Browsing articles tagged with "service-disabled veteran broker dealer Archives - Mischler Financial Group"
No Power Lost re: IG New Issue Debt Market; Mischler DCM Comment
September 2017      Debt Market Commentary   

Quigley’s Corner 09.12.17-No Power Lost re: IG New Issue Debt Market  

 

Investment Grade New Issue Re-Cap – Equity Exchanges Achieve a Trifecta of New Highs; CDX IG & HV New Tights

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates For This Week and September

A Special Message from the EEI About Hurricane Irma

Prudential Financial Inc. Veteran Initiatives

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 September 6th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights – $112.4 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calender

I have a special edition for you tonight, it is chock full of all the usual talking points of our dollar IG primary markets as well as a feature for you that I recommend you all read about Prudential Financial’s long and wonderful history giving back to our nation’s veteran community. Mischler was selected as an active Co-Manager today’s Prudential Financial 30nc10 f-t-f new issue.  Then, it’s on to a permission-ed piece by the Edison Electric Institute re: what they and our utility sector are doing to remedy and resolve the damage done by the recent hurricanes Irma and Harvey.  Edison is quite the authority for all things power-related in the United States.

So, sit back relax, the day is done and this is all you really need to know. Thank you as always for stopping in.

Today’s IG dollar DCM hosted 10 issuers across 14 tranches totaling $8.05b.  The SSA added another 4 issues, 6 tranches and $5.75b for an IG Corporate and SSA day tally of 14 issuers, 20 tranches and $13.80b.

What’s more is the S&P, the Dow and Nasdaq all closed today’s session at new all-time highs.  CDXIG and HV also both reached new tights!

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 58.55% of this week’s syndicate midpoint average forecast or $19.175b vs. $32.75b.
  • MTD we’ve priced 59.95% of the syndicate forecast for July or $67.415b vs. $112.45b.
  • There are now 12 issuers in the IG credit pipeline

 

Today’s IG Primary & Secondary Market Talking Points

 

  • Mischler Financial was named a “passive” Co-Manager on today’s Metropolitan Life Global Funding 10-year Secured FA-backed Notes tranche. We thank Team MetLife for selecting Mischler, the nation’s oldest Service Disabled Veteran broker dealer, from among your many diversity partners.
  • PS Business Parks Inc. upped its $25 par PerpNC5 cumulative preferred Series “X” new issue to $200mm (8mm shs) from an initially announced $100mm (4mm) size at the launch and at the tightest side of guidance.
  • Penske Truck leasing Co. increased its long 5-year 144a/REGS Senior Notes new issue to $600mm from $500mm today at the launch and at the tightest side of guidance.
  • Banistmo S.A. upsized today’s 5-year 144a/REGS Senior Notes new issue to $500mm from $400mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 13 IG Corporate-only new issue, was <26.56> bps.  Including today’s PS Business Parks IG-rated Preferred, the spread compression across 14 tranches was <25.11> bps.
  • BAML’s IG Master Index was unchanged at +117.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.12 vs. 1.13.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +162.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.8b on Monday versus $12.2b on Friday. Last Monday was a holiday.
  • The 10-DMA stands at $13.0b.

 

Global Market Recap

 

  • U.S. Treasuries – Back to back losing days for USTs. Supply and higher U.K. CPI were the catalysts.
  • Overseas Bonds – Poor day for JGB’s and an even worse day for bonds in Europe.
  • 3mth Libor – Set at the highest yield since March 2009 (1.31917%).
  • Stocks – Closed with gains and with the S&P reaching an all-time high.
  • Overseas Stocks – Nikkei strong rally. Europe closed higher except the FTSE.
  • Economic – Another strong JOLTS release. PPI tomorrow.
  • Overseas Economic – U.K. CPI ties the highest level in 4 years.
  • Currencies – USD mixed vs. the Big 5. Big rally for the Pound.
  • Commodities – Non-event today
  • CDX IG: -1.15 to 56.24
  • CDX HY: -3.71 to 323.0
  • CDX EM: +0.86 to 175.43

