Browsing articles tagged with "New Issue Pipeline Archives - Page 2 of 2 - Mischler Financial Group"
IG Corporate Debt Market Outlook In Advance of Labor Day
August 2016      Debt Market Commentary   

Quigley’s Corner 08.18.16-In Advance of Labor Day: IG Corporate Debt Issuers Should Err to the Upside

 

Investment Grade New Issue Re-Cap – It Ain’t Over ‘Til It’s Over!  Guess what?  It’s O-V-E-R!

IG Primary & Secondary Market Talking Points

“The Best and the Brightest”- Fixed Income Syndicate Outlook (Beyond Labor Day)

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

From Quig-litz to Stiglitz: Is There A Solution?  A Northern and Southern Euro!

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

Lipper Report/Fund Flows

Investment Grade Credit Spreads

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

 

Nothing…..zero..de nada!…Hasta la vista! The market is now officially in summer vacation mode folks.  Sure we might get some opportunistic issuers looking to get in ahead of the September rush, however, I was able to speak with all the major syndicate desks today.  My survey/poll was two-fold – to gauge volume forecasts for the remainder of August ($5.44b) and separately, for September issuance projections ($116.02b).  Several commented that the September tally is fluid because issuers are discussing pulling forward their issuance, so take it from me when I tell you to “err to the upside!”

September is traditionally a busy month (scroll down to my “Knowing the Past for the Future” section) as I take a look back at a decade’s worth of September IG issuance for each of IG Corporate, SSA and all-in volume.  The Fed mentioned the Italian banking crisis twice in their minutes yesterday.  The EU is coming undone. Vlad-the-Terrible Putin has a green card to annex Crimea and he will take full advantage of the fact that the EU cannot focus on him in their rearview mirror.  Putin knows this and he’ll take full advantage of it. The EU has too many troubles of its own.  We have a Presidential election on Tuesday, November 8th that could very well compress issuance from the standard stretch run to Thanksgiving (November 24th) by 12 days as a result.  When you err, err to the upside. 

IG Primary & Secondary Market Talking Points

 

  • Taking a look at the secondary trading performance of this week’s IG Corporate and SSA issues, of the 15 deals that printed, 12 tightened versus NIP for a 00% improvement rate while only 2 widened (13.33%) and 1 were trading flat (6.67%).
  • BAML’s IG Master Index tightened 1 bp to +142 versus +143.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research tightened 1 bp to +191 versus  +192.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.9b on Wednesday versus $15.7b Tuesday and $15.6b the previous Wednesday.
  • The 10-DMA stands at $14.2b.

 

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

 

IG Corporate New Issuance This Week
8/15-8/19
vs. Current
WTD – $8.448b
August 2016 vs. Current
MTD – $95.45b
Low-End Avg. $12.78b 66.10% $60.48b 157.82%
Midpoint Avg. $14.09b 59.96% $61.13b 156.14%
High-End Avg. $15.39b 54.89% $61.78b 154.50%
The Low $5b 168.96% $45b 212.11%
The High $20b 42.24% $75b 127.27%

 

“The Best and the Brightest” –  Syndicate Forecasts and Sound Bites for the Remainder of August and September 

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 22 syndicate desks surveyed in today’s Best & Brightest poll.  20 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 20 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  Today’s cumulative underwriting percentage of the participating desks was 80.29% 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.

 

Syndicate IG Corporate-only Volume Estimates for the Remainder of August & September

 

IG Corporate New Issuance Remainder of August
8/19-8/31
September 2016
Low-End Avg. $4.45b $115.45b
Midpoint Avg. $5.44b $116.02b
High-End Avg. $6.43b $116.59b
The Low $0b $80b
The High $15b $150b

 

A Look at How the Voting Brackets Broke-Out for the Remainder of August & September

Remainder of August September
1: 0b 1:80-85b
1: 1-2b 2: 100b
1: 2b 1: 105b
1: 2-3b 1: 100-110b
3: 0-5b 3: 110b
1: 3b 3: 115b
4: 5b 1: 110-120b
2: 5-7b 2: 120b
1: 5-7.5b 6: 125b
2: 5-10b 1: 130b
4: 10b 1:150b
1: 5-15b  

 

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

 

  • Across the past ten years, all-in dollar-denominated IG Corporate plus SSA September new issuance averaged $117.55b.
  • Over the past five years, all-in IG September new issuance averaged $138.49b.
  • Over the past three years, all-in IG September issuance has averaged $157.58b.
  • The past three years of September saw IG Corporate only issuance average $127.88b.
  • September SSA issuance has averaged $29.71b across the last three years.

