Quigley’s Corner 11.17.17 Investment Grade Debt Issuance Weekend Before Thanksgiving Edition
Investment Grade US Corporate Debt New Issue Re-Cap
Today’s IG Primary & Secondary Market Talking Points
Global Market Recap
The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week
Syndicate IG Corporate-only Volume Estimates For This Week
NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches
Rates Trading Lab
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 Nov 15th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
New Issue Pipeline
M&A Pipeline Highlights
Economic Data Releases
The “QC” Geopolitical Risk Monitor
Investment Grade New Issue Re-Cap
Today the IG dollar DCM hosted 3 issuers across 3 tranches totaling $1.485b. The SSA space was quiet.
Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate desk estimates:
- The IG Corporate WTD total is 101.89% of this week’s syndicate midpoint average forecast or $28.775b vs. $28.24b.
- MTD we’ve priced 87.21% of the syndicate forecast for October IG Corporate new issuance or $84.054b vs. $96.38b.
- There are now 4 issuers in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points
- The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 1 IG Corporate-only (Non $25 par) new issue was <20.00> bps.
- Including today’s Southern Company $25 par Jr. Sub Notes the average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 2 IG Corporate-only new issues that displayed price evolution was <13.125> bps.
- BAML’s IG Master Index tightened 1 bp to +107 vs. to +108.
- Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.02 from 1.03.
- Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +148 from +150. The +140 reached on July 30th 2014 represents the post-Crisis low.
- Investment grade corporate bond trading posted a final Trace count of $17.4b on Thursday versus $17.2b on Wednesday and $17b the previous Thursday.
- The 10-DMA stands at $16.4b.
Syndicate IG Corporate-only Volume Estimates For This Week and October
| IG Corporate New Issuance | This Week 11/13-11/17 |
vs. Current WTD – $28.775b |
November 2017 | vs. Current MTD – $84.054b |
| Low-End Avg. | $27.04b | 106.42% | $95.28b | 88.22% |
| Midpoint Avg. | $28.24b | 101.89% | $96.38b | 87.21% |
| High-End Avg. | $29.44b | 97.74% | $97.48b | 86.23% |
| The Low | $20b | 143.87% | $75b | 1112.07% |
| The High | $40b | 71.94% | $130b | 664.66 |
Global Market Recap
- U.S. Treasuries – Same old story with the 30yr better bid & the 2yr in the red.
- Overseas Bonds – JGB’s were better bid. Europe was unchanged to better bid.
- 3mth Libor – Set at 1.44067% the highest since December 2008.
- U.S. Stocks – Could not build on yesterday’s big rally.
- Overseas Stocks – Shenzhen was hit hard. Nikkei higher. Europe more red than green.
- U.S. Economic – The housing data was very good. KC Manufacturing down.
- Overseas Economic – Not a factor today.
- Currencies – USD traded poorly vs. the Yen and also lost ground vs. the Euro & Pound.
- Commodities – CRB, crude oil, gold, etc., took advantage of the weaker USD & rallied.
- CDX IG: +0.06 to 55.05
- CDX HY: +0.36 to 325.24
- CDX EM: -2.41 to 184.16
*CDX levels are as of 3:30PM ET today.
-Tony Farren
The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week
I am happy to announce that the “QC” once again received 100% unanimous participation from all 25 syndicate desks surveyed for today’s “Best & Brightest” edition! Thank you to all of them. 21 of today’s respondents are in the top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting 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 81.33% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.
*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.
As always “thank you” to all the syndicate desks that participated in today’s survey. I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016 !!
Below is the opening segue to our weekly canvass of top fixed income syndicate desks..
“Good morning and TGIF Ahead of Thanksgiving week! I thought I’d start a bit early today as next week should, for all intents and purposes, be a two-day week..
Entering this morning’s Friday session –
- The IG Corporate WTD total stands at $28.775b. We priced $535mm more than this week’s average midpoint estimate of $28.24b or 101.89%.
- MTD we priced 87.21% of the syndicate projection for November IG Corporates or $84.054b vs. $96.38b.
- Entering today’s session, the YTD IG Corporate-only volume is $1,271.993b vs. $1,226.792b on November 10th, 2016 or $45.201b (3.68%) more than a year ago.
- The all-in or IG Corporate plus SSA YTD volume is $1,579.184b vs. $1,557.776b on November 10th, 2016 or $21.408b (1.37%) more than the year ago total.
Entering this morning’s session, here are the five key primary market driver averages for the 49 IG Corporate-only deals that priced this week.
o NICS: 6.56 bps
o Oversubscription Rates: 3.00x
o Tenors: 10.44 years
o Tranche Sizes: $553mm
o Spread Compression from IPTs to the Launch: <17.42> bps
Here’s how this week’s critical primary market data compares against last week’s numbers entering this morning’s session:
- Week on week, average NICs tightened by 1.32 bps to an average 6.76 bps vs.7.88 bps across this week’s 50 IG Corporate-only new issues that had relative value.
- Over subscription or bid-to-cover rates, the measure of demand, increased by 0.66x to an average 3.00x vs. 2.34x.
- Average tenors decreased by 0.02 years to an average 10.44 years vs. 10.46 years.
- Tranche sizes decreased by $207mm to $553mm vs. $760mm.
- Spread compression from IPTs to the launch/final pricing of this week’s IG Corporate-only new issues tightened by 3.48 bps to <17.42> bps vs. <13.94> bps.
- Standard and Poor’s Investment Grade Composite Spreads widened 1 bps to +148 vs. +147.
- Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 1 bps to 1.02 vs. 1.01 week-on-week.
- Week-on-week, BAML’s IG Master Index widened 2 bps to +107 vs. +105.
- Spreads across the four IG asset classes widened 1.50 bps to 8.25 bps vs. 6.75 bps as measured against their post-Crisis lows.
- The 19 major industry sectors also widened 1.37 bps to 10.58 bps vs. 9.21 bps also as measured against their post-Crisis lows.
- For the week ended November 15th, Lipper U.S. Fund Flows reported an inflow of $2.407b into Corporate Investment Grade Funds (2017 YTD net inflow of $111.988b) and a net outflow of $4.442b from High Yield Funds (2017 YTD net outflow of $12.951b).
- Taking a look at the secondary trading performance of this week’s 52 IG Corporate and 2 SSA new issues, of the 54 deals that printed, 36 tightened versus NIP for a 66.75% improvement rate, 15 widened (27.75%) and 3 were flat 5.50%).
Entering today’s Friday session here’s how much we issued this week:
- IG Corps: $28.775b
- All-in IG (Corps + SSA): $84.054b
And now it’s time for today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”
Thank you in advance for your time and contribution!
In this season of Thanksgiving I have many things to be grateful for and one of them are wonderful clients like yourself. Thank you for your friendship and participation here each week and on deal day. Wishing you and your family a great weekend and a very Happy Thanksgiving! -Ron”
The “Best and the Brightest” in Their Own Words
Above is the opening extract from Quigley’s Corner aka “QC” Friday Nov 17 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 is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.
To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646
*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 daily 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.