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
North Korea
·         On Sunday, 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake according to the U.S. Geological Survey. Head of IAEA (Int’l. Atomic Energy Authority) said the hydrogen bomb test a “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO ICBM launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Ambassador to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis. Only the strongest sanctions will enable us to solve this problem through diplomacy.” Monday 8/31 began joint U.S. & S. Korean military exercise the world’s largest computerized command control implementation that involved  over 80,000 U.S. and South Korean troops. CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. NOKO may use nuclear technology as barter for food with ”suspect” nations. U.S. sanctions of select Chinese banks to pressure PRC to influence NOKO has failed. China insiders say PRC does not have influence with NOKO that the U.S. thinks it does. China in precarious position given South China Sea Islands. Asian allies justified to build out their respective militaries.
ELEVATED
BREXIT Fallout
·         Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani

border conflict as one of if not the most volatile. Both are nuclear capable. The 100-year old non-partisan Brookings Institute calls Pakistan “the world’s most dangerous country.”

·        EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU.  UK withdrawal from EU takes place in March, 2019.

CAUTION
“U.S. political gridlock”
·         Trump tax reform targeted for this year. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt after repeal and replace defeat in late July. Trump’s Strategic and Policy Forum disbanded as did his Manufacturing Council. Tense U.S. political environment.

·         Market expecting unwind announcement by Fed in September.

·         Mueller’s FBI probe into Trump.

·         GCC Crisis continues 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.

·         Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. There were 57 global terrorist attacks in the month August killing 766 people and wounding 1,112.

·         Cybercrime, ransomware, viruses & hacking are winning cyber wars. Recent attacks have hit four continents, law firms, food companies, power grids, pharma and governments.

·         Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up.

·         Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3).

MODERATE ·         China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns.
MARGINAL
2018 U.S. Recession
·         Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; recent absence of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates For This Week and September

 

IG Corporate New Issuance This Week
9/11-9/15
vs. Current
WTD – $19.175b
September 2017 vs. Current
WTD – $67.415b
Low-End Avg. $31.71b 60.47% N/A N/A
Midpoint Avg. $32.75b 58.55% $112.45b 59.95%
High-End Avg. $33.79b 56.75% N/A N/A
The Low $25b 76.70% $100b 67.415%
The High $40b 47.94% $125b 53.93%

A Special Message from the EEI about Hurricane Irma

In light of the recent catastrophic hurricanes Harvey and Irma that slammed Texas and Florida among other states and with damage costs estimated as high as between $150b-$200b I wanted to share an article with you all that came to me from the Edison Electric Institute (EEI).  It’s informative and in many ways perhaps the best source from which to receive a power/electric damage assessment from and certainly to comprehend the immensity of what EEI and the power companies are facing.  It should also serve as reassurance that they are in fact truly doing everything they can to power you all back up.  We here at Mischler are acutely aware of what our friends (issuers, accounts, family and friends) have gone through and will be facing in the coming weeks and in some cases months.  We appreciate what you’re experiencing and would like to thank the EEI and particularly Brian Reil at EEI Media Relations for the quick permission approval process to re-print the below article for all of you. There are some embedded links in the piece that may also be very helpful and informative to you.

The Edison Electric Institute is the association that represents every U.S. investor-owned electric company.  EEI’s members provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to its U.S. members, EEI has more than 60 international electric companies with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members.

Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.

Hurricane Irma: More Than 50,000 Workers From Across the U.S. and Canada Dedicated to Power Restoration Efforts  
WASHINGTON (September 11, 2017) – As of 7 p.m. EDT, more than 7.1 million customers are without power across Florida and in parts of Alabama, Georgia, and South Carolina as a result of Hurricane Irma. As the storm moved through the region, companies were able to address more than 1.25 million outages, thanks largely to recent investments in energy grid technology and automation. Irma was downgraded to a tropical storm earlier today.

