Quigley’s Corner 04.16.18: Bank Earnings Bolster Bond Issuance; Citi &JPM Float $6.5b

Investment Grade Corporate Bond New Issue Re-Cap
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates For This Week and March
Global Market Recap
The “QC” Geopolitical Risk Monitor
NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches
New Issues Priced
Indexes and New Issue Volume
2018 Lipper Report/Fund Flows – Week ending April 11th

IG Credit Spreads by Rating
IG Credit Spreads by Industry
New Issue Pipeline
M&A Pipeline
Economic Data Releases
Rates Trading Lab


Investment Grade New Issue Re-Cap – Citi & JPM Ride Strong Earnings to Print $6.5b

Today the IG dollar DCM hosted issuers across 12 tranches totalling $12.05b.  Investors bought on earnings today with both Citigroup and J.P. Morgan Chase & Co. leading the way.  The two six-pack banks represented $6.50b or 54% of today’s issuance on the heels of last Friday’s earnings beats. Citigroup topped estimates posting $1.68 EPS vs. $1.61 forecasts. JPM delivered $2.37 vs. $2.28. The SSA space was quiet.

Here’s a look at the WTD and MTD IG Corporate new issue volume as measured against syndicate desk estimates:

  • MTD we’ve priced 51.92% of the syndicate forecast for February IG Corporate new issuance or $47.454b vs. $91.40b.
  • There are now 19 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 12 IG Corporate-only new issue was <18.92> bps.
  • BAML’s IG Master Index tightened 1 bp to +111 vs. +112. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.  (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +142 vs. +141. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $15.5b on Friday versus $17.3b on Thursday and $13.8b the previous Friday.
  • The 10-DMA stands at $17b.


Syndicate IG Corporate-only Volume Estimates for April 

IG Corporate New Issuance April 2018 vs. Current
MTD – $47.454b
Low-End Avg. $90.60b 52.38%
Midpoint Avg. $91.40b 51.92%
High-End Avg. $92.20b 51.47%
The High $80b 59.32%
The Low $110b 43.14%


Global Market Recap

  • U.S. Treasuries – Closed red except the 30yr. Nice bounce back during NY trading hours.
  • Overseas Bonds – JGB’s, Bunds and Gilts all lost ground.
  • SOFR – Set at 1.72%.
  • 3mth Libor – Set at the highest yield since November 2008 (2.35509%).
  • Stocks – Strong gains heading into the close.
  • Overseas Stocks – Nikkei up. China and Hong Kong hit. Europe more red than green.
  • Economic – Best reading for retail sales in the last 4 months.
  • Overseas Economic – German wholesale price index was tame.
  • Currencies – USD was weaker vs. all of the Big 5.
  • Commodities – Energy struggled today after rallying last week.
  • CDX IG: -1.89 to 59.45
  • CDX HY: -7.84 to 331.95
  • CDX EM: -0.62 to 138.91
  • VIX: -0.65 to 16.76

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

-Tony Farren


Below please find a synopsis of the day’s primary investment grade corporate bond market issuance activity, along with the full view of the debt capital markets from the perch of Mischler Financial Group’s Fixed Income Syndicate desk. Have a great evening!
Ron Quigley, Managing Director

New Issues Priced

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Abu Dhabi Nat’l. Energy Co. A3/A 4.375% 4/23/2025 750 +185a +165a (+/-5) +160 +160 CITI/HSBC/FRAB/ING/MIZ
Abu Dhabi Nat’l. Energy Co. A3/A 4.875% 4/23/2030 1,000 +240a +210a (+/-5) +205 +205 CITI/HSBC/FRAB/ING/MIZ
Citigroup Inc. Baa1/A 4.075% 11nc10 F-t-F
2,000 +140a +125-128 +125 +125
Delta Air Lines Inc. Baa3/BBB- 3.40% 4/19/2021 600 +115a +95a (+/-5) +90 +90 BNPP/CS/DB/FITB/MS/WFS(a)
+11 (p)
Delta Air Lines Inc. Baa3/BBB- 3.80% 4/19/2023 500 +140a +120a (+/-5) +115 +115 BNPP/CS/DB/FITB/MS/WFS(a)
+11 (p)
Delta Air Lines Inc. Baa3/BBB- 4.375% 4/19/2028 500 +170a +160a (+/-5) +155 +155 BNPP/CS/DB/FITB/MS/WFS(a)
+11 (p)
Hanwha Life Insurance A3/A- 4.70% 30nc5
1,000 5.00%a 4.75%a (+/-5) 4.70% $100.00
then +300
J.P. Morgan Chase & Co. A3/A+ FRN 6nc5
500 3mL+equiv 3mL+equiv 3mL+73 3mL+73 JPM-sole
J.P. Morgan Chase & Co. A3/A+ 3.559% 6nc5
1,750 +95a +90a (+/-2) +88 +88 JPM-sole
J.P. Morgan Chase & Co. A3/A+ 4.005% 11nc10
2,250 +125a +120a (+/-2) +118 +118 JPM-sole
United Overseas Bank Aa1/AA- FRN 4/23/2021 500 3mL+equiv 3mL+equiv 3mL+48 3mL+48 CITI/CS/HSBC/JPM/UOB
United Overseas Bank Aa1/AA- 3.20% 4/23/2021 700 REV. IPTS: +85a
+72-75 +72 +72 CITI/CS/HSBC/JPM/UOB


…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

WEEK 4/09
WEEK 4/02
WEEK 3/26
WEEK 3/19
WEEK 3/12
WEEK 3/05
New Issue Concessions 10.80 bps 2.60 bps N/A 8.00 bps N/A 7.13 bps 0.57 bps 8.18 bps 15.80 bps 9.16 bps 5.05 bps
Oversubscription Rates 3.78x 2.13x N/A N/A N/A 3.10x 4.07x 2.53x 2.86x 2.16x 2.88x
Tenors 9.63 yrs 3.80 yrs N/A 10.00 yrs N/A 7.57 yrs 10.55 yrs 13.15 yrs 11.82 yrs. 9.49 yrs 10.43 yrs
Tranche Sizes $679mm $900mm N/A $600mm N/A $752mm $812mm $488mm $784mm $568mm $1,559mm
Avg. Spd. Compression
IPTs to Launch
<17.86> bps <14.70> bps N/A <15.00> bps N/A <16.42> bps <21.41> bps <12.41> bps <13.78> bps <7.92> bps <15.63> bps


Above is the opening extract from Quigley’s Corner aka “QC”  Monday April 16 2018 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.

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