Browsing articles tagged with "service-disabled veteran owned Archives - Mischler Financial Group"
Day’s IG DCM: 14 Issuers Float $14.67b in New Corporate Debt
August 2017      Debt Market Commentary   

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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Muni Bond New Issuance Scheduled Week 080717-Mischler
August 2017      Muni Market   

Mischler Muni Market Market Update for the week of 08-07-17 looks back to last week’s metrics and provides a focused lens on muni bond new issuance scheduled for the upcoming week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $7.0 billion. This week volume for muni bond issuance is expected to be $7.3 billion. The negotiated market is led by $1.1 billion tax-exempt and taxable bonds for Cleveland Clinic Health System issued by the State of Ohio. The competitive market is led by $1.5 billion tax-exempt and taxable bonds for New York City Transitional Finance Authority, New York, on Tuesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

muni-bond-new-issuance-080717

Since 2014 alone, Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

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

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Muni Market Eye on $800m American Dream Meadowlands Project-Mischler Municipal Debt Snapshot
June 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 06.12.17 looks back to last week’s metrics and provides a lens focused on pending municipal debt deals scheduled for the upcoming week, including funding for the American Dream Meadowlands Project.  As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $6.5billion. This week volume is expected to be $6.0 billion. As noted above, the negotiated market is led by $800 million for the American Dream @ Meadowlands Project (NJ) issued by the Public Finance Authority (WI). The competitive market has no bond deals over $100 million with Ventura County, California leading the competitive charge with $150 million TRANs on Monday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below
municipal-debt-calendar-june-12-2017-mischler

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

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

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

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Municipal Debt Deals Scheduled Week June 5: LA County, Metro Washington Airports
June 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 06.05.17 looks back to last week’s metrics and provides a lens focused on pending municipal debt deals scheduled for the upcoming week.  Muni bond inflows increased last week, supported by a risk-on view toward intermediate maturities within the municipal debt market. As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $3.3billion. This week volume is expected to be $7.8 billion. The negotiated market is led by $800 million TRANs for the County of Los Angeles, California and $533 million AMT bonds for Metropolitan Washington Airports Authority. The competitive market is led by $624.3 million for Clark County School District, Nevada in 2 bids on Thursday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below

mischler municipal bond outlook june 05 2017

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

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

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

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Rate Rise Realities; No More “Lower for Longer”-Mischler Debt Market Comment
November 2016      Debt Market Commentary   

Quigley’s Corner 11.15.16-Trump and Rate Rise Realities; No More “Lower for Longer”

 

Below is the opening extract from Quigley’s Corner aka “QC” Tuesday November 15, 2016 edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest and largest 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 observations are 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 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. Any political views expressed are those of the author only.

Investment Grade Corporate Debt New Issue Re-Cap :

Rates Are Going Up in December Folks! Dalio, Montag and…Quigley?!

Chronology of a Politician and a Great Veteran Story

Global Market Recap

IG Primary & Secondary Market Talking Points

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

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 November 9th   

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

 

 

4 IG Corporate issuers priced 7 tranches between them totaling $4.95b with one $500mm assist from the SSA space thanks to EDC’s new 4-year, bringing the all-in IG day totals to 5 issuers, 8 tranches at $5.45b.  We’ve now priced 53.82% of this week’s syndicate midpoint average forecast or $15.85b vs. $29.45b.

rate-rise-realities-mischler-debt-marketInflation is Coming Back and Rates Are Going Up in December Folks! Dalio, Montag and..Quigley!?!?

You hear that sound?  That’s the sound of banks revving up their engines.  Not only did I write about the post-Election rally yesterday, but I also got specific about previous Washington dysfunction, over regulation and higher rates and inflation.”  Today Tom Montag, COO of Bank of America Corp chimed in with similar promise of the new incoming President-elect Trump’s first term saying, there is a “sense of optimism” that “the government will work better together to supply the foundation of growth that we as a bank can optimize.”  He continued, “We have a lot of regulations, so it’s probably healthy to take a breath.”

Bridgewater Chief Ray Dalio said today, “There is a good chance that we are at one of those major reversals that last a decade.  We believe that we will have a profound President-led ideological shift that is of a magnitude, and in more ways than one, analogous to Ronald Reagan’s shift to the right. Of course, all analogies are also different, so I should be clearer. Donald Trump is moving forcefully to policies that put stimulation of traditional domestic manufacturing above all else, that are far more pro-business and that are far more protectionist.”

IG CDX tightened 1.5 bps, HV reeled in 4.8, the VIC compressed 1.11 while the DOW reached another all-time high closing up 55 to 18,923 with the S&P up 16 and Nasdaq up 57.

And now, continuing on where I left off yesterday in the “QC” – President-elect Donald Trump will unleash inflation and rates WILL go up! The populist/Republican platform is so expansionary he will single handedly create inflation.  If you are or were a detractor, forget it. That was politics folks. Get ready to dive deep into reality.  The Fed will raise money on net interest margins and create inflation.  The Fed has no choice.  How’s that from one of the first and most vocal prognosticators of “lower-for-longer” after all these years?  It will hurt overseas as a result, but that was then and this is now!  The U.S.A. cannot worry as much about impacts overseas when we have a US-focused agenda designed to improve operating efficiency.  A hike in December will roil Europe, but it will not be done to hurt Europe. Rather, it’s going to happen to take care of our nation.  The ramifications will be plenty and they will most assuredly crack the fragile Euro egg wide open.  Fret not, however, as the risk reward for IG fixed income will remain healthy.  Although investors are switching into equities, foreign and specifically European investors will find a substantially improved risk/reward upside to investing in U.S. IG credit markets.  More yield, less risk than staying investing in the EU with so much discord.  So strap yourselves in because long-term interest rates are about to go up and the inflationary spending spree is about to take place.  Good bye to the low rates that have been hitting bank earnings and revenues.  A healthier banking system is the foundation for a healthier economy.

How Congressman David Young Led the Way for Veteran Change

Well, here we are on November 15th, 2016 one week detached from our historic November 8th national elections and 2 years and 5 months away from David Young’s first Congressional district win (R-IA).  He has wasted no time getting things done having arrived on the scene in Washington in a big way by working hard and producing results.  To capture part of the sweeping positive changes about to take place in our country, there is more to report on David Young. My favorite Iowans spent the last week picking up all their big barn signs, etcetera around their 16 county district. Now, David Young, can go back to the Beltway and continue to fight for good change. One of his many passions is his No Veterans Crisis Line Call Should Go Unanswered Act (H.R. 5392) bill that passed in the House 357-0.  Re-read that folks.  That’s right…..357-0!  Now, perhaps his bill can get thru the Senate and onto Obama’s desk.  (It should be known and WILL be now known here in the “QC” that none other than Harry Reid stopped it prior to the election).  Reid can’t retire soon enough!

Congressman Young’s legislation seeks to provide necessary responsiveness and performance improvements to the Veterans Crisis Line, which is the confidential, toll free hotline for veterans seeking suicide prevention and crisis resources help from U.S. Department of Veterans Affairs (VA) responders.

As Congressman Young said, “Our veterans, who have made such significant sacrifices on behalf of our nation and in defense of our freedoms, deserve quality mental health care resources which are accessible and responsive. There is absolutely no excuse for a veteran to contact the Veterans Crisis Line and not get the help they are seeking. Our veterans deserve better, which is why I have put forth this important bipartisan legislation to make critical fixes to the Veterans Crisis Line – fixes it clearly needs. I thank my colleagues for working with me to advance this bill and put our veterans first.”