 

“This is likely to be one of the largest and most complex power restoration efforts in U.S. history,” said EEI President Tom Kuhn. “An army of more than 50,000 workers from across the United States and Canada is now dedicated to supporting the industry’s Irma restoration efforts. This includes workers from affected companies, as well as mutual assistance crews, contractors, and other support personnel. Mutual assistance is a hallmark of our industry and serves as an effective—and critical—restoration resource for electric companies.”

 

Given the size and strength of Irma, infrastructure systems will need to be rebuilt completely in some places of Florida before power can be restored. This will delay restoration times, and customers should be prepared for the possibility of extended power outages.

 

“We know that being without electricity creates hardships, and we greatly appreciate customers’ patience as electric companies work day and night to assess damage and to restore power where and when conditions are safe to do so,” said Kuhn. “Companies will continue their storm restoration efforts around the clock until the last customer who can receive power is restored.”

 

Responding to major events like Irma requires significant coordination among the public and private sectors, and strong industry-government coordination is critical. As we did throughout Hurricane Harvey, EEI and the electric power industry are working through the Electricity Subsector Coordinating Council (ESCC) to coordinate with the federal government, other segments of the industry, and critical infrastructure operators.

 

For the fourth consecutive day, Energy Secretary Rick Perry joined an ESCC call with the CEOs of companies impacted by Irma to identify issues that will expedite power restoration. “We commend Secretary Perry’s ongoing leadership and the commitment of the entire Administration to ensure unity of effort in the Irma response,” said Kuhn.

 

Ensuring the safety of customers, communities, and workers is the electric power industry’s highest priority. As always, customers should stay away from downed power lines and always treat fallen wires and anything touching them as though they are energized. Customers using generators should plug appliances directly into the generator and follow all safety warnings.

 

EEI’s Storm Center is a resource for real-time information and explanations of the restoration process. It also includes a map to company outage centers. Customers can follow EEI on Twitter and Facebook​ for the latest updates.

I hope the EEI article was helpful and informative to you.

 

Have a great evening!

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

Fortune CEOs Vote With Their Feet and “Take the High Road”
August 2017      Debt Market Commentary   

Quigley’s Corner Debt Market Comment- 08.16.17- Fortune CEOs On President Council(s) No Longer Ask “Should I Stay or Should I Go?”-Trump Says “You’re Fired!” Minutes Before Planned En Masse Resignations

“We here in America, hold in our hands the hope of the world, the fate of the coming years; and shame and disgrace will be ours if in our eyes the light of high resolve is dimmed, if we trail in the dust the golden hopes of men.” -Theodore Roosevelt

Below is the opening extract from Quigley’s Corner aka “QC”  Wednesday, Aug 16 2017  weekend edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer 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  provides objective debt capital market and investment corporate debt commentary and geo-political analysis, it is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our investment grade fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary 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 email: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade New Issue Re-Cap-
WTD and MTD IG Corporate Volumes Now Both Eclipse Syndicate Forecasts

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

Fortune CEOs Hold the Trump Card – “QC” Commentary

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

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 9th               

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

Investment Grade New Issue Re-Cap – WTD and MTD IG Corporate Volumes Now Both Eclipse Syndicate Forecasts

Today’s IG Corporate dollar DCM hosted 3 issuers across 6 tranches including VMware’s $4bn three-part across 3s, 5s and 10s for day total of $5.75b.

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 now 107.25% of this week’s syndicate midpoint average forecast or $28.85b vs. $26.90b.
  • We eclipsed the average syndicate forecast for August IG Corporate-only volume having priced 118.11% or $93.425b vs. $79.10b.
  • There are now 5 issuers in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 6 IG Corporate-only new issues, was <23.46> bps.
  • BAML’s IG Master Index tightened 1 bp to +114 vs. +115.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.10 vs. 1.11.
  • Standard & Poor’s Investment Grade Composite Spread tightened 3 bps to +157 vs. +160.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15b on Tuesday versus $12.5b on Monday and $17b the previous Tuesday.
  • The 10-DMA stands at $15.3b.