 

August
(Year)
All-in IG Issuance (bn) IG Corps
only (bn)
SSA
only (bn)
2015 119.65 106.06 13.59
2014 160.96 124.25 36.71
2013 192.14 153.32 38.82
2012 143.74 124.62 19.12
2011 75.98 52.51 23.47
2010 130.14 112.41 17.73
2009 136.89 78.90 57.99
2008 29.89 17.58 12.31
2007 107.39 85.36 22.03
2006 78.73 61.41 17.32

Note: includes TARP/TALF & FDIC insured issuance

 

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

“Good morning and Happy Thursday is Friday for me! I will be taking my annual block leave beginning tomorrow morning and returning to my corner desk on Tuesday, September 6th.  It would seem summer vacations are now on the docket for the remainder of the month. August all-in IG Corporate plus SSA issuance managed to break thru the $100b mark for the first time in history.  We currently stand at $104.75b.  WTD issuance has dropped off measurably to $8.44b thus far for IG Corporate only prints. Before I leave there are over 3,000 readers of the “QC” interested in knowing your thoughts and numbers for the remainder of August as well as your projections for September issuance.


This week we priced $8.698b of all-in IG Corporate and SSA issuance. IG Corps were $8.448b or only 60% of this week’s syndicate midpoint average forecast calling for $14.09b.

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

 

  • NICS:  <4.27> bps
  • Oversubscription Rates: 4.26x
  • Tenors:  11.73 years
  • Tranche Sizes: $603mm

 

Week-on-week demand for IG corporate credit primary paper strengthened versus last week posting an average bid-to-cover rate of 4.26x vs. 3.56x.  Average NICs tightened 6.10 bps to an average negative <4.27> bps vs. last week’s +1.83 bps.  Average tranche sizes decreased to $603mm per issue vs. $735mm. Average tenors extended by an average 2.56 years to 11.73 years against last week’s 9.17 years.

Week-on-week, BAML’s IG Master Index is 3 bps tighter or +142 vs. last Friday’s +145 close.  Spreads across the four IG asset classes tightened 2.50 bps to 30.75 vs. 33.25. Looking at the 19 major industry sectors, spreads tightened 1.53 bps to an average 39.42 bps off their post-Crisis lows versus last Friday’s 40.95 bps close.               

Finally, what are YOUR thoughts and number for the remainder of August and separately for September IG issuance?

Thank you as always in advance.  Let’s give the readership a nice read to close out the summer and to prepare for the stretch run.
Best wishes to you and yours thru Labor Day! –Ron”

 

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

(Remainder of this section exclusive to distribution list recipients)

 

From Quig-litz to Stiglitz

This morning Bloomberg TV featured an interview with Columbia University economist and professor as well as Nobel laureate Joseph Stiglitz, who expressed his opinion that if the Euro Zone continues on its current dysfunctional path, it should split up! It’s gotten lots of air time, coverage and traction.  He referred to such a split as an “amicable divorce” with “two or three different currency zones.”  I watched it and had two comments to make.  The first was that Mr. Stiglitz looks like guitarist Joe Walsh might look when the latter turns 75 with a beard.  Then I found out that Stiglitz is 73 while Joe Walsh is 65.  I guess all those lost years kept Joe W. young at heart and with age.  Anyway, the other comment  I made was “hey I wrote about the EU splitting into two zones with two currencies a long time ago.”  I then went searching thru prior “QC’s to find it.  Here it is in its entirety written and distributed to you, if you were onboard the “QC” on January 27th, 2015 you’ll have on your desktops. (more…)

Corporate Debt Issuance Thermometer: Patients’ Resting; Mischler Comments
August 2016      Debt Market Commentary   

Quigley’s Corner 08.15.16 : Corporate Debt Issuance Thermometer

 

Investment Grade Corporate Bond New Issue Re-Cap

Global Market Recap

IG Primary & Secondary Market Talking Points

New Issues Priced

New Issue Volume

Lipper Report/Fund Flows – Week ending August 10th     

Economic Data Release

Rates Trading Lab

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Front-loaded!  FRONT-LOADED? The call was for a top heavy week to digest the bulk of light $14.09b in new supply.  Today however, as Bloomberg’s Bob Elson shared with me this morning, “in case you’re wondering, if it was a prime vacation period, here we are near 7:45 and 40% of the usual suspects are not signed on……..(to Bloomberg).”  Followed by “Big Drop in Issuance Is Expected.”  And so it was.

