Re-Cap

Yellen’s Headlines re: Testimony Before the House

IG Primary Market Talking Points – One Deal Day

New Issues Priced

Lipper Fund Flows

Investment Grade Credit Spreads (by Industry/Rating)

IG Secondary Trading Lab

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab


One IG-rated 30NC5 $25 par Notes transaction for Senior Housing Properties Trust priced today totaling $250mm.  The deal was upsized from $100mm.  We have now officially gotten on the WTD IG Corporate leaderboards with today’s print albeit we’ve priced a mere 1.50% of this week’s syndicate midpoint average forecast or $250mm vs. $16.70b.  Talk about volatility! Looking at yesterday morning’s markets compared to this morning’s captures the tremendous volatility we’ve been seeing lately.  Volatility used to promote profitability but our new world order has been so restrictive and over-regulated that it’s been made more difficult to generate returns in these kinds of markets.  The severe lack of stability has also resulted in 6 no print non-Friday’s year-to-date. That annualizes out to 52 for the year at the current pace! It implies that when stability returns we have to beware of bottlenecking and congestion in our primary markets as issuers flock to print. Until then the morning “Go/No Go” calls are turning into more like “Market Update Calls” as there are myriad market movements to assess and digest.  Many issuers have shelved their deals until further notice.  According to Informa Global Markets, “YTD FIG new issue spreads have gapped out a resounding average 38 bps versus their initial pricing spread levels. Conversely, non-FIG and non-Energy YTD new issue spreads levels have leaked out just under 4 bps.”

Yesterday Market Update Calls (and/or Go/No Go’s if there were any) probably sounded a bit like this, “Good morning everyone!  I’ll just dive in to the carnage here this morning.  I think that’s the appropriate phraseology.  First off, in Asia overnight treasuries rallied in Tokyo, sold off in London and started to rally back in New York.  Volatility was due to the fact that the 10-year JGB is now trading below zero which marks a first time ever event in Japan and joins other EU instruments with negative yields.  U.S. futures opened down 135 while the seven major European exchanges are down an average 2% with oil falling back well below $30 per barrel. Speaking of oil, just yesterday (Thomson Reuters’ Reporter Hilary Flynn wrote in a story Edited by TR’s Natalie Harrison), “average spreads on junk-rated U.S. energy bonds touched their highest levels ever on Monday as oil prices remained under pressure and as bonds of Chesapeake Energy tumbled. Energy spreads widened by 113bps to T+1851bpthe biggest one day move in more than 13 years – according to Bank of America Merrill Lynch data, with the sector yielding 19.73%. Oil has severely impacted FIG equity prices and credit spreads as the big banks have large exposures to the energy sector that is, in turn, stressing cash levels.”  Spread levels on YTD FIGs widened an average 38 bps versus their new issue spread levels while non-FIG and non-Energy Industrial new issue moved out just under 4 bps YTD. Despite low UST yields that went from 2.05% two-and-a-half weeks ago to 1.73%, corporate spreads have widened against that. In fact, many dealers may have likely rate locked at 2.00% and any issuance inside here could provide highly undesirable double loss on further credit spread widening and we could potentially be looking at a false Treasury bottom here.

Conversely today opened up with stronger market tone with S&P futures up and EU exchanges 2.00% in the black, still, markets experienced another volatile day all told.