 

The “QC” Geopolitical Risk Monitor – Addition to the “High Alert” Risk Table Comes Fast & Furious

 

Risk Level/Main Factor Geopolitical Risks
HIGH
1.) Break Between Corporate America & Trump Admin.

2.) North Korea

 **HIGH RISK EVENT ADDITION** – Members of Trump’s Strategic and Policy Forum have made a joint decision to disband the group. Trump agreed to disband his Manufacturing Council as a result.  When an event negatively impacts a company’s public perception it is “game over.” Corporate America’s business leaders are now abandoning Trump. This in response to the President’s replies to the riot that took place in Charlottesville, VA. over the weekend in which one person was killed and dozens injured. Without corporate support, GOP will not coalesce to promote Trump’s agenda.

Monday 8/31 begins joint U.S. & S. Korean military exercises. It is the world’s largest computerized command control implementation and will involve over 80,000 U.S. and South Korean troops.
CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement this week that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” Russia’s Foreign Minister Lavrov says his country “does not want to see North Korea with nuclear weapons.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s 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).  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. China insiders say PRC does not have the influence with NOKO that the U.S. thinks it does. U.S.’s NOKO strategy quickly changing from containment on the Korean peninsula to defending the Hawaii, Alaska and the continental United States and more offensive in nature. NOKO adding miniature nuclear warheads to its ICBMs. Asian allies now justified to build up militaries. China in precarious position given South China Sea Islands.

ELEVATED
BREXIT Fallout
Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani border conflict as one of if not the most volatile. Both are nuclear capable.

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. Companies prepping for hard BREXIT & 2 years of weak growth.

CAUTION
“U.S. political gridlock”
Trump financial, tax and infrastructure reform challenges & consensus GOP support to pass legislation in doubt after repeal and replace defeat. Dems revamping & revising their message.Mueller expanding FBI probe into Trump. Congress and Senate back in session on Tuesday, September 5th following August recess. Increasingly tense political environment.

On June 15th U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Iran launches missile into space in response on 7/28.  U.S. levies additional sanctions on Iran in response to launch.

June 9th: 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.

Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe.

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

Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up.

Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Trump considering more than mere sanctions and “won’t rule out military option.” Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3).

MODERATE China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns.
MARGINAL
2018 U.S. Recession
Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns. Market expecting unwind announcement by Fed in September.

 

Syndicate IG Corporate-only Volume Estimates This Week and August

 

IG Corporate New Issuance This Week
8/14-8/18
vs. Current
WTD – $28.85b
August 2017 vs. Current
MTD – $93.425b
Low-End Avg. $26.17b 110.24% $78.37b 119.21%
Midpoint Avg. $26.90b 107.25% $79.10b 118.11%
High-End Avg. $27.62b 104.45% $79.83b 117.03%
The Low $15b 192.33% $60b 155.71%
The High $40b 72.125% $100b 93.425%

 

CEOs Hold the Trump Card – “QC” Commentary

“We here in America, hold in our hands the hope of the world, the fate of the coming years; and shame and disgrace will be ours if in our eyes the light of high resolve is dimmed, if we trail in the dust the golden hopes of men.” -Theodore Roosevelt

Today, the White House Strategic and Policy Forum disbanded. Blackstone Group CEO Steven Schwarzman played point for the high powered Forum that has suffered from the resignations of numerous participating CEOs in light of Trump’s recent statements concerning the Charlottesville incident. Schwarzman, representing the Forum issued the following statement [which Trump since disputed]:

“We believe the debate over Forum participation has become a distraction from our well-intentioned and sincere desire to aid vital policy discussions on how to improve the lives of everyday Americans. As such, the President and we are disbanding the Forum.”

