Browsing articles tagged with "New Corporate Debt Issue Archives - Mischler Financial Group"
Day’s IG DCM: 14 Issuers Float $14.67b in New Corporate Debt
August 2017      Debt Market Commentary, Recent Deals   

Quigley’s Corner 08.07.17 :  Another New Corporate Debt Issue Milestone


Investment Grade New Issue Re-Cap – Most Amount of Issuers YTD; 14 Issuers, $14b+

Today’s IG New Debt Issuance & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

The Best and the Brightest: IG DCM Syndicate Forecasts and Sound Bites for Next Week 

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

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 August 2nd               

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Today’s IG Corporate dollar DCM finished with a YTD record of 14 issuers that priced 22 tranches between them totaling $14.675b.  Leading the pack: Aetna (NYSE: AET), American Water Capital, Ares Capital (NASDAQ: ARCC), Duke Energy (NYSE: DUK), Kraft Heinz (NYSE:HNZ), Regions Financial (NYSE: RF), and UBS Group (NYSE: UBS).  The SSA space was quiet.  This past March 6th the IG Corporate space featured 12 issuers and April 27th also hosted 12 IG Corporate issuers.  But today takes the cake for the most number of issuers YTD. The DJIA closed at its 9th consecutive new high. The S&P also ended the session at a new all-time high.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

  • The IG Corporate WTD total is 42.80% of this week’s syndicate midpoint average forecast or $14.675b vs. $34.29b.
  • MTD we’ve priced 45.13% of the syndicate forecast for July or $35.70b vs. $79.10b.
  • There are now 4 issuers in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Kimco Realty Corp. upsized its $25 par PerpNC5 Class “L” cumulative redeemable preferred stock new issue to $225mm from $150mm at the launch and at the tightest side of price talk.
  • Regions Financial Corp. dropped the 5-year FRN tranche from today’s earlier announced two-part 5-year FXD/FRN new issue having secured sufficient funding in the 5-year fixed rate tranche.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 20 IG Corporate-only but ex-Kimco Realty $25 par Preferred new issues, was <15.69> bps.
  • The spread compression across all 21 IG Corporate new issues including the Kimco Realty $25 par Preferred was <15.24> bps.
  • The average spreads of 1 of the 19 major industry sectors set a new post-Crisis low while 2 of the 19 tied their post-Crisis lows. That’s 15.79% of the sectors.
  • BAML’s IG Master Index was unchanged at +109.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.05 vs. 1.04.
  • Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +150 vs. +152.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.2b on Friday versus $19.6b on Thursday and $14.3b the previous Friday.
  • The 10-DMA stands at $17.6b.

 

Global Market Recap

 

  • U.S. Treasuries – Not fazed by strong Employment Report & this week’s Treasury Refunding.
  • Overseas Bonds – JGB’s down. Good day Gilts. Bund unchanged. Peripherals better.
  • Stocks – Dow looking for 9th record high close & 11th winning day in a row.
  • Overseas Stocks – Asia rallied to a 10yr high. Europe had more red than green.
  • Economic – Not a factor in the U.S. today. PPI on Thursday & CPI on Friday.
  • Overseas Economic – China foreign reserves up. Japan better. Germany IP weaker.
  • Currencies – Quiet day on the FX front. U.S. outperformed 4 of the Big 5 (small).
  • Commodities – Crude oil small loss, gold basically unchanged & copper 2+ year high.
  • CDX IG: +0.24 to 57.95
  • CDX HY: +0.38 to 322.22
  • CDX EM: -3.47 to 183.20

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·        N. Korea launches ICBM on 7/28. Jong-Un claims Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  Fear that NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. U.S. lofts Trident missile in Pacific Ocean in response. China insiders say PRC does not have the influence on NOKO that the U.S. thinks it does.
ELEVATED
BREXIT Fallout
·        U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.
CAUTION
“U.S. political gridlock”
·        Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

·        GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

·        Italian debt-to-GDP ratio is 133% – world’s 3rd highest.

·        Despite destroying the Caliphate, ISIS will be scattered across a wider MENA region and Europe.

·        Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

·        Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

·        Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE ·        China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
·        Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and August

 

IG Corporate New Issuance This Week
8/07-8/11
vs. Current
WTD – $14.675b
August 2017 vs. Current
MTD – $35.70b
Low-End Avg. $33.46b 43.86% $78.37b 45.55%
Midpoint Avg. $34.29b 42.80% $79.10b 45.13%
High-End Avg. $35.12b 41.79% $79.83b 44.72%
The Low $30b 48.92% $60b 59.50%
The High $45b 32.61% $100b 35.70%

 

UBS Funding Group (Switzerland) AG $3.25bn 2-part 6NC5 Fixed-to-Floating and 6NC5 FRNs Deal Dashboard

Let’s go straight to the “QC” Deal Dashboard for pricing intel and book sizes/bid-to-cover rates.  Here’s a look at spread compression throughout price evolution during today’s two-part book build from IPTs to the launch and final pricing:

Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
6NC5 FRNs 3mL+equiv 3mL+equiv 3mL+95 3mL+95 <20> bps 2.5
6NC5F-t-F +125a +110a (+/-5) +105 +105 <20> bps 2.5

 

………and here’s a snap shot of today’s final book sizes and oversubscription rates:

 

Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
6NC5 FRNs $1.25bn $2.20bn 1.76x
6NC5 F-t-F $2bn $3.5bn 1.75x

 

Final Pricing – UBS Funding Group (Switzerland) AG $3.25bn 2-part 6NC5 Fixed-to-Floating and 6NC5 FRNs

UBS $1.25bn 6nc5 FRNs due 8/15/2023(22) @ $100.00 3mL+95.

UBS $2bn 2.859% 6nc5 due 8/15/2023(22) @ $100.00 to yield 2.859% or T+105.

 

 

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, Sizes and Average Spread Compression from IPTs thru Launches

…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
7/31
TUES.
8/01
WED.
8/02
TH.
8/03
FRI.
8/04
AVERAGES
WEEK 7/31
AVERAGES
WEEK 7/24
AVERAGES
WEEK 7/17
AVERAGES
WEEK 7/10
AVERAGES
WEEK 7/03
AVERAGES
WEEK 6/26
New Issue Concessions <4.05> bps 0.375 bps 1.19 bps 6.80 bps N/A 0.06 bps 1.68 bps <0.05> bps 2.46 bps 2.25 bps <0.24> bps
Oversubscription Rates 4.35x 2.82x 3.09x 1.95x N/A 3.34x 3.30x 3.37x 2.97x 2.38x 3.29x
Tenors 12.83 yrs 12.80 yrs 12.55 yrs 8.12 yrs 6.5 yrs 11.96 yrs 13.03 yrs 10.28 yrs 8.96 yrs 12.50 yrs 9.43 yrs
Tranche Sizes $466mm $933mm $627mm $721mm 325 $651mm $1,512mm $1,187mm $765mm $1,437mm $527mm
Avg. Spd. Compression
IPTs to Launch
<19.73> bps <15.33> bps <17.98> yrs <19.92> bps N/A <18.56> bps <21.15> bps <18.10> bps <19.80> bps <20.50> bps <17.35> bps

 

New Issues Priced

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