Another major issue playing on markets that’s almost lost in the mix of so much market moving news and directly correlated to China’s slow growth are the Emerging Markets.  Friend and former colleague Dr. Scott MacDonald wrote in The National Interest that EM capital markets that have been essentially shut down coming off a year, 2015 that “witnessed net capital outflows of an estimated $735 billion….the first net outflows since 1988.” EM nations are even more concerned now that the Fed is talking higher U.S. interest rates and as the USD strengthens thereby increasing the cost of dollar-denominated debt. With higher costs of debt there will be “less capital available for infrastructure development, tighter budgets and real risks to many of the social gains made over the past decade in much of Asia, Africa and Latin America.”  He continued, “The global economy is not in a good place.  One of the drivers of global economic growth over the past decade has been Emerging Markets. That is now at risk. Combined with competitive currency devaluations, different directions in monetary policy (the U.S. verses the European Central Bank and Bank of Japan), the use of increasingly unconventional monetary policies (negative interest rates, quantitative easing and forward guidance) and risky geopolitical frictions (Russia and the West over Ukraine and Russia and Turkey over Syria), policy coordination among G20 countries has generally fallen apart.”  I could continue the geopolitical list to include tensions in the South China Seas that are about to increase with the U.S. and India agreeing to a joint strategic operation in that very area; MENA dislocation; the fear of spreading Nationalism and increased terror level threats throughout the world and particularly Europe.  The EU one step closer to approving suspension of the Schengen Agreement by mandating enforced borders for a period of at least two years, slow-growth China and its myriad repercussions not to mention  a U.S. election year and the all-important global central bank monetary policies.

The point is clear – the climate for issuance is just not there.  Having said that as we try to uncover new clearing levels we look back at AT&T’s $6b 4-part that came on Friday, January 29th and well, to be quite frank, the issuer and leads look like geniuses given that spreads have only widened an average 7.5 bps across those four tranches.  Now we don’t have the benefit of tomorrow’s newspaper today but certain issuers (FIGs in particular) will require revised IPTs to get done in hear if they should decide to go at all.  One reassuring sign was today’s Mitsubishi UFJ Financial Group, Inc. (NYSE:MTU) (A1/A) announcement that it mandated Morgan Stanley and MUFG to arrange investor calls in the U.S., Europe and Asia slated to begin on Monday, February 15th in preparation for a dollar-denominated Senior Unsecured Holdco Notes transaction.  A global call was also scheduled to take place on Friday, February 12th from 11am ET to noon.  Joint active leads/books are MS and MUFG with J.P. Morgan serving in a passive role. MUFG filed to offer Fixed and FRN Senior Notes. So there is obviously business to get done but it’s a question of timing.

In readjusting starting IPTs in preparation for a would be FIG transaction, for example, it’s important to secure clearing levels palatable for the issuer that simultaneously offer an appropriate concession to investors in order to secure and hold together anchor orders.  As risk increases investors ask for more in return to participate. The flip side of that equation is that new IG Corporate product has become scarce, already trailing last year’s IG supply at this point in the new year by over 13%.  Issuers leading the charge will provide highly desired product to sell into voracious appetite for some of the safer haven corporate names offering much more attractive yields than current USTs.  The CT10 for example is yielding 1.68% as of 4:15pm ET today.  So, will the global money managers still be there?  Of course they will but at what spread levels will they hold together or will new supply, when it eventually comes suffice?

The strong recommendation these past couple of weeks seems to have been to keep a focused eye on spread levels, market conditions and have as many market calls as issuers, syndicate desks and bankers require.  Rather than get a one-day bounce before declaring “risk on” the new norm has been to wait for a couple to a few days of stability before announcing that “neutral” to “positive” or rather “stable” market tone has returned to warrant further issuance. The key word here being “sustainability.”

In the span of two-and-a-half weeks the UST 10-year shed 37 bps moving from yielding 2.05% to 1.68%.  With rate locks having taken place at 2.00% the potential for investment banks to suffer two-sided losses (new issue spreads gapping wider post pricing in a volatile market combined with subsequent wider Treasury levels that might just be sitting at a false artificial levels today, the environment is not exactly palatable for those pricing deals.  As for the energy complex and FIGs with that exposure, WTI crude has now officially seen five consecutive losing sessions closing down 2.11% to $27.35 per barrel.

So, it’s more than wise to look for back-to-back days of at least stable markets.  Stable could mean “neutral” or “flat” to “improved.”  The volatility that’s defined 2016 YTD so far has been so extreme that syndicate desks need to be confident that the window is, in fact, open for issuers to get deals done in the right environment and with a high quality book.  They are as sensitive to new deals holding together as issuers are and they want what’s the best for Companies involved.  Today’s Baa3/BBB- rated 30NC5 $25 par Notes transaction for Senior Housing was underwater with a $24.45 bid despite being upsized given good demand. Every deal in here will be watched by all market participants and will have an impact on deciding when the timing is right.