 

Chronology of How Young’s Veteran Bill Happened in the House

 

  • September 21, 2016 – Congressman Young’s No Veterans Crisis Line Call Should Go Unanswered Act was approved in a markup by the full U.S. House Veterans Affairs Committee.
  • September 14, 2016 – Congressman Young urges his colleagues to support the No Veterans Crisis Line Call Should Go Unanswered Act on the floor of the U.S. House of Representatives.
  • September 8, 2016 – South Dakota Senator John Thune introduces companion legislation to Congressman Young’s No Veterans Crisis Line Call Should Go Unanswered Act.
  • September 1, 2016 – Congressman Young sends a letter to VA Secretary McDonald highlighting continued problems with the Veterans Crisis Line.
  • June 28, 2016 – Congressman Young reacts to a Government Accountability Office (GAO) report finding approximately 30 percent of text messages sent as tests to the Veterans Crisis Line went unanswered.
  • June 23, 2016 – Congressman Young testifies before the U.S. House Veterans Affairs Committee on the importance of the legislation.
  • June 7, 2016 – Congressman Young introduces the No Veterans Crisis Line Call Should Go Unanswered Act in response to concerns voiced by Iowa veterans about unanswered calls, emails or other communications, and failed attempts to receive help from the Veterans Crisis Line.

Congratulations to Iowa’s David Young for fighting for our nations veterans and for being such a part of great changes taking place in the United States. David is the recipient of this evening’s Mischler five-star salute from all of us here at team Mischler.  He is the first recipient that has nothing to do with a bond deal.  It’s all about his work for our veterans.
Global Market Recap

 

  • U.S. Treasuries – USTs mixed with more red and flatter. JGB’s sold off. Europe big rally.
  • Stocks – NASDAQ leads U.S. stocks higher. Europe  and Asia closed mixed.
  • Economic – U.S. retail sales were stronger than expected and had upward revisions to the last.
  • Overseas Economic – U.K. CPI lower than expected/last. German data a touch softer.
  • Currencies – USD was under pressure overnight but rallied during NY hours to lose higher.
  • Commodities – Big rally in crude oil drives the CRB higher.
  • CDX IG: -2.91 to 74.60
  • CDX HY: -17.60 to 413.31
  • CDX EM: -14.97 to 267.30

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

 

  • Plains All American Pipeline LP upsized today’s 10-year Senior Notes new issue to $750mm from $500mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 7 IG Corporate-only new issues that displayed price evolution was 21.57 bps.
  • BAML’s IG Master Index was unchanged at +136.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.30.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +181 vs. +182.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.2b on Monday versus $19.8b Thursday and $14.1b the previous Monday.
  • The 10-DMA stands at $16.9b.

 

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

 

IG Corporate New Issuance This Week
11/14-11/18
vs. Current
WTD – $15.85b
November 2016 vs. Current
MTD – $32.311b
Low-End Avg. $28.32b 55.97% $90.70b 35.62%
Midpoint Avg. $29.45b 53.82% $92.11b 35.08%
High-End Avg. $30.59b 51.81% $93.52b 34.55%
The Low $20b 79.25% $71b 45.51%
The High $40b 39.62% $110b 29.37%

 

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 Monday’s session followed by the averages over the prior four weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
11/14
AVERAGES
WEEK 11/07
AVERAGES
WEEK 10/31
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
New Issue Concessions 2.85 bps <3.60> bps <0.87> bps <0.51> bps 3.31 bps
Oversubscription Rates 2.38x 4.26x 3.32x 2.61x 3.05x
Tenors 11.05 yrs 13.31 yrs 11.33 yrs 7.77 yrs 9.16 yrs
Tranche Sizes $991mm $692mm $491mm $818mm $1,137mm
Avg. Spd. Compression
IPTs to Launch
<14.5> bps <22.96> bps <17.87> yrs <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
21st Century Fox America Baa1/BBB+ 3.375% 11/15/2026 450 +140a +120a (+/-3) +117 +117 JPM-sole
21st Century Fox America Baa1/BBB+ 4.75% 11/15/2046 400 +200a +180a (+/-3) +177 +177 JPM-sole
Plains All American Pipeline Baa3/BBB 4.50% 12/15/2026 750 +mid 200s/+250a +230-235 +230 +230 BAML/BNPP/JPM/WFS
Simon Property Group LP A2/A 2.35% 1/30/2022 550 +95-100 +80a (+/-5) +75 +75 BAML/CITI/GS/USB
Simon Property Group LP A2/A 3.25% 11/30/2026 750 +120-125 +110a (+/-5) +105 +105 BAML/CITI/GS/USB
Simon Property Group LP A2/A 4.25% 11/30/2046 550 +145-150 +135a (+/-5) +130 +130 BAML/CITI/GS/USB
Westpac Banking Corp. A3/A+ 4.322% 11/23/2031 1,500 +237.5 +215a (+/-5) +210 +210 BAML/CITI/JPM/MS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
EDC Aaa/AAA FRN 11/23/2020 500 3mL+13a 3mL+13a 3mL+13 3mL+13 BNPP/BARC/DB

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.30 1.30 0  
IG27 75.503 73.988 <1.515>
HV27 166.425 161.645 <4.78>
VIX 14.48 13.37 <1.11>  
S&P 2,164 2,180 16
DOW 18,868 18,923 55  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $4.95 bn DAY: $5.45 bn
WTD: $15.85 bn WTD: $16.35 bn
MTD: $32.311 bn MTD: $32.811 bn
YTD: $1,201.092 bn YTD: $1,531.476 bn

 

Lipper Report/Fund Flows – Week ending November 9th   

     

  • For the week ended November 9th, Lipper U.S. Fund Flows reported an inflow of $675.4m into Corporate Investment Grade Funds (2016 YTD net inflow of $40.967b) and a net outflow of $668.6m from High Yield Funds (2016 YTD net inflow of $6.285b).
  • Over the same period, Lipper reported a net outflow of $45.4m from Loan Participation Funds (2016 YTD net outflow of $1.563b).
  • Emerging Market debt funds reported a net inflow of $345.7m (2016 YTD inflow of $7.522b).

 

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 26.50 bps wider versus their post-Crisis lows!

 

ASSET CLASS 11/14 11/11 11/10 11/09 11/08 11/07 11/04 11/03 11/02 11/01 1-Day Change 10-Day Trend PC
low
IG Avg. 136 136 136 137 139 140 141 141 140 139 0 <3> 106
“AAA” 75 76 76 80 82 82 83 83 83 82 <1> <7> 50
“AA” 82 83 83 85 85 86 87 87 87 86 <1> <4> 63
“A” 107 107 107 109 110 111 112 112 112 111 0 <4> 81
“BBB” 178 177 177 178 180 181 183 182 181 180 +1 <2> 142
IG vs. HY 375 361 361 357 359 361 379 374 375 366 +14 +9 228

IG Credit Spreads by Industry

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

Spreads across the major industry sectors are an average 33.42 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 11/14 11/11 11/10 11/09 11/08 11/07 11/04 11/03 11/02 11/01 1-Day Change 10-Day Trend PC
low
Automotive 119 119 119 121 121 122 122 120 122 121 0 <2> 67
Banking 124 124 124 127 128  129 130 130 130 129 0 <5> 98
Basic Industry 178 176 176 177 179 180 182 181 181 180 +2 <2> 143
Cap Goods 101 102 102 103 105 105 107 106 106 105 <1> <4> 84
Cons. Prod. 108 108 108 109 110 111 112 112 112 111 0 <3> 85
Energy 182 179 179 179 180 182 184 183 183 180 +3 +2 133
Financials 161 161 161 162 163 164 167 166 165 164 0 <3> 97
Healthcare 117 118 118 121 124 124 126 124 123 122 <1> <5> 83
Industrials 139 138 138 140 141 142 144 143 143 141 +1 <2> 109
Insurance 147 148 148 150 152 153 154 154 153 153 <1> <6> 120
Leisure 136 138 138 139 138 138 139 138 138 138 <2> <2> 115
Media 160 161 161 163 164 165 167 166 165 164 <1> <4> 113
Real Estate 144 146 146 147 145 146 146 146 146 146 <2> <2> 112
Retail 117 118 118 121 122 122 123 123 122 121 <1> <4> 92
Services 129 129 130 130 130 130 130 130 130 129 0 0 120
Technology 113 112 112 115 117 118 120 120 120 119 +1 <6> 76
Telecom 167 165 165 168 170 171 173 172 172 170 +2 <3> 122
Transportation 138 137 136 137 138 139 140 140 139 138 +1 0 109
Utility 137 137 137 137 138 138 139 139 138 138 0 <1> 104

 

New Issue Pipeline

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

America Has Spoken. What’s Next re USD and IG Corporate Debt?
November 2016      Debt Market Commentary   

Quigley’s Corner 11.09.16- It’s Done. America Voted for a New US President. What’s Next re USD and IG Corporate Debt Market?