4 IG Corporate issuers priced 5 tranches between them totaling a mere $1.825b or just shy of 13% of this week’s syndicate midpoint average forecasts.  For that matter though, this month has gone down in the record books as the highest volume August for both IG Corporates and all-in (Corp + SSA) supply.

I am hearing a potentially record breaking stretch run from Post Labor Day thru Thanksgiving with the caveat that due to this year’s corporate-debt-issuance thermometer-Presidential Election on Tuesday, November 8th, we could potentially compress supply that would typically print into Thanksgiving week.  Issuers might pull issuance forward due to election uncertainties making for a very active and high volume period from September 6th thru November 8th.

Global Market Recap

o   U.S. Treasuries – USTs traded poorly as risk assets rallied.

o   Stocks – All-time highs reached for S&P’s, Dow & NASDAQ and Russia too.

o   Overseas Stocks – Europe mostly green, Nikkei red & China had a big rally.

o   Economic – U.S. data was mixed. U.K. data was weaker. Japan GDP was weaker.

o   Currencies – USD outperformed the Pound but lost vs. the Euro, Yen, CAD & AUD.

o   Commodities – Crude oil with another good day. Weaker USD helped commodities.

o   CDX IG: -1.03 to 70.57

o   CDX HY: -6.20 to 382.41

o   CDX EM: -4.74 to 236.38

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

-Tony Farren


IG Primary & Secondary Market Talking Points

 

  • Brixmor Operating Partnership LP upsized today’s 7-year Senior notes new issue to $500mm from $300mm at the launch and at the tightest side of guidance.
  • The average spread compression through price evolution of today’s 5 IG Corporate new issue was 25.80 bps.  It was a split-rated Murphy Oil. Evolution reflects to guidance only.
  • BAML’s IG Master Index was unchanged at +145.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +199.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $10.3b on Wednesday versus $14.6b Tuesday and $12.6b the previous Wednesday.
  • The 10-DMA stands at $14.6b.

 

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

 

IG Corporate New Issuance This Week
8/15-8/19
vs. Current
WTD – $1.825b
August 2016 vs. Current
MTD – $88.83b
Low-End Avg. $12.78b 14.28% $60.48b 146.87%
Midpoint Avg. $14.09b 12.95% $61.13b 145.31%
High-End Avg. $15.39b 11.86% $61.78b 143.78%
The Low $5b 36.50% $45b 197.40%
The High $20b 9.125% $75b 118.44%

 

 

Have a great evening!
Ron

 

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

This Week’s Investment Grade Corporate Debt Tone: Firm & Tight; Mischler Comment
August 2016      Debt Market Commentary   

Quigley’s Corner 08.05.16: Investment Grade Corporate Debt Tighter on The Bid Side

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points – Market Tone Very Firm; 86% of Week’s 50 New Issues Tighter on the Bid Side.

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

 New Issues Priced

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

Lipper Report/Fund Flows – Week ending August 3rd     

Investment Grade Credit Spreads (by Rating/Issuer)

IG Secondary Market Trade Lab

Economic Data Releases

Rates Trading Lab

New Issue Pipeline

M&A Pipeline

We wrap up a resounding week for IG new issuance.  The climate is ripe for continued success for companies looking to print now.  Sure, we’ll have the late August vacations to slow things down a bit before the ramp up to what should be a VERY busy run from September through Thanksgiving but August is NOT yet over.  This week we saw a total of 47 IG Corporate and 3 SSA issues price.  86% of them trended tighter versus their final pricing spread levels in this afternoon’s secondary trading market. That is what syndicate desks mean when they say, “the market is firm!” The syndicate midpoint average forecast for next week’s IG Corporate supply is $22.80b.  They ARE the best.  However, I will say that the trend in here is – without a doubt – to the upside. So would I be surprised to see $30b price?…..Not at all.  But what the heck, when I give YOU access every Friday to those 23 professionals who price your deals and who sit in the most highly pressurized job on Wall Street, why listen to just little ole me?  The Best & Brightest have spoken.  See their projections and read their words in their below weekly section.  And thank you to all 23 of them for accommodating my request for early responses.  At 54 years of age I am wrapping up a tough 66 hour work week are tough BUT it was well worth it.  The Quigley family thanks all 23 syndicate participants for letting me out a bit early today to travel with my family up to Vermont. The guy in the corner needs some R&R in the Green Mountain State this weekend.  We appreciate the patronage of all the issuers who offered us such meaningful roles in the past couple of weeks and ditto that to those lead managers who really gave new meaning to getting us involved on the distribution front. You all know who you are. Thanks to each and every one of you.