Considering that Fed Chair Janet Yellen has presented her Semiannual Monetary Policy Report to the Congress’ Committee on Financial Services throughout today and continues on Thursday before the Senate’s Committee on Banking, Housing and Urban Affairs, there is a lot of room for more volatility given Fed speak and House/Senate Q&A.  Although this Friday is not technically an early close for markets and though we have seen more prints on Friday’s YTD than not, market participants will assuredly be leaving desks a bit earlier given the upcoming long President’s Day weekend.  Which beckons “is it wise to carry new positions into a long weekend given the global backdrop?”


But have hope, there’s lots of business to eventually get done.  64.6% of the S&P 500 has reported earnings since January 4th, and the proportion of earnings beats to misses stands at 3.2: 1, while the proportion of revenue beats to misses is about even at 1: 1. Growth remains lackluster when compared to the same period a year ago.


Overall Market Re-Cap


USTs – Another volatile day. Closed mixed/flatter curve. Rallying after close.

Stocks – U.S. heading into close mixed (poor close). EU rallied & Nikkei sold off.

Economic – Today was all about Janet Yellen.

Currencies – The Yen cannot be stopped. The BOJ has to be in shock.

Commodities – Crude oil, gold, copper & silver all red.

CDX IG: +0.65 to 120.20

CDX HY: +0.80 to 571.98

CDX EM: +10.86 to 402.30

Swap spreads were tighter for the 2nd session in a row.


Yellen’s Headlines re: Testimony Before the House





























Yellen Takeaway

Fed Chair Yellen was the focal point today and I have to say she did a masterful job all things considered. Yellen admitted the environment has taken a turn for the worse since the FOMC raised rates in December for the first time in 9 years. She stated financial conditions have become less supportive and also added that it’s too early to measure the impact of recent YTD global events on the economy (China, Europe, economic data, etc). Yellen had a message for the folks in the four rate hike camp this year (100 bps) and those that priced out any rate hikes this year. The message was clearly that four rate hikes are not happening in 2016 but to take all rate hikes off the table in the first week in February is a mistake. The Fed will hike rates if the economy and markets give them the opportunity.

-Tony Farren


IG Primary Market Talking Points – One Deal Day


Today’s lone IG-rated new issue, Senior Housing Properties Trust increased its new 30NC5 $25 par Notes offering to $250mm from $100mm.  Morgan Stanley had the physical books.

The average spread compression across today’s 1 IG Corporate-only new issues was 6.3125 bps from IPTs to the launch.


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


IG Corporate New Issuance Next Week
vs. Current
WTD – $0.25b
February 2016 vs. Current
MTD – $6.275b
Low-End Avg. $15.29b 1.64% $90.9375b $6.90b
Midpoint Avg. $16.70b 1.50% $92.1875b $6.81b
High-End Avg. $18.12b 1.38% $93.4375b $6.72b
The Low $5b 5.00% $60b $10.46b
The High $25b 1.00% $110b $5.70b



Have a great evening!

Ron Quigley


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


NICs, Bid-to-Covers, Tenors and Sizes


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


Week 1/25
Week 1/18
Week 1/11
New Issue Concessions N/A N/A N/A 7.45 bps 21.77 bps 14.25 bps 12.66 bps
Oversubscription Rates N/A N/A N/A 3.01x 2.71x 1.96x 2.39x
Tenors N/A N/A N/A 8.19 yrs 7.43 yrs 5.33 yrs 7.41 yrs
Tranche Sizes N/A N/A N/A $548mm $940mm $1,235mm $1,901mm


New Issues Priced

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

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



Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Senior Housing Prop. Trust Baa3/BBB- 6.25% 30NC5 250 6.25-6.375%a N/A 6.25% $25 MS (phys) + 5


Lipper Report/Fund Flows


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

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

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


IG Credit Spreads by Rating

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

Spreads across the four IG asset classes are an average 84.50 bps wider versus their post-Crisis lows!


