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Best Quarter EVER- Investment Grade Corporate Debt Issuance; Mischler DCM Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.30.17 – Top Ranked Quarter Ever for US IG Corp Issuance

 

Investment Grade New Issue Re-Cap – Q1 2017 Finishes as the #1 Ranked Quarter for IG Corporate-only and All-In IG Issuance.

On This Week’s Hawkish Fed-Speak

Point Counter-Point

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22nd

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

6 IG Corporate issuers tapped the IG dollar DCM today pricing 12 tranches between them totaling $6.00b.  There was no activity from the SSA space.

 

  • “CHTR” (Ba1/BBB-/BBB-) rated 144a/REGS 30-year Senior Secured Notes new issue due 5/01/2047.  The deal was upsized to $1.25b from $750mm at the launch and at the tightest side of guidance. (Mischler served as passive co-manager)
  • CCO Holdings LLC/Capital Corp. (Charter Communications) High Yield-rated (B1/BB+/BB+) 144a/REGS tap of its 5.125% 10-year Senior Notes due 5/01/2027.  We thank the issuer for our inclusion. (Mischler served as passive co-manager)
  • The IG Corporate only WTD total is now over 83% of the syndicate midpoint average forecast or $22.15b vs. $26.50b.
  • MTD, we are now more than 13% above the IG Corporate mid-range syndicate projection for all of March or $129.998b vs. $114.31b. (scroll to the table below).
  • The all-in MTD total (IG Corporates plus SSA) now stands at $166.158b. March, 2017 has officially broken into 8th place as the highest volume month for all-in issuance (IG Corporates plus SSA).
  • The YTD IG Corporate only volume is now $393.085b. It is the highest quarterly volume total in history.
  • YTD we have officially priced $506.151b in all-in IG Corporate and SSA issuance also ranking it #1 as the highest quarterly volume total ever.

 

On This Week’s Hawkish Fed-Speak

 

Today, crude oil hit a 3-week high, gold slipped, equity markets were all in the black and U.S. Treasury yields compressed while the dollar strengthened.  Most all of that reflects the fluctuations of our fluid daily market gyrations.  Net, net, though it was a good day.  However, what garnered all the attention today – as it did all week – was the sudden overwhelmingly hawkish Fed-speak from just about every Fed member.  Yesterday, Boston FRB President Eric Rosengren said a rate increase at every other FOMC meeting this year “could and should be the committee’s default unless data change.” There are eight meetings left this year implying four additional rate hikes. He also said, four hikes in 2017 would be gradual but “more regular.” The market, however, is expecting 2.5 at the most!  The Fed is a laggard; the market is always accelerated.  Europe, meanwhile is worrying that its recent tiny monetary adjustments have investors concerned of a rate rise for still suffering laggard peripheral EU member economy’s.  They are clearly not home free by any stretch of the imagination. ……..and we do live in an inextricably global-linked world economy.

So, now let’s link all that to today’s major talking points from statements made by the Fed’s William Dudley –

 

  • Dudley says, “growth and inflation risks may be shifting to the upside.”
  • He is more confident that inflation is settling near its goal, medium-term.
  • “Forward-looking data points to further job-market gains.”
  • Calls job gains “sturdy” and labor market slack “diminishing.”
  • Says the Federal Reserve is not “removing the punch bowl, yet.”
  • Comments that the “economic outlook abroad also appears brighter.”
  • The Fed shouldn’t overreact to every “wiggle” in markets.
  • Fed cares about financial condition effects on the economy.
  • Fiscal policy is likely to shift in time to more stimulus.
  • Favors tapering reinvestments instead of an abrupt end to them

 

Point Counter-Point

The takeaway is that Fed-speak is clearly very hawkish.  That pervasive sentiment among FOMC members gives reason to pause.  Here is the point counterpoint of all this –

Several times I re-printed the following comment from a six-pack bulge bracket U.S. bank Chairman.  I also pointed out the banker is either from BAML, CITI, GS, JPM, MS or WFS.  I will always preserve anonymity folks. To clarify, no one person has tomorrow’s news today, BUT this person has a firm grip on what IS going on in the world and a track record that’s perhaps second to none. Here’s a re-print of what the Chairman said in the “QC” dated Friday, March 3rd, 12 days in advance of the most recent FOMC Rate Decision,

“Everyone is thinking a rate hike is coming in March but, the FED needs to be somewhat worried about the yield curve.  When they raised rates in December 2015 the 10yr Treasury rallied 70 bps in yield, thus crushing banks’ net interest margin or “NIM” and, having the effect of dampening growth.  When they raised rates this past December 2016, that did not happen…..instead all rates moved up a bit.  But when Yellen talked about March being a “live meeting’’, the UST 10 year went from 2.56% to 2.31%……The Fed needs to talk a good game to dampen the “animal spirits” that have elevated equity markets but, I really don’t think the Fed wants to raise rates and see the 10 year Treasury move to 2.25%. As a result, it’s a very close call…..I err on the side of thinking that the rate hike comes in June.  But, it’s  close.  If the Fed is committed to 2 to 3 hikes this year and they feel the markets are fully prepared for a March hike…they may just take advantage of that window.”

It seems that this week the historically lagging Fed is clearly attempting to talk up U.S. Treasury yields because they KNOW the CT10-year yield is going to go down…..down…..down much like it did in 2015, though perhaps not as dramatically.  Therefore, take what you are hearing with a massive grain of salt.  The market is priming itself for issuance.  As yields fall, and deals are well-priced, investor appetite remains voracious for better rated IG corporate credits.  There should be a robust amount of issuance ahead of black-outs as we head toward the Easter break.  The opportunities are creating themselves in here and the Fed doesn’t like what it sees from their prior December 2015 experience.  That’s why they ARE talking up yields.  It’s also why yields WILL contract.  The inference is clear – the Fed talks the talk but they will not walk the walk. And that’s how it is folks.