 

How It Happened Across the U.S.A.
Dr. Scott MacDonald Writes a Piece for the  “QC”

Smith’s Research and Gradings – The Global Economic Doctor on the Election of 2016 and its Implications

Investment Grade New Issue Re-Cap 

IG Primary & Secondary Market Talking Points

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending November 2nd  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

One of the great things about being in this business for 26 years are the superlative friends and colleagues I have had the privilege to know and work with during that time. There’s a saying that you are as good as the people around you.  I have been blessed with stellar talent and thought leaders throughout my career. One such person is Dr. Scott MacDonald, who I have occasionally quoted here in the “QC.” Scott B. MacDonald or as I’ve always referred to him as simply “The Doctor”, is Chief Economist at Smith’s Research & Gradings.  Prior to his current post, he was Senior Managing Director and Chief Economist at KWR International, Inc.  Prior to that was Head of Research for MC Asset Management LLC, an asset management unit of Mitsubishi Corporation based in Stamford, Connecticut (2012-2015) and Head of Credit & Economics Research at Aladdin Capital (2000-2011) where he and I worked closely together.  He served as Chief Economist for KWR International (1999-2000) prior to which he worked at Donaldson, Lufkin & Jenrette, Credit Suisse and the Office of the Comptroller of the Currency (in Washington, D.C.).  He was ranked by Institutional Investor magazine as one of the top sovereign analysts in the financial services industry.

Scott did his Ph.D. in Political Science at the University of Connecticut, Masters in Asian Studies at the University of London’s School of Oriental and African Studies, and BA in History (Honors) and Political Science at Trinity College (Hartford). He has written 18 books and has had numerous articles published. His areas of expertise are macroeconomics, international finance and geopolitical risk.

I am privileged and honored to present “The Doctor’s” piece on President-elect Donald Trump’s Election Day victory that was penned today and appears here in the “QC”.

mischler-post-election-debt-market-comment-110816

 

Smith’s Research and Gradings – The Global Economic Doctor on the Election of 2016 and its Implications

 

The U.S. presidential election of 2016 was decidedly one for the history books.  Although 2016 is certainly not 1860, which led to the U.S. Civil War, it was a dirty, brutal and personalized campaign that tapped into the angst of a voting public angry with widening socio-economic disparities, sub-par economic growth and a dysfunctional Washington.

Why did Donald Trump, the Republican candidate, win?

  1. Public frustration with Washington’s corruption and its seeming ineffectiveness in addressing the country’s major problems.  Clinton was clearly seen as more of a Washington insider than Trump, who has never held an elected political office before.
  1. The ongoing whiff of corruption that surrounded Democratic contender Hillary Clinton (not that Trump is a saint), related to her emails and the finances of the Clinton Foundation. Past Clinton “scandals” did not help.
  1. The intervention of the FBI and WikiLeaks into the electoral process via disclosing embarrassing emails, which only maintained attention of Clinton’s email scandal. Furthermore, having her name associated with former Congressman Anthony Weiner (with his sexting scandal) obviously did not help Clinton in the last days of the campaign.
  1. The growing divisions in U.S. society, especially along an urban-rural divide. One thing that gave Trump an appeal to many living in rural areas was that he appeared to listen to them and mocked the political correctness that many found stifling.  
  1. The Democrats underestimated Trump. As General Colin Powell stated: “No battle plan survives contact with the enemy.”  This was certainly the case of Clinton with Trump.
  1. The appeal of a strongman leader. The last reflects a major paradigm change in global politics – the rise of strongman leaders, who offer simple solutions to complex problems. Considering the scope of U.S. problems and the challenging nature of international relations, Trump’s “tough guy” persona was a point of attraction to some voters. There are certainly echoes of this in other countries.

What next?  A Trump victory was not expected by global markets or political leaders in many other countries (many of whom have been critical of the Republican leader now president-elect).  The next week is likely to see an unwinding of the “Clinton trade” (risk on) in global debt and equity markets, downward pressure on oil prices, and a further pounding of the Mexican peso.

Investors find a Trump victory unsettling from the standpoint that during the campaign he was anti-trade, opened up the possibility of negotiating the U.S. debt, and wants to overhaul of the U.S. alliance system around the world (such as with NATO). The last time the U.S. embraced protectionist trade policies in a major fashion was the 1930s, in the form of the Smoot-Hawley Tariffs. U.S. protectionism was a major cause of the deepening of the global Depression. The extent of the market downdraft will depend on Trump’s acceptance speech, his comments on policy matters before he gets into the White House and who he appoints to his cabinet.

The major challenge in the days ahead will be to find a way to reunite the country after the election.  In many regards, this may be an impossible process, considering the bad blood between Democrats and Republicans since 2008.  A dangerous development in U.S. politics is the destruction of the political center – the area where compromise and dialogue are reached and policies can move forward.

The U.S. sovereign ratings are Aaa/AA+/AAA, with a stable outlook.  The policy format of the incoming Trump administration will no doubt be carefully examined, in particular on its debt management and trade policies.

For American politics to become more workable, President Trump will have to demonstrate an ability to lead, but also work within a constitutional system that he might find constraining.  As he moves to “drain the swamp”, Trump will have to make the transition from candidate to elected official and from someone who is critical of Congress to a leader who will have to find the means to work with it.  For their part, both the Republican Party (which held on to both the Congress and Senate) and Democratic Party will have to adjust to a President who has not emerged from their ranks.  A new Washington looms on the horizon – hopefully it works.

Dr. Scott B. MacDonald, Chief Economist

 

Investment Grade New Issue Re-Cap

Needless to say there was no activity in today’s IG dollar DCM.

 

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index tightened 1 bp to +139 vs. +140.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.34 vs. 1.35.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +184 vs. +185.  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 $14.1b Monday and $19.8b the previous Tuesday.
  • The 10-DMA stands at $16.5b.

 

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

 

IG Corporate New Issuance This Week
11/07-11/11
vs. Current
WTD – $945mm
November 2016 vs. Current
MTD – $8.411b
Low-End Avg. $8.09b 11.68% $90.70b 9.27%
Midpoint Avg. $9.83b 9.61% $92.11b 9.13%
High-End Avg. $11.57b 8.17% $93.52b 8.99%
The Low $0.1b 945.00% $71b 11.85%
The High $20b 4.725% $110b 7.65%

 

 

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

 

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.
11/07
TUES.
11/08
WED.
11/09
AVERAGES
WEEK 10/31
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
New Issue Concessions <3> bps N/A N/A <0.87> bps <0.51> bps 3.31 bps 1.87 bps
Oversubscription Rates 2.50x N/A N/A 3.32x 2.61x 3.05x 3.28x
Tenors 4.50 yrs N/A N/A 11.33 yrs 7.77 yrs 9.16 yrs 11.51 yrs
Tranche Sizes $472mm N/A N/A $491mm $818mm $1,137mm $640mm
Avg. Spd. Compression
IPTs to Launch
<16.5> bps N/A N/A <17.87> yrs <17.42> bps

 

Indexes and New Issue Volume

Index levels are as of 2:00pm ET

Index Open Current Change
LUACOAS 1.34 1.34 0
IG27 75.757 74.823 <0.924>
HV27 172.135 170.27 <1.865>
VIX 18.74 15.45 <3.29>
S&P 2,139 2,158 19
DOW 18,332 18,541 209
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $0.945 bn DAY: $0.945 bn
WTD: $0.945 bn WTD: $0.945 bn
MTD: $8.411 bn MTD: $8.411 bn
YTD: $1,177.192 bn YTD: $1,507.076 bn

 

Lipper Report/Fund Flows – Week ending November 2nd  

     

  • For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).
  • Over the same period, Lipper reported a net inflow of $146.468m into Loan Participation Funds (2016 YTD net outflow of $1.518b).
  • Emerging Market debt funds reported a net outflow of $345.7m (2016 YTD inflow of $7.337b).