ASSET CLASS 2/10 2/09 2/08 2/05 2/04 2/03 2/02 2/01 1/29 1/28 1-Day Change 10-Day Trend PC
IG Avg. 215 213 209 208 208 206 202 202 202 201 +2 +14 106
“AAA” 96 96 95 96 96 96 93 93 92 91 0 +5 50
“AA” 121 119 116 116 115 114 111 111 114 113 +2 +7 63
“A” 161 159 155 154 154 152 149 149 147 146 +2 +15 81
“BBB” 296 292 287 287 286 284 280 279 280 278 +4 +18 142
IG vs. HY 647 638 601 595 595 592 577 575 572 574 +9 +73 228


IG Credit Spreads by Industry

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

Spreads across the major industry sectors are an average 108 bps wider versus their post-Crisis lows!


INDUSTRY 2/10 2/09 2/08 2/05 2/04 2/03 2/02 2/01 1/29 1/28 1-Day Change 10-Day Trend PC
Automotive 187 183 177 177 176 175 173 170 170 170 +4 +17 67
Banking 179 173 166 164 162 160 156 156 154 153 +6 +26 98
Basic Industry 409 408 402 407 412 411 406 405 405 405 +1 +4 143
Cap Goods 139 139 136 135 134 133 131 138 138 138 0 +1 84
Cons. Prod. 150 150 147 147 148 147 146 146 143 142 0 +8 85
Energy 391 387 380 380 381 377 366 368 368 367 +4 +24 133
Financials 220 215 211 210 207 204 201 197 197 196 +5 +24 97
Healthcare 153 152 150 150 149 148 146 145 145 145 +1 +8 83
Industrials 233 231 227 227 228 226 222 221 224 222 +2 +11 109
Insurance 205 201 198 197 195 193 189 189 189 188 +4 +17 120
Leisure 203 202 198 196 195 193 194 193 193 192 +1 +11 115
Media 244 241 238 237 236 233 231 229 229 227 +3 +17 113
Real Estate 194 192 188 188 186 185 184 183 183 182 +2 +12 112
Retail 165 164 161 162 162 160 159 158 158 158 +1 +7 92
Services 178 178 176 176 175 174 174 173 173 172 0 +6 120
Technology 166 165 161 162 161 160 157 155 155 153 +1 +13 76
Telecom 234 233 228 228 229 227 225 222 222 218 +1 +16 122
Transportation 200 200 198 197 196 195 193 191 191 190 0 +10 109
Utility 184 182 182 182 181 180 178 178 178 176 +2 +8 104


IG Secondary Trading Lab


BAML’s IG Master Index widened 2 bps to +215 versus +213.  +106 represents the post-Crisis low dating back to July 2007.

Standard & Poor’s Global Fixed Income Research widened 2 bps to +257 versus +255.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $16.2b on Tuesday versus $11b Monday and $19.1b the previous Tuesday.

The 10-DMA stands at $17b.

The top three most actively traded IG-rated issues were led by ABIBB 3.65% due 2/01/2026 that saw client flows account for 65% of the volume and with client buying 1.8-times selling.

ABIBB 4.90% due 2/01/2046 finished second with client and affiliate flows representing for 97% of the volume.

ABIBB 4.70% due 2/01/2036 placed third displaying 93% client flows.


New Issue Pipeline

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


Rentenbank (Aaa/AAA) announced it will issue a new 144a/REGS 5-year FRN due 2/19/2021 thru joint leads Bank of America/Merrill Lynch, Citigroup, Deutsche Bank and Toronto Dominion.  The issue is guaranteed by the Federal Republic of Germany. The deal is expected to price sometime during tomorrow’s session with IOIs being taken with IPTs in the 3mL+35 “area.”

Mitsubishi UFJ Financial Group, Inc. (A1/A) mandated Morgan Stanley and MUFG to arrange investor calls in the U.S., Europe and Asia slated to begin on Monday, February 15th in preparation for a dollar-denominated Senior Unsecured Holdco Notes transaction.  A global call will also take place on Friday, February 12th from 11am ET to noon.  Joint active leads/books are MS and MUFG with J.P. Morgan serving in a passive role. MUFG filed to offer Fixed and FRN Senior Notes today, Wednesday, February 10th.