 

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <17.67> bps.
  • BAML’s IG Master Index was unchanged at +122.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.17.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.7b on Wednesday versus $18.4b on Tuesday and $19.2b the previous Wednesday.
  • The 10-DMA stands at $17.3b.

 

Global Market Recap

 

  • U.S. Treasuries – Down day for USTs led by the 30yr for a host of reasons.
  • Overseas Bonds – JGB’s closed down. Mixed session in Europe.
  • Stocks – Solid gains heading into the close.
  • Overseas Stocks – Weak session in Asia. Europe closed with gains.
  • Economic – Personal consumption moved higher. Inflation data inched higher.
  • Overseas Economic – German CPI lower than expected/last. Big global calendar tomorrow.
  • Currencies – USD mixed vs. the Big 5 but a solid rally for the DXY Index.
  • Commodities – Good day for crude oil (back over 50) & bad day for gold.
  • CDX IG: -0.92 to 66.86
  • CDX HY: -4.28 to 337.98
  • CDX EM: -2.73 to 209.24

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/27-3/31
vs. Current
WTD – $22.15b
March 2017
Forecasts
vs. Current
MTD – $129.998b
Low-End Avg. $25.25b 87.72% $113.79b 114.24%
Midpoint Avg. $26.50b 83.58% $114.31b 113.72%
High-End Avg. $27.75b 79.82% $114.83b 113.21%
The Low $15b 147.67% $80b 162.50%
The High $31b 71.45% $140b 92.86

 
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 five key primary market driver averages for IG Corporates only through Wednesday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
3/27
TUES.
3/28
WED.
3/29
AVERAGES
WEEK 3/20
AVERAGES
WEEK 3/13
AVERAGES
WEEK 3/06
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
New Issue Concessions 0.00 bps/flat 2.60 bps 1.39 bps 1.75 bps 0.00 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps
Oversubscription Rates 2.00x 3.76x 3.53x 2.90x 3.08x 2.73x 3.39x 3.26x 3.76x
Tenors 3.00 yrs 11.65 yrs 8.10 yrs 11.55 yrs 10.05 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs
Tranche Sizes $500mm $727mm $475mm $692mm $859mm $671mm $738mm $695mm $744mm
Avg. Spd. Compression
IPTs to Launch
<17.50> bps <20.87> bps <19.12> bps <15.44> bps <17.99> bps <20.00> bps <16.79> bps <18.47> bps <18.45> bps

 

New Issues Priced

 

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

Please Note: for ratings I use the better two of Moody’s, S&P or Fitch.
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Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemate
March 2017      Debt Market Commentary   

Quigley’s Corner 03.27.17 -Corporate Debt Issuance Slows Due to DC Swamp Sewage Stalemates

 

Investment Grade Corporate Debt New Issue Re-Cap – IG Primary Markets Bogged Down by the Swamp

CT10 Year Yield Going Lower

IG Primary & Secondary Market Talking Points

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22nd       

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Well it was a rare, highly inactive Monday for IG primary markets today. Only one well-telegraphed new issue priced that had been in the pipeline for KEB Hana Bank in the form of a $500mm 3-year FRN. I heard that as many as 10 issuers stood down today following Go/No Go calls.  So, what gives?

On Friday, I placed at the top of my edition, a comment from a widely respected Head of Syndicate.  It was an interesting comment in that it expressed an against-the-grain opinion that Friday’s healthcare bill issue might actually be good for the market in that it pulls forward focus and attention on the all-important and market impactful tax reform bill.  As we were getting ready to close shop on Friday my CEO asked me, “so do you think it’ll be busy next week?  I said, “I hate to go against 24 of the top syndicate desks, but I fear we could see a zero day on Monday and a slower week in store. A health care bill failure will send a horrible message to the market.” I added, “I hope I’m wrong and that we see lots of issuance, but I think I’m right.”  That’s how Friday ended as I left for the weekend.

First, let’s revisit my Friday syndicate voting brackets for this week’s IG new issue volume forecasts:

Next Week
3/27-3/31
1: 20b
1: 15-30b
2: 20-25b
8: 25b
6: 25-30b
5: 30b
1: 31b

 

Out of 24 desks surveyed, 19 of them, or 79%, were in a tight band of $25-$30b.  That is always a great sign.  It means a lot of joint leads verified that similar or consensus volume is expected. The comments were characterized by lots of smaller deals with the absence of any mega transaction. But, I cannot see how issuance gets done if the health care bill is pulled or doesn’t pass. Well it got pulled later on Friday as we now all know. The issue is that republicans made a mistake in prioritizing health care as the first item on their agenda. They did so because it was perceived internally as a “no brainer.” Their plan was to save a trillion dollars to justify a massive tax reform plan.  Guess what?  When it got pulled the message sent to Wall Street was that consensus will continue to be an issue within the GOP.  That’s a MAJOR problem. The historic election is now over. People no longer want to hear the same campaign rhetoric, rather they want action, as the power to legislate has been voted on and given to Trump and the GOP.  The first test was a failure. In fact, it is a massive failure.  So, the market will not be kind to an Administration that has now experienced it’s “Dysfunction Junction” wake-up call. (I refuse to call it Capitol Hill or The Beltway anymore). It’s all about action now. Failure to get a consensus on tax reform WILL lose House and Senate seats in the next elections. That would be a political disgrace after the 7 long years they had amongst themselves to one day ratify a revamped bill. That day came and went last Friday.