 

IG Credit Spreads by Rating (more…)

Twas The Eve Before the US Presidential Election and the Debt Markets Indicated..
November 2016      Debt Market Commentary   

Quigley’s Corner 11.04.16 “’ Twas the Eve Before the Election..and Debt Markets Indicated Volatility Risk … ”

“…Please be mindful that this event could give rise to volatile market conditions; consequently, there is a risk of FX and Rates markets trading in wide ranges during the period.  Voice and electronic trading desks will endeavor to operate at as close to normal levels of service as conditions allow.  With respect to electronic trading specifically, you should bear in mind that low levels of liquidity or high volatility during the period could impact bid-offer spreads, or result in potential delays in order execution…” Head of Rates Trading,  Primary Dealer/Global Investment Bank

 “QC” Call to “Get Out and Vote” next Tuesday November 8th

Investment Grade New Issue Re-Cap 

Global Market Recap

IG Primary & Secondary Market Talking Points

Potential Election Day Trade Volatility

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

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

New Issues Priced

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending November 2nd  

Investment Grade Corporate Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Your humble fixed income servant already voted in my home state of Connecticut via absentee ballot two weeks ago, as I would not have made it in time to cast my ballot traveling back from Phoenix on Election Day.  Each of us understands what a contentious election this one is.  Whoever floats your boat please just get out and cast yours on Tuesday the 8th or hopefully you sent in your ballot in your home state. If you do not vote you do not have a right to complain.  It’s not the voting that is democracy rather it’s the counting.  SO, GET OUT AND VOTE – IT’S A CIVIC SACRAMENT! For those of us blessed enough to have been called to citizenship in a country in which we govern ourselves by choosing our own leaders, voting is one of the duties of our vocation. Enough said.

Sunrise and sunset will be about 1 hour earlier on Nov 6, 2016 than the day before. There will be more light in the morning. Thank Goodness!

Investment Grade New Issue Re-Cap

Bank of America was the sole visitor to today’s IG dollar DCM printing a $1bn 4NC3 Senior Notes new issue due 11/09/2020.  The “Green Bond” is callable after 3 years on 11/09/2019 at par.  BAML was the sole book runner.  Proceeds from the transaction will be used to fund renewable energy projects including the financings of or investments in equipment and systems that facilitate the use of energy from renewable sources such as solar, wind and geothermal energy.

Please continue through the below right into the “Best & Brightest’s” IG Corporate new issue supply forecasts for next week from the street’s top syndicate gurus.  I have all their numbers and thoughts about next week’s Election Day/Veteran’s Day influenced and shortened week waiting for you. It’s all here folks and I make it easy – I write it, I talk to all of them and conveniently deliver it to your desktop or hand held device free of charge!  I’m told it’s good and so, naturally I think it’s good but why listen to me? Wall Street Letter has awarded the “QC” it Best Broker Dealer research for three years in a row – 2014, 2015 and 2016.  What’s not to like about that? I mean really! So, relax, be informed and have yourselves a great weekend!

Global Market Recap

 

  • S. Treasuries – The 30yr lead the UST rally despite the solid Employment Report.
  • Overseas Bonds – Gilts led the core EU bond rally while Peripheral sold off.
  • Stocks – U.S. stocks with small losses at 3:45pm. Bad day for Nikkei & Europe.
  • Economic – The U.S. Employment Report was solid. The trade balance improved.
  • Currencies – USD lost vs. Euro & Pound but had a small gain vs. the Yen, CAD & AUD.
  • Commodities – The crude oil sell off continued. Gold was unchanged.
  • CDX IG: +0.15 to 80.85
  • CDX HY: -2.52 to 433.56
  • CDX EM: -2.76 to 250.86

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points

  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 23 deals that printed, 11 tightened versus NIP for a 00% improvement rate while only 8 widened (35.00%) 4 were trading flat (17.00%).
  • For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).
  • The average spread compression from IPTs thru the launch/final pricing of today’s 1 IG Corporate-only new issue was 10.00 bps.
  • BAML’s IG Master Index widened 1 bp to +141 vs. +140.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +135.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +186 vs. +185.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $15.9b on Thursday versus $17.5b Wednesday and $20.3b the previous Thursday.
  • The 10-DMA stands at $16.8b.

 

Note About Potential Election Day Trade Volatility

I thank my Corporate Secondary trader, Annie Bonner for the following prescient note that she sent around today and that definitely has a place in the “QC”.
It is self-explanatory:

As we saw with Brexit, dealers are sending out notices to prep for Election Day markets.

 

For example, from one Primary Dealer wrote:

“……….Please be mindful that this event could give rise to volatile market conditions; consequently, there is a risk of FX and Rates markets trading in wide ranges during the period.  Voice and electronic trading desks will endeavor to operate at as close to normal levels of service as conditions allow.  With respect to electronic trading specifically, you should bear in mind that low levels of liquidity or high volatility during the period could impact bid-offer spreads, or result in potential delays in order execution.”

 

As Annie concluded, “We’ll probably be seeing more of these today & Monday.”

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

 

IG Corporate New Issuance This Week
10/31-11/04
vs. Current
WTD – $11.791b
November 2016 vs. Current
MTD – $7.466b
Low-End Avg. $24.26b 48.60% $90.70b 8.23%
Midpoint Avg. $25.13b 46.92% $92.11b 8.11%
High-End Avg. $26.00b 45.35% $93.52b 7.98%
The Low $15b 78.61% $71b 10.52%
The High $35b 33.69% $110b 6.79%

 

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

I am happy to announce that, once again, the “QC” received unanimous responses from the 23 syndicate desks surveyed in today’s Best & Brightest poll.  22 of those participants are among 2016’s top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, all of today’s 23 participants finished in the top 25 of last year’s final IG Corporate Bloomberg league table.  The 2016 League table can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates).  The participating desks represent 80.93% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

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

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

If anyone says the U.S. Presidential election is not important in our inextricably linked new world order just point to our IG dollar DCM this week in which we managed to price a mere 42% of this week’s syndicate midpoint average forecast or $10.79b vs. $25.13b.

Here are some impactful events coming up next week that should keep a damper on issuance……among other things:

  • Mon thru Wed. 11/7-11/09 – EEI’s 51st Annual Financial Conference in Phoenix taking Utility issuers off the radar.
  • Tuesday, 11/08 – U.S. Presidential Election
  • Friday, 11/11 – Veteran’s Day (Federal Holiday, many leave work a bit earlier the day before – Thursday 11/10).


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

 

  • NICS:  <0.92> bps
  • Oversubscription Rates: 3.33x
  • Tenors:  11.33 years
  • Tranche Sizes: $469mm
  • Spread Compression from IPTs to the Launch: <178.26> bps

Versus last Friday’s key primary market driver averages, NICs widened a mere 0.06 bps to <0.92> vs. <0.98> bps while over subscription or bid-to-cover rates grew 0.72x to 3.33x vs. 2.61x last week.  Average tenors moved way out 3.62 years to 11.33 yrs vs. 7.71yrs while tranche sizes decreased by a lot – by $357mm to $469mm vs. $826mm.  