With a sub 40% Presidential approval rating and the abandonment by his fellow Corporate America CEO base, Trump is in hot water.  He will now lose additional and desperately needed support from the GOP in both the House and Senate to achieve any of his agenda and campaign promises.  Politicians are fickle. Having lost the recent Repeal and Replace vote by one, this latest debacle is a tell-tale sign of things to come.  It came swiftly and with the support of Corporate America’s finest leaders.  Corporations have long histories and took decades to get to where they are. They have a fiduciary responsibility to their shareholders and diverse customer base to keep their companies operating smoothly and efficiently. Any disruption to that is unacceptable.

Today was not about EPS or EBITDA. Rather, it was about American morals, ethics and values that are and should always be the foundation of the world’s most diverse society and are reflective of the customers who, in turn are the reason businesses exist.  Whether one has an account at J.P. Morgan or drives a Ford, or shops at Walmart or turns on and off the light switches in Chicago as a Commonwealth Edison customer, the engine that drives the companies of the greatest nation on our planet are its people.  As the top dog, President Trump hopefully learned an important lesson today. I believe he meant well, but it certainly didn’t come out that way and we now officially have a Presidency in crisis.

You often read here in the “QC” about Corporate America’s Diversity and Inclusion initiatives. It’s a story I am always proud to tell when we are on an issuer’s new issue transactions.  I work here at our great nation’s oldest Service Disabled Veteran broker-dealer whose certification falls under the umbrella of diversity and inclusion.  The fact remains that Corporate America has spoken today from its top leadership.  As I always recount here, great companies and great initiatives start from the “top down.”  That IS leadership. They led today.

I will also, however, add that those who opposed Trump from the get go are most assuredly happy about this latest chapter in Trump’s controversial seven month old Presidency. The media, to be fair folks, has quite frankly been relentlessly, ruthlessly and consistently focused on pinning Trump into a corner to elicit a reaction.  Well, they got the reaction they wanted these past several days when Trump went off the reservation in his inimitable way, which was subsequently manifested in the disbanding of the Forum and Manufacturing Council.  Rookie mistake perhaps, but when one is the President, there is no such thing as a rookie mistake.

From the onset I have always said that Trump’s election will either serve as a wake-up call to Washington political dysfunction to teach both parties that they are on watch to cross the aisle to get things done OR Trump will succeed and turn the Washington establishment on its head and usher in a new populist leadership.  It appears today that the former should be everyone’s main focus in our wounded nation amidst a host of very dangerous global event risk events all playing out at the same time.  Corporate America, however, and as always, looks very good and highly responsible, which may be the reason why the stock market has held in throughout today’s session.

When America is on the same page NOTHING can stop it.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

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

Syndicate IG Corporate-only Volume Estimates for the Remainder of August & September (more…)

IG Corporate Spreads Widen as Clinton-Trump Spread Tightens
November 2016      Debt Market Commentary   

Quigley’s Corner 11.03.16 : IG Corporate Spreads Widen as Presidential Election Spread Narrows

 

Investment Grade New Issue Re-Cap  : Gaming Spreads as Presidential Polls Yield Uncertainty

Global Market Recap

BOE Rate Decision Talking Points

IG Primary & Secondary Market Talking Points

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

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 October 26th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

With only five days detached from what could be the single most pivotal U.S. Presidential election in our nation’s history, definitely the most contentious, the slow pace of our IG DCM reflects just how critical this election is to the world.  4 IG Corporate issuers priced 5 tranches between them totaling only $1.85b.  The IG Corporate WTD total is now only 42% of this week’s syndicate midpoint average forecast or $10.791b vs. $25.13b.