The result? ………..The CT10-year is going back to 2.00% to 2.10% or lower.  Here’s the challenge –  with as many as 10 Go/No Go calls this morning that wound up with issuers standing down, we risk building a congested pipeline.  That leads to creating additional congestion, sloppy deals, more concession and bankers could look bad advising clients to go now rather than wait for another 25-35 bps rally in yields. Let the market come to the issuer. The latter are in the driver’s seat.  The market is waiting for a sign of optimism. That optimism will come when positive sounders on SUBSTANTIALas in “historic” – tax reform emanates from the White House and Dysfunction Junction. When that happens, equities will rally, yields will climb quickly and we’ll be back to where the GOP wants to be. For now, the Republican Party IS part of the Swamp that desperately needs draining.  It’s a harsh but well-deserved wake-up call to get their act together.  Seven years to fix Obama Care and they come up holding nothing but a yanked deal.  Unbelievable folks!  When that happens in business people get fired fast! Trump needs to run things like a corporation and Dysfunction Junction needs a hard case of tough love. This is not what was voted for on election day. It’s all about well……….waste management………now.

 

CT10 Year Yield Going Lower

rates-going-down-mischler-debt-market

Sorry if I sound like a broken record, but I published this next piece 12 days in advance of the recent FOMC Rate Decision on Friday, March 3rd and re-printed it the day of Janet Yellen’s Press Conference on Wednesday, March 15th.  Here it is yet again:

………..I had an interesting and revealing conversation with a Chairman of a six-pack bank (That’s either BAML, CITI, GS, JPM, MS or WFS folks!) who shared thoughts on a potential March interest rate hike that the market has already built in.  I thought it would be helpful and informative to you all.  Here’s what that person said,

“Everyone is thinking a rate hike is coming in March but, the FED needs to be somewhat worried about the yield curve.  When they raised rates in December 2015 the 10yr Treasury rallied 70 bps in yield, thus crushing banks’ net interest margin or “NIM” and, having the effect of dampening growth.  When they raised rates this past December 2016, that did not happen…..instead all rates moved up a bit.  But when Yellen talked about March being a “live meeting’’, the UST 10 year went from 2.56% to 2.31%……The Fed needs to talk a good game to dampen the “animal spirits” that have elevated equity markets but, I really don’t think the Fed wants to raise rates and see the 10 year Treasury move to 2.25%. As a result, it’s a very close call…..I err on the side of thinking that the rate hike comes in June.  But, it’s  close.  If the Fed is committed to 2 to 3 hikes this year and they feel the markets are fully prepared for a March hike…they may just take advantage of that window.”

Today the CT10-year closed at 2.379% and has tightened 24.8 bps versus 2.627% on March 13th the Monday before the Fed raised rates. It’s going tighter. Issuers be patient!

IG Primary & Secondary Market Talking Points

 

  • The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 1 IG Corporate-only new issues was <17.50> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.18.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +164 vs. +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.8b on Friday versus $17.8b on Thursday and $15.2b the previous Friday.
  • The 10-DMA stands at $17.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Closed with gains except the 2yr but closed near the low prices of day.
  • Overseas Bonds – JGB’s better except the 30yr. Bunds red & Gilts green.
  • Stocks – U.S. stocks mixed heading into the close. Nice comeback in the afternoon.
  • Overseas Stocks – The Nikkei led Asia lower. Europe had more red than green.
  • Economic – Dallas Fed manufacturing was weaker than expected/last.
  • Overseas Economic – Positive IFO releases in Germany.
  • Currencies – The USD had a poor day vs. the Euro, Pound & Yen.
  • Commodities – Crude down, gold up & a 2% gain for silver.
  • CDX IG: +0.83 to 67.84
  • CDX HY: +29.80 to 354.58
  • CDX EM: +1.72 to 213.92

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/27-3/31
vs. Current
WTD – $0.50b
March 2017
Forecasts
vs. Current
MTD – $108.348b
Low-End Avg. $25.25b 1.98% $113.79b 95.22%
Midpoint Avg. $26.50b 1.89% $114.31b 94.78%
High-End Avg. $27.75b 1.80% $114.83b 94.36%
The Low $15b 3.33% $80b 135.43%
The High $31b 1.61% $140b 77.39%

 
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

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Equity Market Drivers: Sentiment, Spending and Politics; Peruzzi’s Perch
March 2017      Equities Market Commentary   

What’s Next for Stocks? Equity Market Drivers-It’s all about Sentiment, Spending and Politics…

larry-peruzzi-mischler-equitiies

Larry Peruzzi

U.S and global markets experienced a classic risk reversal trade on Tuesday as investors re-priced the probability of a reduction in taxes. Investors took profits and reduced their risk exposure by knocking the Dow down 1.14% and the S&P 500 by 1.24% on Tuesday.  The S&P 500 and Dow Jones Industrials ended their historic streak of 110 sessions without a 1% decline. Crude oil continued its decline with WTI crude down 3.1% over the first 4 days of the week. Energy, the worst-performing sector this year, has fallen by about 8% year to date. The economic front was largely void of any market moving numbers.

The housing sector did release some contradictory numbers as Wednesday’s existing home sales in February registered a 3.7% decline, but Thursday new home sales surged 6.1%. Who wants used when you can have new?  As the week came to an end, more uncertainty was created as the House GOP leaders looked to vote on Friday on their health-care bill, while not knowing for sure they have enough votes to pass it. As we have learned time and time again, markets greatly despise uncertainty.

Further evidence of the risk reversal trade can be seen in Gold’s trading action, as the precious metal is up 3.25% over the last 2 weeks. The week will also be remembered for what might have been the beginning stages of an end to an era when Sears Holdings had its worst decline in 2 years. Sears said there was “substantial doubt” about its future. Sears was once the world’s largest retailer over its 131 year history. With the Fed’s rate hike behind us and the next meeting not until May 3rd and 1Q earnings still a few weeks’ away, investors will continue to ponder their risk tolerance in these highly partisan political times.  Friday was an active day for Fed governors with Bullard, Dudley, Williams and Evans speaking.