Standard and Poor’s Investment Grade Composite Spreads widened 5 bps to +186 versus last Friday’s +181.

For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).

Week-on-week, BAML’s IG Master Index widened 4 bps to +141 vs. last Friday’s +137 close.  Spreads across the four IG asset classes also widened 3.75 bps to 32 vs. 28.25 as measured against their post-Crisis lows.  Looking at the 19 major industry sectors, spreads widened 4.58 bps to 37.42 vs. 32.84 also against their post-Crisis lows.
Please let me know your number and most importantly your thoughts for next week’s IG Corporate issuance.  

……and here are their formidable responses:

(this section available exclusively to Quigley’s Corner distribution list recipients)

 

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 weekend!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

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

Please note: The below table averages for this week includes today’s BAML 4NC3 new issue. As a result, the numbers differ ever so slightly from the averages in my question to the “Best & Brightest” which was written and sent at the open this morning.  Thanks! -RQ

Here is this week’s day-by-day re-cap of the five key primary market driver averages for IG Corporates followed by this week’s and the prior three week’s averages:

 

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
10/31
TUES.
11/01
WED.
11/02
TH.
11/03
FRI.
11/04
THIS WEEK’S
AVERAGES
AVERAGES
WEEK 10/24
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
New Issue Concessions 0.50 bps <2.29> bps 3 bps <3.75> bps flat or 0 bps <0.87> bps <0.51> bps 3.31 bps 1.87 bps
Oversubscription Rates 2.99x 2.90x 2.73x 4.80x 3.25x 3.32x 2.61x 3.05x 3.28x
Tenors 8.39 yrs 11.93 yrs 11.30 yrs 15.50 yrs 4 yrs 11.33 yrs 7.77 yrs 9.16 yrs 11.51 yrs
Tranche Sizes $721mm $379mm $393mm $370mm $1,000mm $491mm $818mm $1,137mm $640mm
Avg. Spd. Compression
IPTs to Launch
<14.21> bps <17.71> bps <22.50> bps <22.20> bps <10> bps <17.87> yrs <17.42> bps    

 

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

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 23 deals that printed, 11 tightened versus NIP for a 48.00% improvement rate while only 8 widened (35.00%) 4 were trading flat (17.00%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom.  Thanks! –RQ

 

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED TRADING
Johns Hopkins University Aa3/AA- 3.837% 5/15/2046 500 +135a N/A +123 +123 127/125
Principal Finc’l. Group Inc. Baa1/BBB+ 3.10% 11/15/2026 350 +160a +130-135 +130 +130 129/127
Principal Finc’l. Group Inc. Baa1/BBB+ 4.30% 11/15/2046 300 +200a +170-175 +170 +170 165/162
PSE&G Baa2/BBB 1.60% 11/15/2019 400 +85-90 +70a (+/-2) +68 +68 66/64
PSE&G Baa2/BBB 2.00% 11/15/2021 300 +95-100 +80a (+/-2) +78 +78 76/74
Bank of Nova Scotia Aa3/A+ FRN 11/01/2018 166 N/A N/A N/A 3mL+45 3mL+47/45
Children’s Hosp. Med. Ctr. Aa2/AA 2.853% 11/15/2026 100 N/A N/A N/A +105 106/104
Danske Bank A/S A2/A FRN 11/10/2020 200 N/A N/A N/A 3mL+73 3mL+73/70
Occidental Petroleum A3/A 3.00% 2/15/2027 750 +145a +130a (+/-5) +125 +125 122/120
Occidental Petroleum A3/A 4.10% 2/15/2047 750 +180a +160a (+/-5) +155 +155 152/150
EQT Midstream Partners LP BBB-/BBB- 4.125% 12/01/2026 500 +262.5a +245a (+/-5) +240 +240 240/238
Kimco Realty Baa1/BBB+ 2.70% 3/01/2024 400 +130-135 +120a (+/-3) +117 +117 118/116
Kimco Realty Baa1/BBB+ 4.125% 12/01/2046 350 +180-185 +165a (+/-5) +160 +160 159/157
Lazard Group LLC A-/BBB+ 3.625% 3/01/2027 300 +200a +190a (+/-5) +185 +185 189/187
Rogers Communications Inc. Baa1/BBB+ 2.90% 11/15/2026 500 +125a N/A +125 +125 130/128
Ryder System Inc. Baa1/A- 2.25% 9/01/2021 300 +120-125 +100a (+/-3) +97 +97 97/95
Southwest Airlines Co. Baa1/BBB+ 3.00% 11/15/2026 300 +mid-100s/+150a +130a (+/-3) +127 +127 128/126
Axis Capital Holdings Ltd. Baa3/BBB 5.50% PerpNC5 550 N/A N/A5.50-5.625%a
+5.5625%a
5.50% $25 Pfd $25.75/.80
CMS Energy Corp. Baa2/BBB 2.95% 2/15/2027 275 +135a +120a (+/-5) +115 +115 115/113
Illinois Tool Works A2/A+ 2.65% 11/15/2026 1,000 +95a +85 the # +85 +85 80/78
Proctor & Gamble Co. Aa3/AA- 1.70% 11/03/2021 875 +55a +45a (+/-2) +43 +43 42/40
Proctor & Gamble Co. Aa3/AA- 2.45% 11/03/2026 875 +75a +65a (+/-2) +63 +63 62/60
Wabtec Baa3/BBB 3.45% 11/15/2026 750 +187.5a +165a (+/-2.5) +162.5 +162.5 158/155

 

Indexes and New Issue Volume

Please note that Index levels are as of 4:15pm ET

Index Open Current Change  
LUACOAS 1.35 1.35 0  
IG27 80.702 80.967 0.265
HV27 179.245 180.23 0.985
VIX 22.08 22.91 0.83  
S&P 2,088 2,085 <3>
DOW 17,930 17,888 <42>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $1.00 bn DAY: $1.00 bn
WTD: $11.791 bn WTD: $11.791 bn
MTD: $7.466 bn MTD: $7.466 bn
YTD: $1,176.247 bn YTD: $1,506.131 bn

 

Lipper Report/Fund Flows – Week ending November 2nd  

     

  • For the week ended November 2nd, Lipper U.S. Fund Flows reported an outflow of $2.495b from Corporate Investment Grade Funds (2016 YTD net inflow of $40.292b) and a net outflow of $4.116b from High Yield Funds (2016 YTD net inflow of $6.954b).
  • Over the same period, Lipper reported a net inflow of $146.468m into Loan Participation Funds (2016 YTD net outflow of $1.518b).
  • Emerging Market debt funds reported a net outflow of $345.7m (2016 YTD inflow of $7.337b).

 

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 32.00 bps wider versus their post-Crisis lows!

 

ASSET CLASS 11/03 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 1-Day Change 10-Day Trend PC
low
IG Avg. 141 140 139 138 137 136 136 135 135 135 +1 +6 106
“AAA” 83 83 82 82 80 80 80 78 78 77 0 +6 50
“AA” 87 87 86 86 85 85 84 83 83 83 0 +4 63
“A” 112 112 111 111 110 109 109 108 108 108 0 +4 81
“BBB” 182 181 180 178 176 175 176 175 174 175 +1 +7 142
IG vs. HY 374 375 366 353 339 333 330 325 325 327 <1> +47 228

 

IG Credit Spreads by Industry

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

Spreads across the major industry sectors are an average 37.42 bps wider versus their post-Crisis lows!