 

Global Market Recap

 

  • S. Treasuries – USTs & European bonds closed mixed & steeper. JGB’s were closed.
  • Stocks – S&P & NASDAQ posted their 8th losing session in a row.
  • Overseas Stocks – Europe & Asia closed mixed.
  • Economic – Today’s U.S. data summed up the economic recovery: Some good & some bad.
  • Currencies – 3rd losing session in a row for DXY Index. Big rally for the Pound.
  • Commodities – How low can crude oil go? Gold gave back some of its recent gains.
  • CDX IG: -0.28 to 79.69
  • CDX HY: -0.51 to 431.75
  • CDX EM: -2.06 to 251.58

CDX spreads mover wider after 3pm

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

-Tony Farren

 

BOE Rate Decision Talking Points

 

  • BOE keeps benchmark interest rate at 0.25%; vote 9-0.
  • Keeps gilt-purchase program at £435 bn; vote 9-0.
  • Keeps corporate-bond plan at £10 bn; vote 9-0.
  • MPC drops signal that another rate cut likely this year.
  • Policy can respond “in either direction” to outlook change.
  • Persistent uncertainty on EU deal to weigh on U.K. Economy.
  • Says MPC has limited tolerance for above-target inflation.
  • Sees inflation breaching 2% target in Q2 2017.
  • Sees inflation staying above 2% to end of forecast period.
  • Raises 2017 CPI forecast to 2.7% vs. 2%; 2018 to 2.7% vs. 2.4%.
  • Says medium-term slowdown due to CPI squeeze on consumers.
  • Sees 4Q GDP at 0.4%, raises 2016 forecast to 2.2%.
  • Raises 2017 GDP to 1.4% vs. 0.8%; cuts 2018 to 1.5% vs. 1.8%.
  • Says near-term outlook stronger, medium-term weaker.
  • GBP impact on CPI temporary, policy offset may have costs.
  • GBP impact on CPI “adversely affected” MPC trade-off.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 5 IG Corporate-only new issues that displayed price evolution was 22.20 bps.
  • BAML’s IG Master Index widened 1 bp to +140 vs. +139.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bps to +135 from +134.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 2 bps to +185 vs. +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.5b on Wednesday versus $19.8b Tuesday and $18.9b the previous Wednesday.
  • The 10-DMA stands at $16.9b.

 

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

 

IG Corporate New Issuance This Week
10/31-11/04
vs. Current
WTD – $10.791b
November 2016 vs. Current
MTD – $6.466b
Low-End Avg. $24.26b 44.48% $90.70b 7.13%
Midpoint Avg. $25.13b 42.94% $92.11b 7.02%
High-End Avg. $26.00b 41.50% $93.52b 6.91%
The Low $15b 71.94% $71b 9.11%
The High $35b 30.83% $110b 5.88%

 

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

 

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

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 over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/31
TUES.
11/01
WED.
11/02
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
New Issue Concessions 0.50 bps <2.29> bps 3 bps <0.51> bps 3.31 bps 1.87 bps 4.36 bps
Oversubscription Rates 2.99x 2.90x 2.73x 2.61x 3.05x 3.28x 4.20x
Tenors 8.39 yrs 11.93 yrs 11.30 yrs 7.77 yrs 9.16 yrs 11.51 yrs 12.16 yrs
Tranche Sizes $721mm $379mm $393mm $818mm $1,137mm $640mm $523mm
Avg. Spd. Compression
IPTs to Launch
<14.21> bps <17.71> bps <22.50> bps <17.42> bps      

 

New Issues Priced

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

For ratings I use the better two of Moody’s, S&P or Fitch.

 

IG

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Johns Hopkins University Aa3/AA- 3.837% 5/15/2046 500 +135a N/A +123 +123 JEFF/JPM
Principal Finc’l. Group Inc. Baa1/BBB+ 3.10% 11/15/2026 350 +160a +130-135 +130 +130 CITI/CS/HSBC
Principal Finc’l. Group Inc. Baa1/BBB+ 4.30% 11/15/2046 300 +200a +170-175 +170 +170 CITI/CS/HSBC
PSE&G Baa2/BBB 1.60% 11/15/2019 400 +85-90 +70a (+/-2) +68 +68 BARC/JPM/RBC
PSE&G Baa2/BBB 2.00% 11/15/2021 300 +95-100 +80a (+/-2) +78 +78 BARC/JPM/RBC

 

Indexes and New Issue Volume

Please note that Index levels are as of 4:45pm ET.