……………..I tell ya, the oldest Service Disabled Veteran broker-dealer keeps breaking new ground.  When you give us a chance  to prove our capital market capabilities, we are the Little Engine That Could.  Thanks for entrusting Mischler Financial, the financial industry’s oldest minority broker-dealer owned/operated by Service-Disabled Veterans on your deals.


IG Primary & Secondary Market Talking Points – Market Tone Very Firm with 86% of This Week’s 50 New Issues Tighter on the Bid Side.

firm-tight-tone-investment-grade-debt

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate new issue was 15.00 bps.
  • BAML’s IG Master Index was unchanged at +151.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research widened 4 bps to +203 versus +199.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.4b on Wednesday versus $17.8b Thursday and $14.5b the previous Thursday.
  • Taking a look at the secondary trading performance of this week’s IG Corporate and SSA issues, of the 50 deals that printed, 43 tightened versus NIP for a 00% improvement rate while only 6 widened (12.00%) and 1 was not available or N/A (2.00%).
  • For the week ended August 3rd, Lipper U.S. Fund Flows reported an inflow of $2.472b into Corporate Investment Grade Funds (2016 YTD net inflow of $23.27b) and a net outflow of $2.464b into High Yield Funds (2016 YTD net inflow of $7.232b).

 

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

 

IG Corporate New Issuance This Week
8/01-8/05
vs. Current
WTD – $48.95b
August 2016 vs. Current
MTD – $48.95b
Low-End Avg. $25.13b 194.79% $60.48b 80.94%
Midpoint Avg. $26.22b 186.69% $61.13b 80.07%
High-End Avg. $27.30b 179.30% $61.78b 79.23%
The Low $15b 326.33% $45b 108.78%
The High $45b 108.78% $75b 65.27%

 

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

 

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  21 of those participants are among 2016’s top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  Today’s cumulative underwriting percentage of the participating desks was 80.95% 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 Corporate Debt only. They do not include SSA issuance unless otherwise noted.

 As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for the third consecutive year! That’s 2014, 2015 and 2016 !!  More importantly, however, you’re helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! -RQ

 

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

 

“Good morning and TGIF!  So, payrolls bounced, wages soared and the domestic labor market seems to be improving.  The BOE yesterday cut its benchmark rate 0.25%. But there’s “chatter” out there that the BOE might extend its sterling bond purchases to include “other currencies.”  This in lieu of Carney’s statement that he is “adverse to negative rates” and “helicopter money.” Could USD denominated bonds be on the BOE’s shopping list?  Today’s U.S. numbers were really good but in the grand scheme of things, as they saying goes, the world is “going deeper into the rabbit hole.”


This week we priced $50.65b of all-in IG Corporate and SSA issuance. IG Corps were $48.65b which eclipsed this week’s syndicate midpoint average forecast of $26.22b by 85.55%. We also beat the high estimate of $45b this week by 8%.

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

 

  • NICS:  3.17 bps
  • Oversubscription Rates: 2.86x
  • Tenors:  11.57 years
  • Tranche Sizes: $1,020mm

 

Week-on-week demand for IG corporate credit primary paper was off against last week but remained strong posting an average bid-to-cover rate of 2.86x vs. 3.63x. Average NICs widened by 1.94 bps to an average 3.17 bps versus last week’s 1.23 bps.  Average tranche sizes increased thanks to the large multi-tranche deal from MSFT, to $1,020mm versus $875mm last week.  Average tenors decreased to 11.57 years versus last week’s 13.95 years but still over the 10.  For the week ended August 3rd, Lipper U.S. Fund Flows reported an inflow of $2.472b into Corporate Investment Grade Funds (2016 YTD net inflow of $23.27b) and a net outflow of $2.464b into High Yield Funds (2016 YTD net inflow of $7.232b).