                                    

INDUSTRY 11/03 11/02 11/01 10/31 10/28 10/27 10/26 10/25 10/24 10/21 1-Day Change 10-Day Trend PC
low
Automotive 120 122 121 120 119 119 119 117 117 117 <2> +3 67
Banking 130 130 129 129 128 127 128 127 127 127 0 +3 98
Basic Industry 181 181 180 179 179 178 179 177 177 179 0 +2 143
Cap Goods 106 106 105 105 103 102 102 101 101 101 0 +5 84
Cons. Prod. 112 112 111 110 109 108 108 107 105 105 0 +7 85
Energy 183 183 180 179 177 176 176 175 174 175 0 +8 133
Financials 166 165 164 162 160 159 160 160 160 160 +1 +6 97
Healthcare 124 123 122 120 118 117 117 115 114 114 +1 +10 83
Industrials 143 143 141 140 139 138 138 137 136 136 0 +7 109
Insurance 154 153 153 153 153 153 153 154 154 155 +1 <1> 120
Leisure 138 138 138 138 138 137 138 137 136 135 0 +3 115
Media 166 165 164 162 160 160 159 157 157 157 +1 +9 113
Real Estate 146 146 146 146 146 146 146 147 147 147 0 <1> 112
Retail 123 122 121 120 118 117 117 116 115 114 +1 +9 92
Services 130 130 129 129 129 128 128 128 128 128 0 +2 120
Technology 120 120 119 117 115 114 115 113 112 112 0 +8 76
Telecom 172 172 170 168 167 165 165 163 162 161 0 +11 122
Transportation 140 139 138 137 137 136 136 136 136 136 +1 +4 109
Utility 139 138 138 138 137 136 136 136 136 137 +1 +2 104

 

Economic Data Releases

 

TODAY’S ECONOMIC DATA PERIOD SURVEYED ESTIMATES ACTUAL NUMBER PRIOR NUMBER PRIOR REVISED
Trade Balance September <$38.0b> <$36.4b> <$40.7b> <$40.5b>
Change in Nonfarm Payrolls October 173k 161k 156k 191k
Two-Month Payroll Net Revisions October —- 44k <7k> —-
Change in Private Payrolls October 170k 142k 167k 188k
Change in Manufacturing Payrolls October <4k> <9k> <13k> —-
Unemployment Rate October 4.9% 4.9% 5.0% —-
Average Hourly Earnings MoM October 0.3% 0.4% 0.2% 0.3%
Average Hourly Earnings YoY October 2.6% 2.8% 2.6% 2.7%
Average Weekly Hours All Employees October 34.4 34.4 34.4 —-
Change in Household Employment October —- <43.0> 354.0 —-
Labor Force Participation Rate October —- 62.8% 62.9% —-
Underemployment Rate October —- 9.5% 9.7% —-

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Mischler Financial 2016 Annual Veterans Day Month Pledge: Three Philanthropic Missions
October 2016      Company News, Giving Back   

Mischler 2016 Annual Veterans Day Month Pledge Supports Three Special Philanthropies

 Industry’s oldest Minority Firm Owned  & Operated by Service-Disabled Vets Gives Back and Pays Forward

Stamford, CT & Newport Beach, CA –November 1, 2016 —Veterans Day is observed by Americans each year on November 11; the day that is dedicated to honoring and extending our gratitude to the millions of men and women who have served within the US military. At Mischler Financial Group (“Mischler”), the financial industry’s oldest institutional brokerage and investment bank owned and operated by service-disabled veterans, Veterans Day is observed every day, and each November Mischler pledges a percentage of the entire month’s profits to carefully-vetted charitable organizations that support veterans and their families in recognition of this national holiday.

To honor Veterans Day Month 2016, Mischler Financial Group has made a financial pledge to three separate organizations that go above and beyond the call of duty to support military veteran families and local communities. Those 501c3 organizations are Bob Woodruff Foundation, The Johnny Mac Soldiers Fund and Buildon.org.

Stated Dean Chamberlain, Chief Executive of Mischler Financial, a 20-year veteran of the securities industry and a U.S. Military Academy at West Point alumni, “There are now more than 20 million Americans who have served with integrity and honor in the US Armed Forces, yet when transitioning back to civilian roles, too many are encountering challenges as they seek higher ground. The Mischler Financial year-round philanthropic mission is dedicated to the military veteran community at large, and Veterans Day Month provides a special opportunity for our trading desk and our clients to work together to give back and pay forward to the veteran community in ways that can truly help change lives for the better.”

Added Chamberlain, “This past May, we made our Memorial Day Month pledge to crowdfund campaign Veterans Education Challenge,  as we believe that advanced education is a core component to both personal and professional success. The organizations that we have pledged our Veterans Day Month support to provide equally unique runways by which veterans can further bolster their knowledge base and self-confidence, and in turn, help them to more easily target and capture opportunities as they advance forward.”

bob-woodruff-foundation-veterans-day-mischler

About The Bob Woodruff Foundation (501c3)

Mission Statement: Founded in 2006 by ABC News reporter Bob Woodruff and his wife Lee after Bob was hit by a roadside bomb while covering the war in Iraq. The Bob Woodruff Foundation has led an enduring call to action for people to stand up for heroes and meet the emerging and long-term needs of today’s veterans. To date, BWF has invested more than $33 million to find, fund and shape programs that have empowered more than 2.5 million impacted veterans, service members and their families. To learn more, visit their website

 

johnny-mac-soldiers-fund-mischler-veterans-day-About The Johnny Mac Soldiers Fund (501c3)

Mission Statement: Committed to providing support to those most affected by the Global War on Terror. Assistance includes: College scholarships and grants; Financial aid for professional certification programs and non-degree programs; Educational career counseling and mentorship.  visit their website.

 


build-on-org-mischler-veterans-dayAbout Buildon.org (501c3)

Mission Statement: To break the cycle of poverty, illiteracy and low expectations through service learning programs in many of America’s most under-resourced high schools. Buildon.org is dedicated to engaging and training high school students in the country’s most challenging urban areas by providing those students with the tools to proactively advance programs that can better the quality of life for members of their communities who are in need. visit their website.

mischler-veterans-day-service-disabled-vets

 

About Mischler Financial Group Inc.

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) was the first FINRA broker-dealer member that was also a federally-certified Service-Disabled-Veteran-Owned Business Enterprise (SDVOB). Since that time, Mischler has become widely-recognized by Fortune corporate treasurers, public pension sponsors and the industry’s leading institutional investment managers for “punching above its weight class” while serving as a boutique investment bank and conflict-free institutional brokerage. Mischler is unique among its peers for its capital markets capabilities, as well as the firm’s year-round advocacy and support of veteran-centric causes. Mischler maintains offices in 8 major cities and is staffed by more than 55 securities industry veterans whose expertise extends across virtually all primary and secondary debt and equity capital market silos. In addition to traditional DCM and ECM services and secondary market best execution, Mischler administers corporate share repurchase programs for leading Fortune companies, cash management for government entities and corporations, and asset management programs for liquid and alternative investment strategies. The firm’s website is www.mischlerfinancial.com

For Additional Information:

Attn: Office of the Chief Executive

Email: info@mischlerfinancial.com

Tel. 203.276.6646

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Central Banks and Big Government; Mischler Debt Market Comment
October 2016      Debt Market Commentary   

Quigley’s Corner 10.27.16: Central Banks and Big Government

 

Investment Grade New Issue Re-Cap 

Global Market Recap

Uncle Tony on Central Banks and Big Government

IG Primary & Secondary Market Talking Points

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 Credit Spreads (by Rating/Issuer)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Below is the opening extract from Quigley’s Corner aka “QC” Thursday October 27, 2016 distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest and largest 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 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 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 contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone.

 

7 IG Corporate issuers priced 13 tranches between them totaling $8.525b bringing the WTD total to $33.875b or 33% above this week’s syndicate midpoint average estimate calling for $25.48b. What’s more the MTD total is now $102.47b surpassing the October syndicate midpoint average forecast of $88.59b by over 15%. The all-in IG MTD volume is now $149.22b furthering the new all-time October issuance record for IG Corporate plus SSA supply by 20.21%.  The old October all-in record was $124.131b set in 2015.

