Drilling Into The Core of Apple Inc Debt Issuance; Mischler Fixed Income Commentary
May 6, 2015   //   by Mischler MarCom   //   Uncategorised  

Quigley’s Corner 05.06.15

  • Investment Grade New Issue Re-Cap – Apple of Investors
  • New Record: Quickest In History to the Half Trillion Dollar Mark!
  • Investor’s Take A Big Bite Of Apple Bonds – And Love It! A Look at Today’s 6-Part Demand
  • IG Primary Market Talking Points
  • New Issues Priced
  • Investment Grade Spreads by Industry
  • Secondary Market Trading Data
  • New Issue Pipeline
  • M&A Pipeline’s Biggest

Two mega deals hit the tapes early this morning led by an $8b 7-part from Apple Inc. and a $10b 6-part from Shell International Finance.  There were a total of 8 IG Corporate issuers that tapped the dollar DCM to price 20 tranches totaling $21.525b bringing the WTD total to more than 14% more than the syndicate midpoint forecast or $45.125b vs. $39.34b.  Meanwhile, the Kingdom of Sweden also added $2.25b from the SSA space with a new 3-year bringing the all-in IG day totals to 9 issuers, 21 tranches and $23.775b.

New Record: Quickest In History to the Half Trillion Dollar Mark!

Today marks a landmark in the history of IG issuance – It is the earliest time in any year that we reached the $500 billion issuance mark.  YTD IG Corporate-only volume now stands at $510.797 billion! Investor appetite for the stability of higher rated credits and especially those from Corporate America is beyond robust. Congratulations to Apple for their help in putting us on top with this new and very impressive record!  Well-timed and well-priced no doubt!  YTD all-in IG issuance (Corporates plus SSA) is now $634.407 billion.  Not too shabby folks!

Investor’s Bite the Apple – And Like It Alot! A Look at Today’s 6-Part Demand

Apple Final Book Sizes Bid-to-Cover Rate Final Pricing Currently Trading
2yr FRN 590m 2.36x 3mL+5 issue bid
2yr FXD 2600m 3.47x +30 30/28
5yr FRN 840m 1.68x 3mL+30 $100.05/
5yr FXD 2900m 2.32x +45 44/42
7yr FXD 2900m 2.32x +75 75/73
10yr FXD 5850m 2.925x +100 99/97
30yr FXD 5300m 2.65x +140 141/139

 

A Word About Apple’s Diversity & Inclusion Mandate

From the onset Apple has had a fundamental commitment to diversity and inclusion, after all they are a collective of individuals.  Different kinds of people from different kinds of places. Artists, engineers and scientists, thinkers and dreamers.  A place of substance, things and ideas; a dimension of sight, sound and mind.  One powerful thing the people of Apple share is the belief that they can make a difference in the world, and they do it through their products and through their values.  It’s why diversity and inclusion lays at the very core of Apple Inc.  Apple realizes that inclusion opens a broader view and seeks a diversity of thought and perspective.  That very environment inspires creativity and innovation.  They proved it today in the financial services side of their business by being receptive to our small special operations unit known as Mischler Financial Group.  As the nation’s Oldest Service Disabled Veteran broker-dealer we are dedicated and committed to providing a value-added proposition to those issuers that provided us the opportunity to demonstrate our capital markets capabilities.  Thanks Apple for believing in Mischler Financial today and for opening up our little world to your big one.  We appreciate the opportunity to introduce new investors to your profile today, and we most certainly appreciate your role in helping to advance Mischler’s initiatives, including those that give back and pay it forward to the service disabled veteran community at large.

IG Primary Market Talking Points

  • Mischler Financial Group, Inc., the nation’s oldest Service Disabled Veteran broker dealer, was honored today to accept a 1.00% Active Co-Manager role for the world’s largest corporation as measured by market capitalization – Apple Inc.  This was our inaugural transaction with Apple.  Our Mischler Financial five-star salute goes out to Mike Shapiro and Matt Blake in Silicon Valley.  I’d be remiss, however, if I didn’t also include a shout-out to today’s lead B&D who we liaised with namely Team Goldman Sachs Syndicate.  They do diversity and inclusion right and today’s transaction was just another reason why they are setting new standards when it comes to their familiarity with introducing new, high quality tier II and III middle markets accounts to prestigious issuer’ investor profiles like Apple.
  • Today’s all-in IG total (Corporates plus SSA) of $23.775b ranks as the 2nd busiest of 2015.
  • It ranks as the 8th busiest week of all-time with two days to go!
  • The WTD all-in IG total of $47.375 b is the 5th busiest of the year.
  • Shell’s $10b 6-part deal ranks tied with Oracle as the 6th largest of the year.
  • Apple’s $8b 7-part is the 8th largest issue of the year.
  • Host Hotels & Resorts LP increased its 10-year Senior Unsecured Notes new issue to $500mm from $400mm at the tightest side of guidance or +178.
  • AvalonBay Communities Inc., upsized its new 10-year Notes transaction to $525mm from $400mm also at the tightest side of guidance or +123.
  • The average spread compression across today’s 20 IG Corporate-only new issues was 13.2375 bps from IPTs to the launch.

The WTD and MTD Pace of IG Corporate-only New Issue Volume vs. Syndicate Forecasts

 

IG Corporate New Issuance This Week’s
Volume Forecasts
vs. CurrentWTD –  $45.125b May
Volume Forecasts
vs. Current
MTD – $46.375b
Low-End Avg. $38.21b 118.10% $124.00b 37.40%
Midpoint Avg. $39.34b 114.71% $124.50b 37.25%
High-End Avg. $40.47b 111.50% $125.00b 37.10%
The Low $30b 150.42% $110b 42.16%
The High $50b 90.25% $140b 33.12%

 

Below please find a complete synopsis of everything Syndicate and Secondary from today’s debt capital markets, including a drill down into the day’s investment grade corporate bond data as seen from the perch of Mischler Financial’s Fixed Income Syndicate and Capital Markets desk(s).Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

IG Secondary Trading

 

  • BAML’s IG Master Index was once again unchanged at +133.  +106 represents the post-Crisis low dating back to July 2007.
  • Standard & Poor’s Global Fixed Income Research was also unchanged at +176.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.3b on Tuesday versus $11.1b on Monday and $17b the previous Tuesday.
  • The 10-DMA stands at $14.8b.
  • The three most actively traded issues were led by ACT 3.80% due 3/15/2025 that saw two-way client flows account for 100% of the volume.
  • MS 3.95% due 4/23/2027 finished second with client flows representing 65% of the volume and with client selling three-times that of buying.
  • T 4.80% due 6/15/2044 placed third displaying 94% client flows and selling two-times that of buying.

New Issue Pipeline

 

Above is the opening extract from Quigley’s Corner aka “QC” Wednesday May 6 2015 edition distributed via email to clients of Mischler Financial, the investment industry’s oldest and largest minority investment bank/institutional brokerage owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter for “2015 WSL Award, Best Research/BrokerDealer,” the QC observations provide a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate bond new issuance and market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

To receive Quigley’s Corner, please contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone: 203.276.6646

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

 

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