United Mexican States (A3/BBB+) on Monday, February 8th filed a $10b shelf registration covering debt securities and warrants.

On Thursday, February 4th, Electronic Arts, which S&P assigned a “BBB-“ rating to today, asked Bank of America/Merrill Lynch to coordinate investor calls beginning tomorrow, Friday, February 5th and continuing on Monday, February 8th from 10am to 5pm ET on both days.

Molson Coors Brewing Company (Baa2/BBB), expects to issue up to $6.8b in new debt to help fund its $12b acquisition of Miller beer brands from AB InBev an SEC filing shows. On Tuesday, January 26th , Molson Coors filed an S-3ASR automatic mixed shelf registration covering debt securities, Class “B” common stock, depositary shares, warrants and units to be used for general corporate purposes including debt refis, acquisitions, working capital, CAPEX and repurchases of redemptions. Molson Coors announced last year that will acquire SAB Miller’s interest in MillerCoors for $12b contingent upon AB Inbev’s purchase of SABMiller.  The deal is expected to close some time during the second half of 2016.

Berkshire Hathaway Inc./Finance Corp. (Aa2/AA) filed an S-3ASR debt securities shelf registration on Tuesday, January 26th with proceeds flagged for general corporate purposes.

Corporacion Andina de Fomento or “CAF” (Aa3/AA-), the Latin American Development Bank, mandated Bank of America/Merrill Lynch, Citigroup, Deutsche Bank and HSBC to arrange global investor calls scheduled that began today, Thursday, January 28th in preparation for a dollar-denominated global offering that could soon follow their conclusion.

NASDAQ (Baa3/BBB-) filed an S-3ASR mixed securities shelf registration covering debt securities, preferred stock, common stock, warrants, depositary shares, purchase contracts and units with proceeds flagged for general corporate purposes, capital expenditures and working capital.

Banque Ouest Africaine de Développement or “BOAD” (Baa1/BBB) mandated BNP Paribas, Deutsche Bank, J.P. Morgan and Standard Bank to arrange fixed income investor meetings scheduled that began on Monday, January 18th in preparation for a dollar-denominated benchmark 144A/REGS S/3( c )(7) Senior Unsecured transaction that could soon follow its conclusion.  “BOAD”  is the West African Development Bank.

The State of Israel (A1/A+) filed a 424B5 registration statement under which it may offer up to $7b of debt securities and subsequently asked Barclays, Citigroup and Goldman Sachs to arrange U.S. fixed income investor meetings that began on January 12th.

The Republic of Turkey (Baa3/BBB-) filed an S-B shelf registration covering over $4.9b of debt securities.  Turkey has issued in January in 12 of the past 13 years.

CIBC Funding, L.P. guaranteed by CIBC and rated (Aa3/AA-) asked Citigroup, CIBC Capital Markets, BNP Paribas and Wells Fargo held fixed income investor calls that wrapped up on Monday, December 7th in preparation for a dollar-denominated 144a/RegS 3( c )(7) transaction that could soon follow.

Split-rated Yapi ve Kredi Bankasi A.S. (Baa3/BB+) mandated Bank of America/Merrill Lynch, Citigroup, Mistubishi UFJ Securities Inc. and Unicredit as joint leads and books to arrange investor meetings that began on Tuesday, December 1st in the U.S., Europe and Asia in conjunction with a 144A/RegS Basel III compliant Tier 2 dollar-denominated offering expected to price sometime in early 2016.

Romania (Baa3/BBB-) asked HSBC, RBI, SG and Unicredit to arrange credit update meetings with U.S. investors across four cities that concluded in New York on Thursday, December 10th.

Kia Motors Corporation (Baa1/A-) road showed with fixed income investors thru meetings arranged by Citigroup and J.P. Morgan that began on Monday, November 16th.

PT Pertamina (Persero) (Baa3/BB+/BBB-) mandated BNP Paribas, Deutsche Bank and J.P. Morgan to arrange fixed income investor meetings took place in on Monday, September 28th  in London and that made subsequent stops in New York and Boston before concluding October 2nd in L.A.