Week-on-week, BAML’s IG Master Index is 1 bps wider or +151 vs. last Friday’s +150 close.  Spreads across the four IG asset classes widened 1.75 bps to 37.75 vs. 36.00. Looking at the 19 major industry sectors, spreads widened 1.63 bps to an average 46.84 bps off their post-Crisis lows versus 45.21 bps versus last Friday’s close.               

Finally, what are your thoughts and number or range for next week’s IG Corporate issuance?  Thoughts mean a lot and are always welcome and appreciated!

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

Corporate Debt New Issuance Roars; China Retreats
February 2016      Debt Market Commentary   

Quigley’s Corner 02.25.16- $16bil in New Issuance Today

 

Investment Grade New Issue Re-CapU.S. Engine Strengthens in the Face of Troubled China

Overall Market Recap

IG Primary Market Talking Points

Lipper Fund Flows

IG Secondary Market Trading Lab

Economic Data Reports

Rates Trading Lab

New Issues Priced

Investment Grade Credit Spreads (by Industry/Rating)

New Issue Pipeline

M&A Pipeline

 

Despite walking in this morning to find China in a proverbial market collapse with the Shanghai Index down 6.41% and the Shenzhen down 7.34%, it was clear that the U.S. and Europe had enough of PROC unpredictability.  Asian news was cast aside and along with WTI Crude’s 2.86% gain enjoyed a resurgence that carried over into equity markets and the investment dollar debt capital markets.  Yesterday’s no print day was followed by today’s active session featuring 5 IG Corporates that printed 16 tranches between them totaling $16.20b and bringing the WTD total to $46.20b or 61% above this week’s syndicate midpoint average forecast of $28.70b.  IFC tapped a 3-year FRN in the SSA space bringing the all-in IG day totals to 6 issuers, 17 tranches and $16.45b.  February breached the $100b mark for all-in IG Corporate plus SSA volume today with $108.159b.  It’s the 5th consecutive time that a new calendar year priced over $100b in each of the first two months and the 6th time overall. The combined all-in IG January and February total of $278.283b is a new all-time record.  Considering where we were a couple of weeks ago I think that says a lot about the resiliency of our IG DCM. It also speaks volumes about the negative rate environments in both the EU and Japan that is pushing those foreign investors into higher yielding and higher-rated dollar denominated credits.

 

Overall Market Recap

 

USTs – Impressive performance in the face of heavy winds.

3mth Libor set at its highest yield since June 2009 (0.63560%).

Stocks – Rally in U.S., Europe & Japan while stocks in China were hit very hard.

Economic – Strong durable goods data in the U.S. and lower inflation in Europe.

Currencies – USD weaker vs. Euro/PND but stronger vs. Yen. CAD strongest since December.

Commodities – Crude oil rallied. Natural gas hit low since 1999.

CDX IG: -1.12 to 113.38

CDX HY: -4.32 to 540.90

CDX EM: -2.12 to 361.43

 

IG Primary Market Talking Points

 

The average spread compression from IPTs thru the launch/final pricing of today’s 15 IG Corporate-only new issues was 15.46875 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: $46.20b
February 2016 vs. Current
MTD – $86.475b
Low-End Avg. $27.45b 168.31% $90.9375b 95.09%
Midpoint Avg. $28.70b 160.98% $92.1875b 93.80%
High-End Avg. $29.95b 154.26% $93.4375b 92.55%
The Low $20b 231.00% $60b 144.12%
The High $35b 132.00% $110b 78.61%

 

 

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:

Please note that Wednesday 2/24 featured no IG Corporate new issuance. It was the 9th no-print non-Friday YTD.

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/22
TUES.
2/23
WED.
2/24
AVERAGES
WEEK 2/15
AVERAGES
Week 2/08
AVERAGES
Week 2/01
AVERAGES
Week 1/25
New Issue Concessions 4.47 bps 16.14 bps N/A 13.68 bps N/A 7.45 bps 21.77 bps
Oversubscription Rates 3.57x 2.37x N/A 3.00x N/A 3.01x 2.71x
Tenors 7.04 yrs 7.55 yrs N/A 8.92 yrs 30 yrs 8.19 yrs 7.43 yrs
Tranche Sizes $867mm $837.5mm N/A $850mm $250mm $548mm $940mm

 

 

Lipper Report/Fund Flows

 

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).