Global Market Recap

  • S. Treasuries – USTs traded poorly & steeper but not nearly as bad as Europe.
  • Stocks – U.S. closed in the red. Europe was mixed & Asia lost ground.
  • Economic – It is not about the data right? It is all about the Central Banks.
  • Currencies – USD outperformed all of the Big 5.
  • Commodities – CRB & crude oil improved but crude remained below 50.
  • CDX IG: +0.59 to 75.93
  • CDX HY: +4.67 to 410.68
  • CDX EM: +6.47 to 237.56

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

-Tony Farren

Uncle Tony on Central Banks and Big Government

I have 3 questions for the market:

1) Are short-term or long-term rates more important to growth?

2) Has there ever been a time when higher long-term rates were better for growth than lower-long term rates?

3) Should Central Banks be advocating higher long-term rates when growth & inflation are both below target?

The Central Banks around the world are currently getting a bad rap. Central Banks are getting blamed for the low growth low inflation environment. I may not agree with all the policies of the Central Banks but at least they are trying. Where is the fiscal stimulus? If the market wants to point fingers for the current environment it should be at the governments & not the Central Banks.

 

IG Primary & Secondary Market Talking Points

 

  • PNC Financial Services Group, Inc. upsized today’s $1,000 par FXD/FRN non-cumulative PerpNC10 preferred, Series “S” to $525mm vs. $500mm.
  • The average spread compression from IPTs thru the launch/final pricing of today’s 13 IG Corporate-only new issues was 20.21 bps.
  • BAML’s IG Master Index widened 1 bp to +136 vs. +135.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +131 vs. +130.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research widened 1 bp to +181 vs. +180 vs. +181.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.9b on Wednesday versus $19.5b Tuesday and $18.1b the previous Wednesday.
  • The 10-DMA stands at $16b.

 

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

 

IG Corporate New Issuance This Week
10/24-10/28
vs. Current
WTD – $33.875b
October 2016 vs. Current
MTD – $102.47b
Low-End Avg. $24.61b 137.65% $87.83b 116.67%
Midpoint Avg. $25.48b 132.95% $88.59b 115.67%
High-End Avg. $26.35b 128.56% $89.35b 114.68%
The Low $15b 225.83% $75b 136.63%
The High $35b 96.79% $125b 81.98%

 

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 and Sizes

Please note: I always try to find ways to incrementally increase and improve the “QC” value-added proposition.  So, this evening I have added a fifth key primary market driver average to the below daily table.  The new category tracks the daily average spread compression from IPTs to the launch of each day’s IG Corporate and IG-rated preferreds when applicable. I always use that number on calls with issuers, follow-ups and in fact, on my market update calls wherein Mischler has been a joint lead.  Treasury/Funding finds it valuable as do syndicate desks and accounts.  So, there it is – yet another reason to keep reading the “QC.”

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.
10/24
TUES.
10/25
WED.
10/26
AVERAGES
WEEK 10/17
AVERAGES
WEEK 10/10
AVERAGES
WEEK 10/03
AVERAGES
WEEK 9/26
New Issue Concessions 2.67 bps 1.75 bps <4.36> bps 3.31 bps 1.87 bps 4.36 bps 2.71 bps
Oversubscription Rates 2.52x 2.77x 2.13x 3.05x 3.28x 4.20x 3.52x
Tenors 6.75 yrs 5.71 yrs 5.64 yrs 9.16 yrs 11.51 yrs 12.16 yrs 10.51 yrs
Tranche Sizes $985mm $700mm $964mm $1,137mm $640mm $523mm $646mm
Avg. Spd. Compression
IPTs to Launch
<15.20> bps <15.79> bps <16.05> 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
Buckeye Partners LP Baa3/BBB- 3.95% 12/01/2026 600 +250a +220a (+/-5) +215 +215 BARC/JPM/STRH/WFS
Equate Petrochemical Co. Baa2/BBB+ 3.00% 3/03/2022 1,000 MS +low 200s
+212.5
MS +212.5a MS +195 +198.8 CITI/HSBC/IMI/JPM/MIZ/MUFG
NBK/SMBC
Equate Petrochemical Co. Baa2/BBB+ 4.25% 11/03/2026 1,250 MS +hi 200s-300
or +293.75
MS +287.5a MS +270 +255.2 CITI/HSBC/IMI/JPM/MIZ/MUFG
NBK/SMBC
PNC Financial Services Baa2/BBB- 5.00% PerpNC10 525 5.125%a 5.00%a (+/-5) 5.00% 3mL+330 CITI/JPM/MS/PNC
Sirius International Group BBB/BBB- 4.60% 11/01/2026 400 +300a +285 the # +285 +285 ABC/BOCOM/CITI/HSBC/HUARONG
HSBC/JPM/SHK/TD
Trinidad Generation BBB/BBB- 5.25% 11/04/2027 600 +400a +375a (+/-12.5) +362.5 +362.5 CS/SCOT
United Technologies A3/A- FRN 11/01/2019 350 3mL+equiv 3mL+equiv 3mL+35 3mL+35 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 1.50% 11/01/2019 650 +70a +55a (+/-5) +50 +50 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 1.95% 11/01/2021 750 +80a +70a (+/-5) +65 +65 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 2.65% 11/01/2026 1.150 +105a +85a (+/-2) +83 +83 BAML/CITI/GS/MIZ/MS + 5 (p)
United Technologies A3/A- 3.75% 11/01/2046 1.100 +145a +120a (+/-2) +118 +118 BAML/CITI/GS/MIZ/MS + 5 (p)
Wake Forest Medical Ctr. A2/A 3.093% 6/01/2026 75 +135a +130a (+/-5) +125 +125 GS/MS/WFS
Wake Forest Medical Ctr. A2/A 4.175% 6/01/2046 75 +165a +160a (+/-5) +157.5 +157.5 GS/MS/WFS

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
JBIC A1/A+ 2.00% 11/04/2021 1,000 MS +65a MS +64a MS +63 +65.4 BAML/JPM/MIZ/NOM
JBIC A1/A+ 2.25% 11/04/2026 1,800 MS +67a MS +65a MS +64 +49.6 BAML/JPM/MIZ/NOM
OKB Aa1/AA+ FRN 11/04/2019 600 3mL+17a 3mL +16a 3mL +16 3mL+16 GS/HSBC

 

Indexes and New Issue Volume

 

Index Open Current Change  
LUACOAS 1.30 1.31 0.01  
IG27 75.345 76.257 0.912
HV27 162.61 162.38 <0.23>
VIX 14.24 15.36 1.12  
S&P 2,139 2,133 <6>
DOW 18,199 18,169 <30>  
 

USD

 

IG Corporates

 

USD

 

Total IG (+SSA)

DAY: $8.525 bn DAY: $11.925 bn
WTD: $33.875 bn WTD: $37.275 bn
MTD: $102.47 bn MTD: $149.22 bn
YTD: $1,166.606 bn YTD: $1,493.84 bn

 

Lipper Report/Fund Flows – Week ending October 19th  

     

  • For the week ended October 19th, Lipper U.S. Fund Flows reported an inflow of $2.431b into Corporate Investment Grade Funds (2016 YTD net inflow of $41.086b) and a net outflow of $160m from High Yield Funds (2016 YTD net inflow of $11.119b).
  • Over the same period, Lipper reported a net inflow of $514.8m into Loan Participation Funds (2016 YTD net outflow of $1.956b).
  • Emerging Market debt funds reported a net inflow of $621.7m (2016 YTD inflow of $7.333b).

 

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 28.25 bps wider versus their post-Crisis lows!