M&A Pipeline – $657.785 Billion in Cumulative Enterprise Value!

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


Fortis Inc. (A-/S&P) announced on Tuesday, February 9th that it will acquire ITC Holdings for $11.3b in a cash and stock transaction.  The terms stipulate that ITC shareholders will receive $22.57 in cash and .7520 Fortis shares per ITC share. Fortis will also assume approx. $4.4bn of consolidated ITC indebtedness. The cash portion of the deal will be financed through the issuance of about $2bn of Fortis debt and the sale of up to 19.9% of ITC to one or more infrastructure-focused minority investors. Fortis expects to maintain a solid IG credit rating.

On a consolidated basis, Southern Company (Baa1/A-) plans to raise $10.35b of debt in the capital markets this year, including the refinancing of nearly $2b of long-term debt maturities. This would account for more than 20% of an anticipated $47b of new corporate bond supply from U.S. investment grade electric utilities. Within that plan, the parent holding company would issue $8b to finance its acquisition of AGL Resources (BBB+/BBB+); this would be the largest single corporate bond issuance by a U.S. investment grade electric utility, surpassing the $6.7 billion issued by Pacific Gas & Electric in March 2004 as it prepared to complete its Chapter 11 restructuring. Southern Power (Baa1/BBB+) will be the next largest issuer, with $1,200 million budgeted for 2016, primarily to finance its growth plans.

Exelon Corp. (Baa2/BBB-) Debt financing plans for 2016 include $950 million at Commonwealth Edison (A2/A-) ($665 million maturing in 3Q16), $750 million at Baltimore Gas & Electric (A3/A-) ($300 million maturing on October 1) and $450 million at PECO Energy (Aa3/A-) ($300 million maturing on October 15). Exelon Corporation will either issue some debt to effectively replace the acquisition-related debt it redeemed in late 2015, or redeem its new 2025, 2035 and 2045 maturities, depending on whether or not it closes its $6.8b acquisition of Pepco Holdings (Baa3/BBB+). The only remaining required approval is that of the District of Columba Public Service Commission, which stated in its order of October 28, 2015 that it expected to issue its decision on or before March 4, 2016.

TE Connectivity (A-/A-) announced it will buy medical device maker Creganna Medical for $895mm in cash.  The deal will be funded with available cash and debt.

Stryker Corp. (A3/A+) announced on Monday, February 1st, that it will acquire Sage Products, LLC in an all cash transaction totaling $2.775b that will be funded with cash and new debt.

Dominion Resources Inc. “D” (Baa2/BBB+) announced on Monday, February 1st, that it will 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 is expected to close by the end of 2016. RBC and Mizuho are providing financing and acting as financial advisors to Dominion.  The deal is subject to shareholder and regulatory approvals.

Abbott Labs (A2/A+) announced on Monday, February 1st, it will acquire Alere Inc. (Caa1/CCC+) for $5.8b in which “ABT” will pay $56 per share of ”ALR.”  The deal will be financed with debt.  ABT expects a strong IG rating despite the new debt. The deal is subject to “ALR” shareholder as well as regulatory approvals.

Newell Rubbermaid “NWL” (Baa3/BBB-/BBB+) and Jarden Corporation “JAH” announced on December 14th, 2015 that it entered in to an agreement to combine the two companies in a cash and stock transaction valued at $15.4b. The transaction will be funded with cash, equity, and debt issued to JAH shareholders. NWL entered into a commitment letter with Goldman Sachs to provide a $10.5bn bridge facility. In an S-4 filing NWL will refinance $4.5bn of outstanding Jarden debt and will assume $632 million of outstanding Jarden debt, with up to approximately $10.2bn of new debt expected to be incurred in the form of up to approximately $8.7bn of newly issued Newell Rubbermaid debt securities, a $1.5bn term loan facility and available balance sheet cash and the net cash proceeds from Newell’s sale of its Décor business. Goldman Sachs is acting as advisor to NWL. The deal is expected to close in Q2 2016 and is subject approvals.

