Quigley’s Corner 06.06.18 – 17 Issuers, 29 Tranches $11b in New Issuance; Mischler Financial Tribute to D-Day
Investment Grade New Issue Re-Cap – WTD IG & SSA Issuance Matches 2018 High as 54 Tranches Price in 3 Sessions!
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates For This Week and June
Remembering D-Day
Syndicate IG Corporate-only Volume Estimates For This Week and June
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
Global Market Recap
2018 Lipper Report/Fund Flows – Week ending May 30th
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
Today the IG dollar DCM continued rolling along hosting 8 issuers across 14 tranches totaling $7.20b. The SSA space added KfW’s $4b 2-year Global Notes new issue bringing the all-in IG day totals to 9 issuers, 15 tranches and $11.20b. Week to date we have now priced 54 tranches matching the 2018 weekly high after only three sessions and including 2 IG rated preferreds and 2 SSA issues.
Here’s a look at the WTD and MTD IG Corporate new issue volume as measured against syndicate desk estimates:
- The IG Corporate WTD total is 132.53% of this week’s syndicate midpoint average forecast or $33.45b vs. $25.24b.
- MTD we’ve priced 37.65% of the syndicate forecast for April IG Corporate new issuance or $34.055b vs. $90.44b.
- There are now 14 issuers in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points
- NiSource Inc. upsized today’s 144a/REGS $1,000 par PerpNC5 transaction to $400mm from $350mm at the launch and at the tightest side of guidance.
- The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 14 IG Corporate and Preferred-only new issues was <14.07> bps.
- BAML’s IG Master Index widened 1 bp to +121 vs. +120. (It’s post-Crisis low is +90 set on 2/01).
- Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.15 vs. +1.14 thereby tying its high. (0.85 is its post-Crisis low set on 1/30).
- Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +153 vs. +152. (+125 represents its post-Crisis low set 2/02).
- Investment grade corporate bond trading posted a final Trace count of $18.3b on Tuesday versus $16b on Wednesday and $21.9b the previous Tuesday.
- The 10-DMA stands at $17.4b.
Syndicate IG Corporate-only Volume Estimates For This Week and June
| IG Corporate New Issuance | This Week 6/04-6/08 |
vs. Current WTD – $33.45mm |
June 2018 | vs. Current MTD – $34.055b |
| Low-End Avg. | $24.44b | 136.87% | $91.24b | 37.32% |
| Midpoint Avg. | $25.24b | 132.53% | $90.44b | 37.65% |
| High-End Avg. | $26.04b | 128.46% | $89.64b | 37.99% |
| The High | $20b | 167.25% | $75b | 45.41% |
| The Low | $35b | 95.57% | $110b | 30.96% |
Remembering D-Day and the Greatest Generation: 74 years Ago Today
Today marks the 74th anniversary of Operation Overlord, the Allied invasion of Normandy, most commonly known as D-Day. An epic multinational amphibious and airborne operation, D-Day forged partnerships and reinforced trans-Atlantic bonds that remain strong to this day. U.S. service members from 20 units in Europe and the United States have commemorated the D-Day anniversary over the past week in almost 40 locations throughout the Normandy region.
Never forget!
Have a great evening!
Ron Quigley, Managing Director & Head of Fixed Income Syndicate
*Normandy – American Cemetery
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 Tuesday’s session followed by the averages over the prior six weeks:
| KEY IG CORPORATE NEW ISSUE DRIVERS |
MON. 6/04 |
TUES. 6/05 |
AVERAGES WEEK 5/28 |
AVERAGES WEEK 5/21 |
AVERAGES WEEK 5/14 |
AVERAGES WEEK 5/07 |
AVERAGES WEEK 4/30 |
AVERAGES WEEK 4/23 |
| New Issue Concessions | 6.33 bps | 6.61 bps | 9.00 bps | 9.67 bps | 4.59 bps | 4.10 bps | 5.92 bps | 3.63 bps |
| Oversubscription Rates | 2.77x | 2.77x | 2.73x | 2.93x | 2.96x | 2.70x | 2.16x | 2.53x |
| Tenors | 7.92 bps | 10.40 bps | 9.69 yrs | 7.70 yrs | 10.18 yrs | 7.04 yrs | 13.17 yrs | 9.19 yrs |
| Tranche Sizes | $622mm | $741mm | $467mm | $952mm | $842mm | $805mm | $630mm | $786mm |
| Avg. Spd. Compression IPTs to Launch |
<13.38> bps | <13.51> bps | <8.23> bps | <18.71> yrs | <15.12> bps | <12.91> bps | <12.54> bps | <13.85> 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.