Index Open Current Change  
LUACOAS 1.35 1.35 0  
IG27 79.977 80.702 0.725
HV27 178.86 179.72 0.86
VIX 19.32 22.08 2.76  
S&P 2,097 2,088 <9>
DOW 17,959 17,930 <29>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $1.85 bn DAY: $1.85 bn
WTD: $10.791 bn WTD: $10.791 bn
MTD: $6.466 bn MTD: $6.466 bn
YTD: $1,175.247 bn YTD: $1,505.131 bn

 

Lipper Report/Fund Flows – Week ending October 26th  

     

  • For the week ended October 26th, Lipper U.S. Fund Flows reported an inflow of $1.701b into Corporate Investment Grade Funds (2016 YTD net inflow of $42.787b) and a net outflow of $48.26m from High Yield Funds (2016 YTD net inflow of $11.070b).
  • Over the same period, Lipper reported a net inflow of $290.611m into Loan Participation Funds (2016 YTD net outflow of $1.665b).
  • Emerging Market debt funds reported a net inflow of $390.9m (2016 YTD inflow of $7.723b).

 

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 31.75 bps wider versus their post-Crisis lows!

 

ASSET CLASS 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 10/20 1-Day Change 10-Day Trend PC
low
IG Avg. 140 139 138 137 136 136 135 135 135 135 +1 +5 106
“AAA” 83 82 82 80 80 80 78 78 77 76 +1 +7 50
“AA” 87 86 86 85 85 84 83 83 83 83 +1 +4 63
“A” 112 111 111 110 109 109 108 108 108 108 +1 +4 81
“BBB” 181 180 178 176 175 176 175 174 175 174 +1 +7 142
IG vs. HY 375 366 353 339 333 330 325 325 327 327 +9 +48 228

 

IG Credit Spreads by Industry

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

Draghi Talk; Mischler Debt Market Comment via Quigley’s Corner
October 2016      Debt Market Commentary   

Quigley’s Corner 10.20.16- Draghi Talk; The BIGGEST Oct in IG Bond History

 

Investment Grade New Issue Re-Cap 

Global Market Recap

La Dolce Vita – Draghi Talks About “The Good Life” in the EU (?!)

IG Primary & Secondary Market Talking Points

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

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 19th  

Investment Grade Corporate Debt Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Believe it or not, we very quietly slid into 9th place among the top 10 highest all-in IG issuance weeks.  All-in IG issuance combines both IG Corporates and SSA deals.  Generally speaking,  SSA weekly issuance typically accounts for about 20%-25% of all-in weekly volume, give or take.  This week, however, thanks to The Kingdom of Saudi Arabia’s $17.5b 3-part inaugural deal, EIB’s $4.5b 3yr and today’s $4.25b IBRD two-part 3s and 10s, SSA issuance has thus far eclipsed IG Corporates 50.36% vs. 49.64%.

On the day, 3 IG Corporates priced 3 deals totaling $1.4b bringing the WTD total to $28.34b vs. $23.17b or 22% above this week’s syndicate midpoint average estimate. SSA added IBRD $4.25b two-part 3s & 10s bringing the all-in IG day total to 4 issuers, 5 tranches and $5.65b.  The all-in MTD total is now $108.145b.  This month is on pace to finish as the most prolific October in IG history.

 

Global Market Recap

 

  • U.S. Treasuries – USTs closed mixed, little changed & flatter.
  • Overseas Bonds – Long end Bunds had a strong session. JGB’s were little changed.
  • 3mth Libor – Set at the highest yield since May 2009 (0.88178%).
  • Stocks – U.S. small losses (3:15pm) Europe rallied after Draghi. Nikkei well bid.
  • Economic – U.S. data fine. Germany PPI remained negative. U.K. retail sales weaker.
  • Currencies – Strong day for the USD outperforming all of the Big 5.
  • Commodities – Crude hit hard after rallying to a 15-month high yesterday.
  • CDX IG: +0.15 to 73.87
  • CDX HY: +0.66 to 398.69
  • CDX EM: -2.93 to 234.07

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

-Tony Farren

 

La Dolce Vita – Draghi Talks About “The Good Life” in the EU…..N-O-T!  