Over the same period, Lipper reported an outflow of $645mm from loan participation funds (2016 YTD net outflow of $4.05bn).

Emerging Market debt funds reported a net outflow of $157.4m (2016 YTD outflow of $2.318bn).

IG Secondary Trading Lab

 

BAML’s IG Master Index was unchanged at +214.  +106 represents the post-Crisis low dating back to July 2007.   

Standard & Poor’s Global Fixed Income Research widened 1 bp to +257 versus +256.  The +140 reached on July 30th 2014 represents the post-Crisis low.

Investment grade corporate bond trading posted a final Trace count of $20.5b on Wednesday versus $18.3b Tuesday and $18.8b the previous Wednesday.

 

New Issue Volume

 

Index Open Current Change  
IG25 114.503 112.628 <1.875>
HV25 350.115 337.030 <13.085>
VIX 20.72 19.11 <1.61>  
S&P 1,929 1,951 22
DOW 16,484 16,697 213  
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $16.20 bn DAY: $16.45 bn
WTD: $46.20 bn WTD: $49.30 bn
MTD: $86.475 bn MTD: $108.159 bn
YTD: $213.459 bn YTD: $278.283 bn

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Initial Jobless Claims Feb. 20 270k 272k 262k —-
Continuing Claims Feb. 13 2253k 2253k 2273k 2272k
Durable Goods Orders January 2.9% 4.9% <5.0%> <4.6%>
Durables Transportation January 0.3% 1.8% <1.0%> <0.7%>
Cap Goods Orders Nondef Ex Air January 1.0% 3.9% <4.3%> <3.7%>
Cap Goods Ship Nondef Ex Air January <0.5%> <0.4%> 0.2% 0.9%
House Price Purchase Index Q4 —- 1.4% 1.3% —-
FHFA House Price Index MoM December 0.5% 0.4% 0.5% 0.6%
Bloomberg Consumer Comfort Feb. 21 —- 44.2 44.3 —-
Kansas City Fed Manufacturing Activity February <6> —- <9> —-

 

Rates Trading Lab

 

As if these markets weren’t difficult enough to trade, today’s auction postponement due to “technical difficulties” added a new variable to the equation. Whatever they were, they almost certainly cost the dealer community and were poorly communicated. Obviously dealers are going to be short into the auction and the event risks possible in a 22.5 hour span would almost certainly have skewed the risk dynamic of anybody trading today. Then there was the issue of information distribution. I’d love to know the thought process of burying the announcement in a remote quarter of the TreasuryDirect website as opposed to transmitting the information to the newswires. All this helped our market trade well and effectively detached it from other markets. Given the way other assets are trading, I’d expect treasuries to be cheaper tomorrow. Treasury will be given a pass this time, but anything that threatens the integrity of the auction process will have profound ramifications.

-Jim Levenson

 

UST Resistance/Support Table

 

CT3 CT5 CT7 CT10 CT30
RESISTANCE LEVEL 99-27 101-03 102-13 100-02+ 99-24+
RESISTANCE LEVEL 99-25+ 100-31+ 102-08 99-26+ 99-02+
RESISTANCE LEVEL 99-24 100-28+ 102-03 99-14+ 98-18
           
SUPPORT LEVEL 99-22 100-252 101-26+ 99-04 97-18
SUPPORT LEVEL 99-20 100-23 101-20 98-29 97-01
SUPPORT LEVEL 99-18+ 100-20+ 101-15+ 98-22 96-16

 

Tomorrow’s Calendar

 

China Data: Swift Global Payments CNY, China January Property Prices

Japan Data: Natl CPI, Tokyo CPI YoY

Australia: Nothing Scheduled

EU Data: EU Feb BCI/Conf GE-CPI

S. Data: Jan Trade, Q4 GDP, Feb U Mich, Jan PI/PS/PCE

Supply: Italy 5, 7, 10y (€6.75-8.25bn)

Events: Ratings reviews, G20 Summit, Irish Election

Speeches: ZHOU, Weidmann, Praet, Powell, Brainard

Mischler’s “Rates” Team is: Glenn Capelo, Jon Cardilli, Tony Farren, Jim Levenson, Andy Livingston, Steve Muchnikoff and Ed Schmitt.