Next week will be equally active for the Fed, with 12 speeches by governors, culminating with Chair Yellen speaking on Tuesday.  With the market drivers changing over the last couple of weeks, I think what the market and investors will be concentrating on is sentiment, spending and politics. Tuesday’s March Conference Board consumer confidence and Friday’s March Michigan sentiment readings should give us a good idea how the public views the economy, while Wednesday’s February pending home sales and Thursday 4Q personal consumption, followed by Friday’s February Personal Spending will be a good indication of how much the recent market rally has buoyed the consumption and spending.

The political front remains divided by party lines and reforms in taxes, healthcare, immigration and a Supreme Court nominee are at risk. As we watch a few key economic numbers and Fed speeches, we will be closely monitoring the shenanigans out of Washington. Quarter-end on Friday is normally “meet with portfolio managers” who will be making some last minute adjustments to portfolio holding and cash levels. I would expect trading volumes to increase as the week progresses.

There is a lot to digest for a market that looks like it is being stymied by a fork in the road.

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch March 09 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.
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IG Debt Market Issuers Confounded By Dysfunction Junction; Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.23.17 –Dysfunction Junction

 

A Very Important Message

Investment Grade Corporate Debt New Issue Re-Cap – “Dysfunction Junction”

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending March 22th      

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab –Courtesy of Jim Levenson

Tomorrow’s Calendar

 

 Important Message to all “QC” readers:  Before we dive into the session  details re: today’s corporate debt issuance, I’d like to call your attention to a very important message from one the Fixed Income Syndicate world’s truly good people, Greg Baker of Bank of America/Merrill Lynch.  Greg is going to be competing in his third 140.6 IRONMAN challenge to raise money for a critically important cause. Without further ado I will hand it over to Greg to tell you more about it. 

 

Dear Friends,

I will be participating in IRONMAN Lake Placid on July 23rd, 2017 as part of the Multiple Myeloma Research Foundation (MMRF) Team For Cures.

The Goal:
Raise $10,000 for the MMRF
Swim: 2.4 miles
Bike: 112 miles
Run: 26.2miles

Multiple myeloma is the second most common form of blood cancer and, sadly, has one of the lowest five-year relative survival rates of all cancers. But while there is no cure, great progress is being made.

In fact, thanks to the important work of the MMRF, the world’s leading private funder of myeloma research, the FDA has approved TEN new treatments, including FOUR in just the past 18 months – a track record that’s unparalleled in the world of oncology. These drugs have almost tripled the lifespan of myeloma patients. And now the MMRF is funding over 20 additional treatments in various stages of development, giving hope to tens of thousands of patients and their families.

All donations are GREATLY appreciated! Thank you very much.
Greg

To donate, please click on the link:  https://endurance.themmrf.org/2017IMLP/Member/MyPage/986791/Gregory-Baker

As Winston Churchill so eloquently put it, “We make a living by what we get, but we make a life by what we give.” Greg is giving of himself, and I ask that you please find it in yourselves to donate what you can to help this incredible cause.  In the name of social responsibility, a heartfelt thank you from the guy-in-the-corner who is always in your corner.
Good luck Greg! -RQ

 

Investment Grade New Issue Re-Cap – Zip, Zero, Zilch Thanks to Capitol Hill and “Dysfunction Junction”

quigleys-corner-Dysfunction-Junction
Why did nothing price in today’s rare non-Friday goose egg in our IG DCM?  Simple!  Market participants and issuers are wondering if the Trump rally will stop dead in its tracks if it cannot get an Obama Care replacement bill approved by Congress.  Fractional divides within the majority controlled Republican Party reminds us all of the “circus” that is our nation’s capital known as “The Beltway.”  If support is not achieved, this writer will forever refer to Washington, D.C. as “Dysfunction Junction.”

We are already living in a nation divided with the worst media wars being fought between left and right.  Congress made some “headway” this morning by throwing out the minimum benefits that insurers are required to provide.  The final iteration, however, may not reflect the many months that Trump and his campaign staff and advisors have had to work on a replacement plan promised to be better, stronger, more efficient and one that will save the average American lots of money, while upgrading their care and keeping their choice of doctors.  Anything less than that and it will be perceived as a failure.  The session expected an announcement from House Speaker Paul Ryan – it did not happen.  A vote was expected this evening – it will not happen. The vote on legislation has officially been delayed.  Discussions will be ongoing, beginning this evening in the House at 7:00 pm ET. Markets awaited today’s healthcare/legislative conundrum with the eagerness with which it typically saves for FOMC Press Conferences.  That’s the kind of impact this decision and how it is handled will have.

Unfortunately, and further underlying all the suspense, is the real story of political dysfunction within the GOP.  A new, improved Obama Care seems to be taking a back seat to the question “will the Freedom Caucus continue to agitate any progress within the party?” If so, it will mean a long and painful 4-year term for the Trump Administration, likley result in a loss of seats in the next election and potential control of his ability to effectively govern.  Without support from within his own party effectively means no control at all.  This is all about breaking the party’s House Freedom Caucus, comprised of 20+ Republicans who have been a thorn in the side of any Republican headway.  For now, however, just getting support for whatever bill is being rushed through is challenged to find the necessary 215 votes for its passage.  The legacy of Trump’s legendary negotiating ability – recall his book “The Art of the Deal” – is also being called into question as he faces off with the nation’s lawmakers.