ECB Head Mario Draghi announced that the ECB will not stop QE without first tapering it fortifying the opinion that it will extend well beyond March 2017. Draghi said, “an abrupt ending to bond purchases is unlikely” and “it is not present in anybody’s mind.”

Here are all the pertinent talking points from today’s short news conference with ECB President Mario Draghi:

  • The ECB left its benchmark rates unchanged as expected.
  • ECB’s Main Refinancing Rate was left unchanged at 0.0% as expected.
  • The ECB’s Deposit Facility Rate persisted at -.40% ……as expected.
  • ECB’s Marginal Lending Facility Rate continued at 0.25% also as expected.
  • ECB’s Asset Purchase Target also remained unchanged at €80 bln per month.
  • Draghi sees rates at present or lower level for extended period.
  • Sees rates at present, lower level well past QE horizon.
  • Says QE will run through March 2017 or beyond if needed.
  • QE will run until inflation path is consistent with goal.
  • ECB to preserve stimulus needed to raise inflation.
  • ECB policy ensures very favorable conditions.
  • ECB ready to act using all instruments within mandate.
  • December assessment will benefit from new forecasts.
  • Council will review committee work on QE in December.
  • Baseline remains subject to downside risks.
  • Sees moderate economic growth at steady pace.
  • No signs of convincing upward trend in core inflation.
  • Sees gradual rise in inflation.
  • Inflation rates rising further in 2017, 2018.
  • Economy resilient to global, political uncertainty.
  • Domestic demand supported by policy pass-through.
  • Investment supported by favorable financing conditions.
  • Low oil prices, job gains provide support for consumers.
  • Sluggish pace of reforms also a risk.
  • Loan dynamics follow path of gradual recovery.
  • ECB measures significantly helping credit.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 3 IG Corporate-only new issues was 21.83 bps.
  • BAML’s IG Master Index tightened 1 bp to +135 vs. +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to +129 vs.  +130.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Investment grade corporate bond trading posted a final Trace count of $18.1b on Wednesday versus $17.3b Tuesday and $16.7b the previous Wednesday.
  • The 10-DMA stands at $15.8b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $28.34b
October 2016 vs. Current
MTD – $64.795b
Low-End Avg. $22.30b 127.09% $87.83b 73.77%
Midpoint Avg. $23.17b 122.31% $88.59b 73.14%
High-End Avg. $24.04b 117.89% $89.35b 72.52%
The Low $15b 188.93% $75b 86.39%
The High $30b 94.47% $125b 51.836%

 

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

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

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 over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/17
TUES.
10/18
WED.
10/19
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
AVERAGES
WEEK 9/19
New Issue Concessions 6.62 bps 3.17 bps 1.71 1.87 bps 4.36 bps 2.71 bps 0.69 bps
Oversubscription Rates 2.11x 2.91x 2.86x 3.28x 4.20x 3.52x 3.23x
Tenors 6.06 yrs 10.71 yrs 12 yrs 11.51 yrs 12.16 yrs 10.51 yrs 9.36 yrs
Tranche Sizes $1,043mm $1,050mm $1,249mm $640mm $523mm $646mm $964mm

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.30 1.29 <0.01>  
IG27 73.725 73.938 0.213
HV27 162.135 161.645 <0.49>
VIX 14.41 13.75 <0.66>  
S&P 2,144 2,141 <3>
DOW 18,202 18,162 <40>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+ SSA)

DAY: $1.40 bn DAY: $5.65 bn
WTD: $28.34 bn WTD: $57.09 bn
MTD: $64.795 bn MTD: $108.145 bn
YTD: $1,139.531 bn YTD: $1,463.365 bn

 

Lipper Report/Fund Flows – Week ending October 19th   (more…)