Total Systems Services, Inc. “TSS” (Baa3/BBB-) entered into a definitive agreement with Vista Equity Partners to acquire TransFirst, a vista portfolio company, in an all-cash transaction valued at $2.35bn. In terms of financing TSS management noted that the deal will be funded with fully committed debt financing. On a pro forma basis at closing the combined entity will have approx. $3.8bn of debt and pro forma leverage of 3.9x. The transaction is expected to close sometime in Q2 2016 and is subject to regulatory approvals. Moody’s affirmed TSS’s Senior Unsecured “Baa3” rating and “stable” outlook.

Molson Coors (Baa2/BBB-) expects to issue up to $6.8b in new debt to help fund its $12b acquisition of Miller beer brands from AB InBev an SEC filing shows. The transaction will be financed thru cash, debt and new equity.  The deal is expected to close some time during the second half of 2016.

Lockheed Martin (Baa1/BBB+) announced it will combine its information systems/global solutions entity with Leidos (Ba1/BBB-)in a deal valued at roughly $5b.  Leidos will keep its existing $1.1b debt and expects to incur $2.5b of additional debt as part of the transaction.  The deal is expected to close sometime in the second half of 2016.

Johnson Controls (Baa2/BBB+) announced it will acquire Tyco International (A3/A-) for $16.5b and with the merged entity operating in Ireland to save on taxes.  Tyco secured a $4b bank facility to fund the cash consideration inferring additional long-term dated M&A  ahead according to S&P. The deal is slated to close by the end of 2016. The new entity will be called Johnson Controls plc. Tyco has entered a commitment letter with Citigroup Global Markets to provide as much as a $4b term loan as well as a $4b 364-day year Senior Unsecured bridge loan facility.

This morning in Charlotte, 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 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.  The deal is expected to close toward the end of 2016.

Shire PLC announced this morning that it will acquire Baxalta Inc. (Baa2/BBB) for approximately $32.2 billion in cash and stock.  Shire secured an $18b bank facility to finance the cash portion and will refinance it in debt. The deal creates the single largest maker of rare disease drugs in the world.

Dow Chemical and DuPont Co. (A3/A-) announced a merger of epic proportions worth $130b that brings together among the largest and most prestigious chemical and agricultural companies.  The plan is to merge followed by a split into three businesses focused on agriculture, material sciences and a specialty brand focused on nutrition/electronics. The two companies are among the nation’s oldest with DuPont founded in 1802 and Dow in 1897.

Air Liquide SA (NR/A+) announced on November 17th that it will acquire Airgas Inc. (Baa2/BBB) for $13.4b in which Airgas will be a wholly-owned subsidiary of its new parent. The transaction will be financed bridge loans that are expected to be refinanced through equity, Euro cash and euro as well as dollar-denominated debt issuance.

Avago Technologies (Ba2/BB+) is expected to buy Broadcom (A2/A-) for $37b. The transaction is scheduled to close by the end of Q1 2016. Avago will fund the $17b cash consideration with cash on hand and $9b in new, fully-committed debt financing from a consortium of banks.

Pfizer (A1/AA) and it’s Irish counterpart Allergan (Bbaa3/BBB-) announced on Monday, November 24th a $160 billion behemoth health care services merger making it the largest M&A deal ever.  Pfizer’s U.S. headquarters looks to move across the pond to relocate to the emerald island (did someone say tax haven?) making it the world’s number one pharmaceutical company.  Most of the M&A transaction will be in cash with a debt portion heard to be in a range of $6-12b.  Post today’s close, ratings agencies have said the merger may involve a buyback of as much as $80-85b.

Michael Dell’s privately held Dell Inc., (Ba3/BB+), announced an up to $67b cash and stock deal to acquire EMC Corp. (A1/A).

BB&T (A2/A-) announced in August that it will acquire National Penn Bancshares for $1.8b in cash and stock ($550mm in cash and 31.6mm BB&T shares). The deal is expected to close mid-2016.

Black Hills Corp. (Baa1/BBB) announced in July an acquisition of SourceGas Holdings LLC (Baa2/BBB-) for $1.89b in a deal that will include approximately $500mm in new debt. Expected to close sometime in the first half of 2016.