For the more objective Trump supporters, this could be a major disappointment and usher in more toxic additives to the “swamp” that Trump has promised to drain.  The main issue here, however, is that as important as Trump’s first real litmus test is to keep his promises on a full repeal and replacement of Obama Care is that he and his Administration will not be able to focus on any other plans unless and until he overcomes this first major hurdle.  If it fails, President Trump’s ability to achieve his eagerly anticipated and market moving tax reduction plan will be questioned and a financial crisis of confidence could likely ensue.  Perhaps the ultimate deal maker is working on health care concessions in return with a sledge hammer of a tax reduction plan. We’ll have to wait and see. I do think we could see a CT10-year below 2.00% again in short order, after which issuers will gladly hop off the fence in unison and act on a more clear view of rate direction. Robust issuance will be the flavor of the day, but first, we could see a quiet period in our primary markets.  We’ll know more tomorrow when I send out the Friday “QC” featuring the syndicate world’s “Best and the Brightest” and their views and comments on next week’s IG Corporate issuance. So, stay tuned it will be a critically important read for all of you.  For today and in conclusion, “Dysfunction Junction” is why our IG DCM was stalemated today.

IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index widened 1 bp to +123 vs. +122.  +106 represent the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.18 vs. +117.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +165 vs. at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.2b on Wednesday versus $20.5b on Tuesday and $21.6b the previous Wednesday.
  • The 10-DMA stands at $17.9b.

 

Global Market Recap

 

  • U.S. Treasuries – 4-day winning streak was snapped.
  • Overseas Bonds – JGB’s closed better bid. European bonds traded poorly.
  • Stocks – U.S. stocks little changed with 45 minutes left in the session.
  • Overseas Stocks – Asia closed with small gains. Europe had a good day.
  • Economic – New home sales & KC Fed manufacturing were strong.
  • Overseas Economic – U.K. retail sales were strong.
  • Currencies – The USD was mixed vs. the Big 5. The DXY Index had a small gain.
  • Commodities – Crude oil & gold closed in the red.
  • CDX IG: -0.97 to 67.37
  • CDX HY: -3.17 to 330.27
  • CDX EM: -1.52 to 216.16

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

-Tony Farren

 

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

 

IG Corporate New Issuance This Week
3/20-3/24
vs. Current
WTD – $19.375b
March 2017
Forecasts
vs. Current
MTD – $107.848b
Low-End Avg. $24.92b 77.75% $113.79b 94.78%
Midpoint Avg. $25.65b 75.54% $114.31b 94.35%
High-End Avg. $26.38b 73.45% $114.83b 93.92%
The Low $20b 96.87% $80b 134.81%
The High $35b 55.36% $140b 77.03%

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 & 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 five key primary market driver averages for IG Corporates only through Thursday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
3/20
TUES.
3/21
WED.
3/22
TH.
3/24
AVERAGES
WEEK 3/13
AVERAGES
WEEK 3/06
AVERAGES
WEEK 2/27
AVERAGES
WEEK 2/20
AVERAGES
WEEK 2/13
AVERAGES
WEEK 2/06
New Issue Concessions 0.57 bps 0.11 bps 4.62 bps N/A 0.00 bps 1.17 bps <3.15> bps <0.16> bps <0.86> bps <3.44> bps
Oversubscription Rates 3.08x 3.68x 1.77x N/A 3.08x 2.73x 3.39x 3.26x 3.76x 3.92x
Tenors 15.35 yrs 10.83 yrs 8.82 yrs N/A 10.05 yrs 9.65 yrs 8.04 yrs 8.37 yrs 8.03 yrs 12.04 yrs
Tranche Sizes $578mm $788mm $650mm N/A $859mm $671mm $738mm $695mm $744mm $735mm
Avg. Spd. Compression
IPTs to Launch
<17.69> bps <19.23> yrs <7.5> bps N/A <17.99> bps <20.00> bps <16.79> bps <18.47> bps <18.45> bps <19.60> bps

 

New Issue Pipeline (more…)

Mischler Muni Market Outlook-Pending Deals Week of 03-13-17
March 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 03.13.17 looks back to last week’s metrics and provides a lens focused on municipal bond Issuance Calendar for this week. As always, the Mischler Muni Market snapshot provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads, money flows and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $9.2 billion.  This week, with the Fed Open Market Committee meeting, volume is expected to be $5.8 billion.  The negotiated market is led by $400.0 million for the Ohio Water Development Authority.  The competitive market is led by $1.8 billion of tax exempt and taxable State Personal Income Tax Bonds for Empire State Development Corp. (NYSUDC) in 5 bids 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

mischler-muni-market-outlook-031317

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

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

(more…)

March-In Like a Lion..Out Like A Lamb, a Bull or a Bear? Mischler Equities Insight
March 2017      Equities Market Commentary   

Mar 09 11 pm EST– March comes in like a lion and goes out like a lamb. Traders are hoping March does not come in like a bull and goes out like a bear.

larry-peruzzi-mischler-equitiies

Larry Peruzzi

On March 1, the Dow, S&P 500 and NASDAQ comp all closed at record highs, over the next 6 trading sessions the S&P declined on 4 of 6 days and had very small gains on the 2 other days.

On Thursday, the bull market celebrated its 8th year with gains of between 1bp and 8 bps in U.S indices. After 8 years, markets seem to be both tired and excited. Valuations are starting to be questioned but expectation of job growth and tax relief has few ready to sell; but an equally few are ready to jump in.

So, markets feel as though we are currently in a stalemate. Friday’s February employment report is truly the first report that will be more affected by the present administration rather than the former. It is being closely watched, and anticipation about the Feb report explains why the equities markets move this week has been muted. Investors have been calling for, and patiently waiting for, policy details. Friday’s report should give us something to digest for now.

