Grexit, Brexit and Frexit-Mischler Debt Capital Markets Comment
February 9, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 02.08.17- First Grexit, Then Brexit and Now..Frexit? Mischler Debt Market Comment


Investment Grade New Issue Re-Cap

IG Primary & Secondary Market Talking Points – A Citigroup tap

Global Market Recap

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

The Critically Important French Elections

The EU: It’s All Greek to Me

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 January 25th     

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


2 IG Corporate issuers priced 5 tranches between them totaling $3.45b.  Additionally, 1 SSA issuer, BNG, priced a $2.25b 2-year for an all-in IG day total of $5.7b.

The WTD IG Corporate total is now $14.40b or 58% of this week’s syndicate midpoint average calling for $24.72b.


IG Primary & Secondary Market Talking Points – Mischler Serves as “passive” Jr. Co-Manager on Citigroup tap.


  • BP Capital Markets PLC added a fourth tranche, a $TBD 18-month FRN, to today’s earlier announced three-part 3-year tap, new 7s and 10s. 
  • The average spread from IPTs thru the launch/final pricing of today’s 5 IG Corporate-only new issues was <11.50> bps.
  • BAML’s IG Master Index tightened 1 bp to +127 vs. +128.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.21.  The “LUACOAS” wide since 2012 is +215.  +120 is the new tight.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +166 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 $16.7b on Friday versus $22.5b on Thursday and $18.9b the previous Friday.
  • The 10-DMA stands at $20.6b.


Global Market Recap


  • U.S. Treasuries – rallied into supply for the second day. Curve flatter for second day.
  • Overseas Bonds – Big rally in Europe led by the long end despite heavy supply.
  • Stocks – mixed & little changed heading into the close.
  • Overseas Stocks – Europe mixed with slightly more green. Asia closed higher.
  • Economic – Non-event in U.S. & Europe. Weaker data in Japan.
  • Currencies – USD had small losses vs. all of the Big 5.
  • Commodities – Crude oil had a small gain despite very bearish inventory data.
  • CDX IG: +1.11 to 66.65
  • CDX HY: +3.07 to 331.64
  • CDX EM: -0.18 to 226.81

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

-Tony Farren


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


IG Corporate New Issuance This Week
vs. Current
WTD – $14.40b
February 2017
vs. Current
MTD – $26.975b
Low-End Avg. $23.74b 60.66% $90.65b 29.76%
Midpoint Avg. $24.72b 58.25% $91.96b 29.33%
High-End Avg. $25.70b 56.03% $93.26b 28.92%
The Low $15b 96.00% $85b 31.74%
The High $35b 41.14% $120b 22.48%


The Critically Important French Elections


Okay so, we all understand that the first round of the French Presidential Elections are held on Sunday, April 23rd.  The most recent election polls show National Front leader Marine Le Pen ahead 26% versus 20.5% for Emmanuel Macron and 18.5% for a fast-sinking Francois Fillon whose fizzling campaign is embroiled in corruption charges. But then there is the run-off Presidential election that is held two weeks later on Sunday on May 7th.  Now, many of you may be very familiar with the concept of the run-off or second election but many are not. In the first April election it is clear that no Presidential candidate will win with the required number of votes or an absolute majority 40-45% with a winning margin of 5-15%.  As a result a run-off election is held between the two candidates with the most votes.  It’s that simple.

There is a history in France of moderate and even conservative parties capturing the liberal votes in an effort to thwart what was once a notoriously nationalistic leaning National Front founded and headed by Marine Le  Pen’s father Jean-Marie.  That is no more.  Marine re-shaped and re-branded the National Front party catapulting it into modern times making it more appealing for contemporary sensibilities while capturing its widest support in its history – thanks to an unlikely strategist named Florian Phillipot.  The first task on the docket toward reinvention of the NF was for Marine to oust her father as the party’s leader.  That was no small task for anyone let alone the daughter of the man at the top of the National Front.  He simply could not remain at the helm with his dated and nationalistic and often times offensive views on certain subjects.  Marine took over and has changed the perception of the NF in France and around the world to make it more palatable and at a critical juncture in history for France. 