 

ASSET CLASS 10/26 10/25 10/24 10/21 10/20 10/19 10/18 10/17 10/14 10/13 1-Day Change 10-Day Trend PC
low
IG Avg. 136 135 135 135 135 135 136 137 136 137 +1 <1> 106
“AAA” 80 78 78 77 76 76 76 78 78 79 +2 +1 50
“AA” 84 83 83 83 83 82 83 84 84 84 +1 0 63
“A” 109 108 108 108 108 108 109 109 109 110 +1 <1> 81
“BBB” 176 175 174 175 174 175 176 176 176 177 +1 <1> 142
IG vs. HY 330 325 325 327 327 331 336 339 336 345 +5 <15> 228

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Corporate Bond Market: Noisy Silence from…
October 2016      Debt Market Commentary   

Quigley’s Corner 10.18.16 : Corporate Bond Market Noisy Silence from A Really Big Bank; Halloween Scare for European Banks?

 

Investment Grade New Issue Re-Cap – “If there’s anything I can’t stand, it’s a lot of noisy silence!”

As Halloween Approaches, How “Scary” are European Banks?

Global Market Recap

IG Primary & Secondary Market Talking Points

NICs, Bid-to-Covers, Tenors and Sizes

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 12th  

Investment Grade Credit Spreads (by Rating/Industry)

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

noisy-silence-mischler-debt-market-commentAs James Stewart’s character Charlie Anderson quips at the family dinner table in Andrew McLaglen’s Civil War 1965 film Shenandoah, “If there’s anything I can’t stand, it’s a lot of noisy silence!’

 

Yes, the Kingdom of Saudi Arabia is printing a suspected $15b three-part 5-, 10- and 30-year inaugural debt transaction tomorrow, but that wasn’t the big subject of talk in today’s primary market session.  Nor, surprisingly, was it Bank of America/Merrill Lynch’s $5b 3-part Senior Unsecured callable, the largest of its kind, 6NC5 FXD/FRN and 11NC10 notes issued to lower costs related to compliance with loss-absorbing debt requirements. Rather it was Wells Fargo & Co. that announced a 10-year Senior Notes new issue carrying IPTs in the +140-145 range that never went to guidance and had many/most suspecting it would go straight to the launch.  Lo and behold just after 3:30pm ET it was heard that the deal would not price until tomorrow, as apparently news would hit the tapes that would be relevant to bondholders that resulted in Wells deciding not to “rush everything.”  The order book was “heard” to have $10b in orders at 2:30pm ET.

On the day 4 IG Corporate issuers priced 7 tranches between them totaling $7.35b while the SSA space hosted 2 issuers, 2 tranches and $5.50b for an all-in IG day total of 6 issuers, 9 tranches and $12.85b.  WTD we’ve now issued 67% of this week’s syndicate midpoint average forecast for IG Corporates or $15.70b vs. $23.17b. MTD we’ve issued 58% of the syndicate average or $52.155b vs. $88.59b.  The all-in IG MTD total (Corporates & SSA) is $72.255b.

 

Mischler Financial is proud to announce that it served as a Co-Manager on today’s new Bank of America $5b 3-part callable new issue.  Demand was strong for the structure with the 6yr FXD book heard to be $5b (2.5x); the 6yr FRN $2b (4x) and the 11yr $7b (2.5x) when the deal went subject.  In fact, Mischler served as a Co-Manager on both of JPM’s similar structures, and as a proud active Co-Manager on Goldman Sach’s two-part 5NC4 FXD/FRNs. Once again, Mischler is proud to have been involved on all the recently priced callable structures among the six-pack – two with JPM, a two-part with GS and today’s 3-part with BAML.  Therein, we thank all of those firms for including us.

 

As Halloween Approaches, How “Scary” are European Banks?

mischler-debt-market-bloomberg-chart

Screen shot courtesy of Bloomberg LP

 

 

Capital flows suggest that some people aren’t waiting to find out if Italy will follow the U.K.’s example and leave the European Union, according to Bloomberg View’s Mark Whitehouse. Italy’s central bank liabilities to the Euro system stood at about 354 billion euros ($390 billion) at the end of September, up 118 billion euros from a year earlier and up 78 billion euros since the end of May, before the U.K. voted to leave the bloc. The outflow isn’t quite as large as during the sovereign-debt crisis of 2012, but it’s still significant and compares to the main beneficiary, Germany, which has seen its credits to the Euro system increase by 160 billion euros over the past year.

 

Global Market Recap

 

  • S. Treasuries – USTs, Gilts & Bunds all improved with the Gilts the catalyst.
  • Stocks – Global stock rally.
  • Economic – CPI y/y in the U.S. & U.K. both printed at the highest rate in 2 years.
  • Currencies: Big day for the Pound vs. the USD. Euro lost ground & Yen unchanged.
  • Commodities; Small gains for the CRB, crude oil & gold.
  • CDX IG: -1.20 to 74.88
  • CDX HY: -4.84 to 403.19
  • CDX EM: -3.19 to 244.31

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

-Tony Farren

 

IG Primary & Secondary Market Talking Points – Tone Goes Out Strong; Nice Set Up For Next Week

 

  • The average spread compression from IPTs thru the launch/final pricing of today’s 7 IG Corporate-only new issues was 13.93 bps.
  • BAML’s IG Master Index widened 1 bp to +137 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 a new tight of +130 vs. +131.  The “LUACOAS” wide since 2012 is +215. The tight is +135.
  • Standard & Poor’s Global Fixed Income Research was unchanged at +183.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.9b on Monday versus $11.7b Friday and $11.2b the previous Friday.
  • The 10-DMA stands at $14.1b.

 

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

 

IG Corporate New Issuance This Week
10/17-10/21
vs. Current
WTD – $15.70b
October 2016 vs. Current
MTD – $52.155b
Low-End Avg. $22.30b 70.40% $87.83b 59.38%
Midpoint Avg. $23.17b 67.76% $88.59b 58.87%
High-End Avg. $24.04b 65.31% $89.35b 58.37%
The Low $15b 104.67% $75b 69.54%
The High $30b 52.33% $125b 41.724%

 

Now let’s end tonight’s piece where I started it – as James Stewart’s character Charlie Anderson quips at the family dinner table in the 1965 film Shenandoah, “If there’s anything I can’t stand, it’s a lot of noisy silence!”

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 and Sizes

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

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

 

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
Bank of America BBB+/A FRN 10/21/2022 500 3mL+equiv 3mL+121a (+/-3) 3mL+118 3mL+118 BAML-sole
Bank of America BBB+/A 2.503% 10/21/2022 2,000 +137.5a +130a (+/-3) +127 +127 BAML-sole
Bank of America BBB+/A 3.248% 10/21/2027 2,500 +162.5a +155a (+/-5) +150 +150 BAML-sole
Export Credit Bank of Turkey Ba1/BBB- 5.375% 10/24/2023 500 MS+420a MS+410a MS+400 +386.8 CITI/HSBC/ING/MIZ/MUFG/STAN
Jackson Nat’l. Life Glbl. Fdg. AA/AA 2.10% 10/25/2021 350 +high 90s/+97.5 +90a (+/-2) +88 +88 BAML/GS
Nike Inc. A1/AA- 2.375% 11/01/2026 1,000 +80-85 +70a (+/-5) +65 +65 BAML/CITI/DB
Nike Inc. A1/AA- 3.375% 11/01/2046 500 +110a +95a (+/-2) +93 +93 BAML/CITI/DB

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
EIB Aaa/AAA 1.25% 12/16/2019 4,500 MS+17a MS+17a MS+83 +31.2 CITI/GS/HSBC
JFM A1/A+ 2.125% 10/25/2023 1,000 MS+90a RG: MS+84a +/-1
MS+87a
MS+83 +70.18 BAML/CITI/DAIWA/MIZ

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