Although the market moves this week have been narrow, news has been abundant. We have seen a new proposed health care bill, a new immigration policy effort, U.S shale production increase, a global bond rout, U.S dollar at highest levels in 2 months, South Korean President ousted from office and an EU summit all kept us busy. Monday’s Factory orders exceeded expectations, Wednesday’s ADP employment change exceeded estimated by a healthy 112K and Thursday import prices showed inflation seems to be under control.

After Friday’s employment report, I think that the next two most important events this week were: 1) WTI crude oil falling back below $50 (WTI is down 8.3% for March). This has always been a double edge sword. More money in consumers’ pocket, but decline in the energy sector is a drag on the economy and indices. 2) A largely overlooked surge in Household Net Worth, with both a positive revision to 3Q and a better than expected gain in 4Q. Simply put, more wealth equals more spending, which equals more jobs and growth. But we need to watch that inflation as well.

Looking ahead to next week investors will have plenty to digest. As this market moves more toward a dual factor market (taxes and jobs), we will be reminded of the other factors able to move the market. We get a good view on inflation with Tuesday’s PPI report for February and Wednesday CPI report for February. Wednesday’s retail sales figures will give us a clearer picture as to how much of the surge in household wealth has pushed through the economy. With recent weakness in the retailers, we will be watching the sales numbers closely. Later in the day on Wednesday, the FED will release its FOMC rate decision, in which a 25bps hike is widely expected. Fed Funds rate is actually pricing in a 100% probability of a rate increase; the accompanying comments will be of more importance than the action.

With Thursday’s February Housing Starts and building permits release we get a better idea of the health of real estate.  Mild weather in February should help this number. The week concludes with Michigan sentiment reading. With the stock market near all-time highs, surge in household wealth and cheaper oil and gas prices in store, consumers should have reason to be optimistic.  With the S&P 500 PE ratio continuing to creep up to 21.8, companies’ earnings need to be able to sustain these prices when 1Q earnings roll around next month, otherwise we could some profit taking on the rise.

But it all starts with Friday’s employment number.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch March 09 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

(more…)

Draghi Says Euro is Irrevocable-Mischler Debt Market Comment
March 2017      Debt Market Commentary   

Quigley’s Corner 03.09.17 –Draghi Says Euro is Irrevocable

 

Investment Grade New Issue Re-Cap

Buy-Side Feedback—“Its Amazing!”

IG Primary & Secondary Market Talking Points

Global Market Recap

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

Draghi’s ECB Key Talking Points

ECB Forecasts

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 March 8th      

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

6 IG Corporate issuers tapped the dollar DCM today pricing 9 tranches between them totaling $5.25b.  The SSA space featured 2 issuers and 2 tranches totaling $1.30b for an all-in IG day total of 8 issuers, 11 tranches and $6.55b.
The WTD total is now 34% more than this week’s syndicate midpoint average forecast or $44.50b vs. $33.15b. MTD, we’ve now priced 50% of the IG Corporate mid-range projection for all of March or $58.025b vs. $114.31b.

Note: In last Friday’s “QC” Best and Brightest edition I wrote at the top, “Personally one should err to the upside in markets like this wherein new issue volume forecasts are concerned.  I’ll start by saying I have a strong feeling we see another $50b week of all-in IG Corporate and SSA new issuance next week.  IG Corporates alone could easily eclipse the $40b mark.  However, that’s my take on things. Across the 24 syndicate desks that I surveyed today, next week’s IG Corporate-only midpoint average estimate calls for $33.15b to price characterized by MANY new issuers.”

The WTD tally for IG Corporate new issuance thru today is $44.50b and all-in IG Corporate and SSA issuance is $52.80b ……not too shabby eh?

Buy-Side Feedback

Late this afternoon a buy-side account pointed out the following, “It’s amazing Ron! I was looking at your “QC” from last Friday and recall how staggered I was that almost 90% of last weeks’ new issues tightened versus pricing spread levels especially considering the negative concession environment.  I don’t think I’ve ever seen that before.  But this week is an entirely different story. In fact, it’s completely the opposite.  I’ll bet that a new record number of this week’s new issues widened out vs. their pricing levels given yields.  I haven’t seen more apathy in the market than this week in a VERY long time.”

We’ll see tomorrow folks when I check  the secondary trading levels of this week’s


IG Primary & Secondary Market Talking Points

 

  • Host Hotels & Resorts LP bumped up its 7yr Senior Notes new issue to $400mm from $350m at the launch and at the tightest side of guidance.
  • Neuberger and Berman upped today’s 144a/REGS 10yr Senior Notes new issue to $300mm from $250mm at the launch. The deal skipped guidance.
  • The Asian Development Bank increased today’s 4yr FRN new issue to $1b from $750mm at the launch.
  • Swedish Export Credit Corp. upsized today’s tap of its FRNs due 10/04/2018 to $300mm from $250mm at the launch.
  • The average spread from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues, that displayed price evolution, was <25.06> bps.
  • BAML’s IG Master Index was unchanged at +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 1.14 vs. 1.12.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.2b on Wednesday versus $20.9b on Tuesday and $21.6b the previous Wednesday.
  • The 10-DMA stands at $20.4b.