What has emerged since 2009 when Marine took charge and Phillipot became the NF’s chief strategist, was to tap into France’s silent majority of working class people fed up with the bureaucracy of the European Union.  Having lived in France for five formative years from the ages of 11 thru 16 I know a bit more about French culture and society than the next person.  Make no mistake about it – the French invented the word B-U-R-E-A-U-C-R-A-C-Y.  I saw it at play during my tenure as head of syndicate at BNP Paribas before, during and after that painful merger.  I had seven reporting lines between New York, London and Paris.  It took 6 months to have ideas even considered.  “Bureaucracy” is my point.  French bureaucracy however, is the worst kind.

When I visited with my wife’s Uncle Jean who had been the long-time Police Commissioner of Lyon, France’s second largest city, and de factor gastronomic capital of the world, I sensed his frustration. Here was a man who was an active member of La Resistance during World War II and who saw society at the street level thru his long and respected career in law enforcement.  He was comparable to George Simenon’s Inspector Maigret.  He was very dedicated and hard-working guy.  He always carries an Opinel knife, eats fresh-baked baguette with cheese accompanied by the obligatory glass of Bordeaux.  The French culture wore him well and vice versa but he epitomizes today’s disgruntled, frustrated and concerned Frenchman.  He takes nothing for granted unlike the stigma associated with France that has been enjoying a quality of life for over a decade thanks to neighboring Germany.  He is distraught at the current direction and future of his country and relayed that his former “brothers in arms” the French gendarme are all equally disappointed and concerned. Does this sound familiar?

In 2002 when Le Pen senior made it to the second round of French elections, virtually all of France pooled together to oust him by showing support for Jacques Chirac.  It was more of a vote against Jean-Marie than a vote for Chirac. But today’s National Front, though conservative, is much more inclusive than people think. It would serve at this critical juncture to learn more about its reinvention since Le Pen and Phillipot took the reins. As Phillipot himself has said, “ I didn’t come into this party saying I’m going to go to war against Jean-Marie Le Pen……but he was increasingly out to provoke and his behavior became untenable.  Subsequent to Le Pen’s ouster he in turn said in a nationally broadcast interview “that he wished his daughter no longer bore his name.”

Le Pen and Phillipot took care of business. That business started in the home. They ousted Jean-Marie from his throne of leadership and created a veritable powerhouse National Front party that has been leading in all the polls in France. She is currently projected to win the April election. Meanwhile the conservative party’s candidate M. Fillon had become embroiled in a mess surrounding his having paid his wife hundreds of thousands of dollar (equivalent) over years in a position she never showed up to work for.  Once his public relations handlers attempted to manage that fiasco, it was then revealed that he did the same for his two sons.  The result? He is now running in third place.

The NF has appealed to a similar type of populist movement in France analogous to what we saw here in the U.S. It’s somewhat of a silent majority that feels it needs to restrain open support of Le Pen for fear of being ostracized, criticized and labeled.  But once again, come election day, people will cast their ballot in private. It will be between themselves and the man upstairs.  That’s when voices will once again be heard and reverberate throughout the world.

Should Le Pen becomes France’s next president it will be thanks to our rapidly changing world.  What happened here in the United States is playing out across Europe as well. We saw BREXIT first.  Be prepared for FREXIT next.  It can very likely happen and the EU, which according to many, was destined for failure from the beginning, will be focused on putting all its energies into as orderly an unwind as can be orchestrated.  There have and always will be too many borders, too many cultures, too many histories, too many languages and for that matter too many cuisines in Europe for it to function as a quasi-United States of Europe.  It’s coming so, be prepared as the world reconfigures its alliances, it defense strategies and its economies.  Change is something that NEVER comes easy to any one person let alone countries, continents and hemispheres.  Get ready. If you don’t have the financial stomach for it well, continue buying into the full trust and faith of the United States of America – it’s called BUY TREASURIES.  Yields will tumble despite the Fed’s hawkish tone that will continue when Chair Yellen speaks on February 14th.  If you are a corporate treasury/funding team operative get ready to take full advantage.  As I pointed out yesterday after a relatively long silence for me and being more focused on the Microsoft, AT&T and Apple deals that Mischler was involved in last week, black-outs are upon us and you and your companies will look brilliant when you issue debt in here.  The CT10 closed today 6 bps tighter versus yesterday’s closing yield.  That’s now 26 bps tighter in the last 8 weeks. It’s going lower…….Rates will continue to rally and rates will continue to go lower……..much lower.