UPS (Aa3/A+) announced it has entered into a definitive purchase agreement to acquire Coyote Logistics, a technology-driven, non-asset based truckload freight brokerage company for $1.8b from Warburg Pincus.  The transaction will be financed with available cash resources and through existing and new debt arrangements and is expected to close within 30 days.

Israel’s Teva Pharmaceutical (A3/A-) announced plans in July to purchase Dublin-based Allergan’s Pharma (Baa3/BBB-) business for $40.5b.  $33.75b in cash will be financed through a combination of new equity, debt and cash on hand. Teva entered into a $33.bridge facility commitment including $27b debt and $6.75b equity.  Timing is expected sometime in Q1 2016.

Aetna Inc. (Baa1/A) announced in July that it will buy Humana Inc. (Baa3/BBB+) for about $37 billion in cash and stock making it the largest insurance M&A deal in history.

Anthem Inc. (Baa2/A) proposed to purchase Cigna Corp. (Baa1/A) for $54b or $188 per share furthering the consolidation in the healthcare sector. The deal is expected to close sometime during the second half of 2016. The merger would involve 53mm members and will include $22b in new debt and loans.

Amphenol Corporation (Baa1/BBB+) announced on June 29th that it made a binding offer to acquire 100% of FCI Asia Pte. Ltd. for $1.275b. Funding will be made thru cash and debt and is expected to close by the end of 2015.


New Issue Volume


Index Open Current Change  
IG25 119.554 121.563 2.009
HV25 371.845 368.815 <3.03>
VIX 26.54 26.29 <0.25>  
S&P 1,852 1,851 <1>
DOW 16,014 15,914 <100>  



IG Corporates




Total IG (+ SSA)

DAY: $0.25 bn DAY: $0.25 bn
WTD: $0.25 bn WTD: $0.45 bn
MTD: $6.275 bn MTD: $14.359 bn
YTD: $133.259 bn YTD: $184.483 bn


Economic Data Releases


MBA Mortgage Applications Feb. 5 —- 9.3% <2.6%> —-
Monthly Budget Statement January $50.0b $55.2b <$17.5b> —-


Rates Trading Lab


Tokyo Holiday Tonight: Cash Markets Will Not Open Until 2am. Andy will be on the desk from 1:30am(est).

It seems possible that market is setting itself for some sort of correction, but it also seems to be suffering from “seller’s exhaustion” as the path of least resistance, at least in the long end, is lower rates. As I said this afternoon, there are some very valid arguments for the rate complex to take a breather here, but I think it’s equally important to remember that auctions are liquidity events and in the current poor trading environment, liquidity is at a premium (no matter what the NY Fed theorizes). It’s hard to quantify, but it’s important to remember, that many buyers here are buying not because they want to, but because they have to. As for the curve, the flattening we have seen was not all that surprising given the term structure in place. Steepening trades make sense when you can collect enough carry to justify the forwards in a tightening environment. When the positive carry is not there, you really have to make a case for an easier Fed to justify a steeper curve so in that context, I think the move in the curve makes more sense.

-Jim Levenson


UST Resistance/Support Table


CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-27 101-16 102-12 105-16+ 111-30
RESISTANCE LEVEL 99-256 101-11 102-08 105-09+ 111-08
RESISTANCE LEVEL 99-24 101-08+ 102-06 105-05+ 110-22
SUPPORT LEVEL 99-226 101-02+ 101-31 104-25 110-01
SUPPORT LEVEL 99-21 101-00+ 101-22+ 104-15 109-18
SUPPORT LEVEL 99-19+ 100-29+ 101-17+ 104-08 108-31+


Tomorrow’s Calendar


China Data: Nothing Scheduled

Japan Data: Nothing Scheduled

Australia: Consumer Inflation Expectation

EU Data: U.K.-Jan RICS

S. Data: Claims, Cons Comf

Supply: Italy 2, 6, 14y, Irish 10y, U.K. 29y, U.S. 30y

Events: Riksbank, Eurogroup

Speeches: Yellen, Cunliffe, Bailey, Stevens, Liikanen (more…)