 

Global Market Recap

 

  • U.S. Treasuries – Terrible price action. Supply, Draghi and healthcare the main culprits.
  • Overseas Bonds – Europe sold off on Draghi’s political correctness.. JGB’s red except 30yr.
  • 3mth Libor – Set at 1.11956% the highest since April 2009.
  • Stocks – Basically unchanged with 40 minutes left in the session.
  • Overseas Stocks – Japan up, China & Hang Seng down & Europe more green than red.
  • Economic – Claims higher from low since 1973. Import prices YoY high since 2012.
  • Overseas Economic – China inflation data mixed & credit down. Ireland GDP was strong.
  • Currencies – U.S. weaker vs. Euro & Pound but stronger vs. the Yen, CAD & AUD.
  • Commodities – CRB, crude oil, gold, copper, silver, etc., all got hit.
  • CDX IG: +0.85 to 64.75
  • CDX HY: +4.14 to 333.37 (wider by 26.15 bps this week)
  • CDX EM: +4.48 to 221.56

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

-Tony Farren

 

ECB President Mario Draghi’s Declares “The Euro is here to stay!” and “The Euro is irrevocable!” 

mischler-draghi-euro-irrevocable 

 

Today the ECB left the Euro Zone’s  main refinancing rate unchanged at 0%, the marginal lending facility unchanged at 0.25% and the deposit facility rate also unchanged at <0.4%>.  Asset purchases remained €80b a month until the end of March after which they will be reduced by 25% to €60b per month from April thru December. Currency traders, however, reacted to the hawkish news that the ECB dropped its pledge to use “all available instruments” to achieve its mandate, and is now less worried about deflation. On the one hand, ECB President Mario Draghi talked up the prospects for the Euro Zone economy while saying there is no longer a deflation risk however, he also warned that there are “downside risks” that could derail the recovery. Clearly the ECB monetary chief has a firm eye on upcoming elections, particularly in France. Draghi sighted domestic risks are now more contained but subsequently took several minutes explaining how elections actually make everything uncertain. Among notable moments in his speech, he ducked the question: Could the ECB raise interest rates before it has ended its QE program?“  That was interesting, as he previously insisted that the rate would not rise until the asset-purchase program concludes.  The takeaway is that risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors.

Draghi’s ECB Key Talking Points

 

  • ECB leaves the main refinancing rate unchanged at 0.00%.
  • Leaves the marginal lending facility unchanged at 0.25%.
  • Leaves the deposit facility rate unchanged at -0.4%.
  • Keeps asset purchases at €80b a month until the end of March.
  • Says asset purchases will be €60b a month from April to December – a 25% reduction.
  • Reiterates that rates will stay at present or lower levels for an extended period of time.
  • Net purchases will be made alongside reinvestments.
  • QE can be increased in size and/or duration if the outlook worsens.
  • Draghi sees rates at present or a lower level well past the end of QE.
  • QE will run until the ECB sees a sustained inflation pick-up.
  • Sees no convincing upward trend in underlying inflation.
  • Inflation is likely to remain close to 2% in the coming months.
  • Core inflation set to rise gradually over the medium-term.
  • ECB measures preserve favorable conditions needed.
  • Sentiment indicators point to a pick-up in momentum.
  • Inflation increased due to energy effects.
  • Underlying inflation pressures remain subdued.
  • The ECB will look through transient inflation changes.
  • A very substantial degree of accommodation is needed.
  • Draghi omits pledge to use “all instruments” within the mandate.
  • Says economic risks are less pronounced, yet still to the downside.
  • Risks relate predominantly to global factors.
  • Survey results increase confidence in the recovery
  • Survey results suggest the recovery may broaden.
  • Rising employment bolsters private consumption.
  • Signs of a somewhat stronger global recovery.
  • Euro-area growth was damped by a sluggish reform pace.

 

ECB Forecasts

  • 2017 GDP growth at 1.8% vs 1.7%
  • 2018 GDP growth at 1.7% vs 1.6%
  • 2019 GDP growth at 1.6% vs 1.6%
  • 2017 inflation at 1.7% vs 1.3%
  • 2018 inflation at 1.6% vs 1.5%
  • 2019 inflation at 1.7% vs 1.7%

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

 

IG Corporate New Issuance This Week
3/06-3/10
vs. Current
WTD – $44.50b
March 2017
Forecasts
vs. Current
MTD – $58.025b
Low-End Avg. $31.79b 139.98% $113.79b 50.99%
Midpoint Avg. $33.15b 134.24% $114.31b 50.76%
High-End Avg. $34.50b 128.99% $114.83b 50.53%
The Low $25b 178.00% $80b 72.53%
The High $45b 98.89% $140b 41.45%

 

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 (more…)

Big Week for Municipal Bonds-Mischler Muni Market Outlook 03-06-17
March 2017      Muni Market   

Mischler Muni-bond Market Outlook for the week commencing 03.06.17 looks back to last week’s metrics and provides a lens focused on municipal bonds Issuance Calendar for this week. As always, the Mischler Muni Market snapshot provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads, money flows and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $4.0 billion. This week volume is expected to be $10.2 billion. The negotiated market is led by $2.4 billion for the State of California. The competitive market is led by $1.2 billion of tax-exempt and taxable GO’s for the State of Maryland in 3 bids on Wednesday

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-muni-market-outlook-030617Mischler Financial Group debt capital market expertise, inclusive of Debt Origination, Distribution, Primary Market Access and Secondary Market trading across the full spectrum of fixed income markets is courtesy of our 18-member team of debt market veterans is what makes MFG’s Fixed Income Group a compelling partner to Fortune issuers, corporate treasurers, municipal debt market issuers and the world’s leading institutional investors.

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

(more…)

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

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

 

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

IG Primary & Secondary Market Talking Points

Global Market Recap

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

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 22nd    

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

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

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

 

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

 

Global Market Recap

 

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

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

-Tony Farren

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

 

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

 

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

 

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

US Corporate Debt New Issuance Market-What’s Next?
February 2017      Debt Market Commentary   

Quigley’s Corner 02.24.17 – Weekend Edition: Corporate Debt New Issuance- What’s Next?