Above is the opening extract from Quigley’s Corner aka “QC”  Tuesday Feb 23 2016 Edition distributed via email to clients of Mischler Financial, the investment industry’s oldest and largest minority brokerdealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer, the QC observations is one of three distinctive research content pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate bond new issuance and market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

To receive Quigley’s Corner, please contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone:

*Sources: Bank of America/Merrill Lynch, Bloomberg, Bond Radar, Dow Jones Newswire, IFR, Informa Global Markets, Internal Mischler, LCDNews, Market News International, Prospect News, Standard & Poor’s Ratings Services, Stone & McCarthy Research, Thomson Reuters and of course, a career of sources, contacts, movers and shakers from syndicate desks to accounts; from issuers to originators; from academicians to heads of research, and a host of financial journalists, et al.

 

Mischler Financial Group’s “U.S. Syndicate Closing Commentary”  is produced weekly by Mischler Financial Group. No part of this document may be 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.   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.  “Mischler Financial” Group and the Mischler Financial Group

(more…)

An Upsize Day For Corporate Debt Issuance
February 2016      Debt Market Commentary   

Quigley’s Corner 02.23.16 – $10bil Day with 9 Corporate Debt Issuers

 

Investment Grade Corporate Debt New Issue Re-Cap

Overall Market Recap

IG Primary Market Talking Points – Four Issuers Upsize New Issues on Strong Demand

New Issues Priced

Lipper Fund Flows

IG Secondary Market Trading Lab

Rates Trading Lab

New Corporate Debt Issues Priced

Investment Grade Credit Spreads (by Industry/Rating)

New Issue Pipeline

M&A Pipeline

 

Momentum continued for our IG Corporate primary markets that chalked up their sixth consecutive day of issuance featuring 9 issuers across 12 tranches totaling $10.05b.  SSA assists came in the form of 2 issuers, 3 tranches and an additional $1.1b bringing the all-in IG day total to 10 issuers, 15 tranches and $11.15b. We have now priced 104% of this week’s syndicate midpoint average forecast or $30.00b vs. $28.70b. 4 of todays’ IG Corporates increased (see below Talking Points) while the Kingdom of Bahrain priced its 5- and 10-year taps that were cancelled last Thursday following S&P’s downgrade. 

Overall Market Recap

USTs – Small gains in a whipsaw session.

3mth Libor set at 0.62910% the highest since June 2009.

Stocks – Poor day in the U.S. & Europe. Asia also closed in the red.

Economic – U.S. housing data was positive but consumer confidence was weak.

Germany Economic – Full calendar with mixed data tilted to weaker side.

Currencies – USD had a strong day against the Pound but a poor day vs. the Yen.

Commodities – Crude oil down (no production cuts). Gold rallied & wheat at low since 2010.

CDX IG: +1.16 to 114.65

CDX HY: +8.01 to 547.82

CDX EM: +3.78 to 366.03

 

IG Primary Market Talking Points – Four Issuers Upsize New Issues on Strong Demand

 

Hubbell Inc. (NYSE:HUB.B)grew today’s 10-year Senior Unsecured Notes issuance to $400mm from $300mm launching it at the tightest side of guidance.

Welltower (NYSE:HCN) (formerly Health Care REIT) grew its 10-year Senior Unsecured notes new issue to $700mm from $400mm while also launching it at the tightest side of guidance.

Aon PLC (NYSE:AON) increased today’s short 10-year Senior Notes new issue to $750mm from $500mm. The issue launched at the tightest side of guidance.

Pacific Gas & Electric (NYSE:PCG) upsized today’s 10-year Senior Notes new issue at the launch to $600mm from $500mm and at the tightest side of guidance.

W.R. Berkley Corp. (NYSE:WRB) downsized its new $25 par Subordinated Debentures issue to $100mm from an earlier announced $150mm.

The average spread compression across today’s 12 IG Corporate-only new issues including one IG-rated $25 Sub Deb was 19.27 bps from IPTs to the launch.

 

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

 

IG Corporate New Issuance This Week
2/22-2/26
vs. Current
WTD: $30.00b
February 2016 vs. Current
MTD – $70.275b
Low-End Avg. $27.45b 109.29% $90.9375b 77.28%
Midpoint Avg. $28.70b 104.53% $92.1875b 76.23%
High-End Avg. $29.95b 100.17% $93.4375b 75.21%
The Low $20b 150.00% $60b 117.12%
The High $35b 85.71% $110b 63.89%

 

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…)

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