As Charles de Gaulle once famously said, “Once upon a time there was an old country, wrapped up in habit and caution.  We have to transform our old France into a new country and marry it to its time.”  That time is now.  The National Front would agree that if not at this juncture in time, well, France will likely continue along the same do nothing bureaucratic path more humorously captured by the late great General Norman Schwarzkopf who said “Going to war without France is like going hunting without an accordion.”


The EU: It’s All Greek to Me


To say “Greece is back” would be a gross misrepresentation.  Greece never went away.  The disaster was always there it’s just that so many other EU issues have stolen it’s spotlight……BREXIT, immigration, French elections, etc.  Well, Greece has returned to the proscenium.  Today the IMF effectively announced that Grexit concerns are back on the table. Okay, so what do I mean by “effectively?”  Well, a senior IMF staff member said “Greece cannot grow out of its debt problem.”  Let’s go straight to the numbers here shall we?  “Greek debt will reach 175% of GDP in 3 years…….275% of GDP by 2060.”  Shall I continue?  Sure, why not?  The IMF report just out today also says “our analysis suggests that Greece’s public debt is highly unsustainable…….Even with full implementation of policies agreed under the European Stability Mechanism or ESM program, public debt and financing needs will become EXPLOSIVE!” (caps are mine!)  The National Front, to use an example, isn’t taking a “jump ship” policy approach toward the EU because of this.  The National Front foresaw this year’s and years ago and never wanted to be part of the EU to begin with. That WILL resonate with French voters in April and May elections.  The problems are literally just beginning in Europe.  National Front knows it and wants to take the precautions necessary with their nation to take more control of the French Revolution’s motto of Liberté, égalité, fraternité ……… (translated – freedom, equality and fraternity)……while it still has the chance. Trouble + Concern = Flight-to-Quality folks. You’ll be seeing that clearly illustrated very shortly.  OOPAH!!!!

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

WEEK 1/30
WEEK 1/23
WEEK 1/16
WEEK 1/09
WEEK 1/02
WEEK 12/26
New Issue Concessions <3.62> bps <7.5> bps 5.25 bps <0.87> bps 1.13b bps 3.42 bps 0.85 bps 2.25 bps N/A
Oversubscription Rates 4.25x 4.56x 2.18x 3.12x 3.29x 2.40x 2.85x 2.45x N/A
Tenors 12.83 yrs 16.65 yrs 6.40 yrs 11.60 yrs 6.67 yrs 12 yrs 7.83 yrs 6.52 yrs N/A
Tranche Sizes $744mm $850mm $690mm $1,311 yrs $845mm $1,123mm $927mm $859mm N/A
Avg. Spd. Compression
IPTs to Launch
<19.17> bps <25.40> bps <11.5> bps <19.77> bps <18.20> bps <14.69> bps <18.77> bps <15.27> bps N/A


New Issues Priced

Above is the opening extract from Quigley’s Corner aka “QC”  Wed Feb 08, 2017 edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC 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: or via phone.

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

Mischler Financial Group’s “U.S. Syndicate Closing Commentary”  is produced weekly by Mischler Financial Group. No part of this document may be reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   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.

Quigley’s Corner 02.08.17- First Grexit, Then Brexit and Now..Frexit? Mischler Debt Market Comment