 

Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points

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

The Best and the Brightest”:  Fixed Income Syndicate Forecasts and Sound Bites for Next Week 

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

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 February 22nd    

Investment Grade Credit Spreads by Rating

Investment Grade Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

We missed the midpoint syndicate forecast for IG Corporate volume this week by a lot. In fact, the very low estimate calling for only $19.4b was off by 42% with only $11.125b in new supply.  Next week, however, desks seemed focused on around $25b.

Yellen speaks next Friday, March 3rd and the Employment Report is the following Friday, March 10th. Those are really the only two bits of data that could move the market. Of course that’s notwithstanding any one of myriad global event risk factors playing out i.e. the Dutch election on Wed. 3/15 followed by round one of the French election on Sunday, April 23rd and round 2 on Sunday, May 7th. As we get closer and closer to each, polling will gyrate thru the markets.

Next week has been a huge one in each of the past three years for IG Corporate volume and overall IG issuance including SSA product.

Take a look:

2016 – IG Corps: $50.72b Corps + SSA: $61.22b

2015 – IG Corps: $59.03b Corps + SSA: $65.03b

2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 

Unfortunately no estimate for next week comes close to the $50m mark. The highest estimate is an out layer at $43b. The most dense groupings are focused on around $25b with the midpoint estimate being $25.46b. I am more optimistic for 30b+ in new IG Corporate issuance only because we’ve disappointed on recent weekly issuance projections in 3 of the past 4 weeks, the time is right, tone is formidable, concessions are skimpy, issuers cannot sit around forever, demand is very strong and so, I err to the upside. Overall issuance including SSA could top $40b.

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 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.17 vs. 118 setting a new tight since November 3rd, 2014.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +164 vs. +165.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $21.2b on Thursday versus $20.8b on Wednesday and $24b the previous Wednesday.
  • The 10-DMA stands at $19.9b.

 

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

 

IG Corporate New Issuance This Week
2/20-2/14
vs. Current
WTD – $11.125b
February 2017
Forecasts
vs. Current
MTD – $61.15b
Low-End Avg. $18.25b 60.96% $90.65b 67.46%
Midpoint Avg. $19.40b 57.35% $91.96b 66.50%
High-End Avg. $20.54b 54.16% $93.26b 65.57%
The Low $15b 74.17% $85b 71.94%
The High $26b 42.79% $120b 50.96%

 

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

 

I am happy to announce that I had 96% response to today’s “Best & Brightest” survey! That means 23 out of 24 desks.  21 of those participants are among 2017’s YTD top 25 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  In fact, 22 of today’s 23 participants finished in the top 25 of last year’s 2016 final IG Corporate Bloomberg league table.  The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 84.38% 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.

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

Getting right to it today, here are this week’s numbers entering today’s morning session:

  • We priced an anemic 57% of this week’s already low syndicate midpoint average forecast or $11.125b vs. $19.40b.
  • Thus far in February we priced 66.50% of the monthly syndicate projection or $61.15b vs. $91.96b.
  • All-in YTD IG Corporate and SSA issuance stands at $303.183b! 
  • Wednesday was the fastest pace ever to reach the $300mm mark for all-in IG Corporate and SSA issuance.

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

  • NICS:  <0.16> bps
  • Oversubscription Rates: 3.26x
  • Tenors:  8.37 years
  • Tranche Sizes: $695mm
  • Spread Compression from IPTs to the Launch: <18.47> bps


Here’s how this week’s performance data compares against last week’s:

  • NICs widened 0.70 bps to<0.16> bps vs.  <0.86> bps.
  • Over subscription or bid-to-cover rates, the measure of demand, reduced by 0.50x to 3.26x vs. 3.76x. 
  • Average tenors extended by 0.34 years to 8.37 years vs. 8.03 years.
  • Tranche sizes decreased by $49mm to $695mm vs. $744mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 16 IG Corporate-only new issues tightened fractionally by <0.02> bps to <18.47> bps vs. <18.45> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to+164 vs. +165.
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +123 vs. +124. 
  • Spreads across the four IG asset classes tightened 0.25 bps to16.50 bps vs. 16.75 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors tightened 0.79 bps to 20.37 vs. 21.16 bps also against their post-Crisis lows.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 20 deals that printed, 17 tightened versus NIP for a 00% improvement rate while 2 widened (10.00%) and 1 were flat (5.00%).
  • For the week ended February 22nd, Lipper U.S. Fund Flows reported an inflow of $2.566b into Corporate Investment Grade Funds (2016 YTD net inflow of $20.906b) and a net inflow of $726.282m into High Yield Funds (2016 YTD net inflow of $1.616b).

It seems as if syndicate desks have said issuance would increase “the week after next” in each of the last two Friday’s.  Now, however, with Corporate America having posted earnings and with most issuers having exited blackouts, expectations are for a much more robust calendar next week. The two bits of potentially market moving data are: Fed Chair Janet Yellen speaks at the Executive’s Club of Chicago on Friday, March 3rd and the Employment Situation for February is scheduled to be released on Friday, March 10, 2017, at 8:30 a.m. (EST). After that there’s the FOMC meeting on Tuesday and Wednesday March 14th and 15th, which is associated with a Summary of Economic Projections and a press conference by Chair Yellen.  Blackouts then begin shortly thereafter. The point being – this time, next week really should see very strong issuance across all sectors. But why listen to me let’s go back to the same week in time over the past three years. The results are eye-opening:

  • 2016 – IG Corps: $50.72b Corps + SSA: $61.22b
  • 2015 – IG Corps: $59.03b Corps + SSA: $65.03b
  • 2014 – IG Corps: $50.29b Corps + SSA: $55.18b

 We all understand that “past performance is no guarantee of future results” but those are pretty telling statistics right there folks!

The Big Question:  Next Wednesday begins the month of March, so today I ask a two-part question “what are your thoughts and numbers for BOTH next week AND March?

The “Best and the Brightest” in Their Own Words

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

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