IG
| Issuer | Ratings | Coupon | Maturity | Size | IPTs | GUIDANCE | LAUNCH | PRICED | LEADS |
| Alliant Energy Finance | Baa1/A- | 3.75% | 6/15/2023 | 400 | +115a | +100a (+/-5) | +95 | +95 | BAML/JPM/MIZ |
| Alliant Energy Finance | Baa1/A- | 4.25% | 6/15/2028 | 300 | +145a | +135a (+/-5) | +130 | +130 | BAML/JPM/MIZ |
| Compass Bank | Baa2/BBB+ | FRN | 6/11/2021 | 450 | 3mL+equiv | 3mL+73 the # | 3mL+73 | 3mL+73 | BBVA/CITI/GS/MS |
| Compass Bank | Baa2/BBB+ | 3.50% | 6/11/2021 | 700 | +110a | +95 the # | +95 | +95 | BBVA/CITI/GS/MS |
| Credit Suisse Group AG | BBB+/A- | FRN | 6NC5 6/12/2024 |
750 | 3mL+equiv | N/A | 3mL+124 | 3mL+124 | CS-sole |
| Credit Suisse Group AG | BBB+/A- | 4.207% | 6NC5 6/12/2024 |
1,250 | +150a | N/A | +140 | +140 Reset: 3mL+124 |
CS-sole |
| Edwards Life Sciences | Baa2/BBB- | 4.30% | 6/15/2028 | 600 | +150-155/+152.5a | +140a (+/-5) | +135 | +135 | BAML/JPM (a) + 4 (p) |
| Jackson Na’l. Life Glbl. Fdg. | A1/AA- | FRN | 6/11/2021 | 500 | 3mL+equiv | 3mL+48-50 | 3mL+48 | 3mL+48 | BAML/DB/GS/JPM |
| Jackson Na’l. Life Glbl. Fdg. | A1/AA- | 3.30% | 6/11/2021 | 300 | +80-85/+82.5a | +70-72 | +70 | +70 | BAML/DB/GS/JPM |
| Jackson Na’l. Life Glbl. Fdg. | A1/AA- | 3.875% | 6/11/2025 | 400 | +110a | +98-100 | +98 | +98 | BAML/DB/GS/JPM |
| KeyBank NA/Cleveland, OH | A3/A- | 3.35% | 6/15/2021 | 500 | +85a | +72a (+/-2) | +70 | +70 | GS/JPM/KEY/MS |
| NiSource Inc. | Baa2/BBB+ | 3.65% | 6/15/2023 | 350 | +105-110/+107.5a | +90a (+/-2.5) | +87.5 | +87.5 | CS/JPM/MS/MUFG |
| NiSource Inc. | BBB-/BB+ | 5.65% | PerpNC5 | 400 | 5.875%a | 5.70%a (+/-5) | 5.65% | $1000 par | CS/JPM/MS/MUFG |
| Western Union Co. | Baa2/BBB+ | 4.25% | 6/09/2023 | 300 | +145a | N/A | +145 | +145 | BAML/BARC |
SSA
| Issuer | Ratings | Coupon | Maturity | Size | IPTs | GUIDANCE | LAUNCH | PRICED | LEADS |
| KfW | Aaa/AAA | 2.75% | 7/15/2020 | 4,000 | MS<2>a | MS<2>a | MS<3> | +23.8 | BARC/HSBC/RBC |
Indexes and New Issue Volume
Countable IG volume includes maturities of 18-months and out and IG-rated Preferreds.
*Denotes new high or tight.
| Index | Open | Current | Change | |||
| IG30 | 64.169 | 63.742 | <0.427> | |||
| VIX | 12.40 | 11.64 | <0.76> | |||
| CT10 | 2.929% | 2.973% | 0.044 | |||
| S&P | 2,749 | 2,772 | 23 | |||
| DOW | 24,800 | 25,146 | 346 | |||
| Nasdaq | 7,638 | *7,689 | 51 | |||
| OIL | 65.52 | 65.01 | <0.51> | |||
| GOLD | 1,296 | 1,296 | 0 | |||
| USD | IG Corporates | USD | Total (IG + SSA) | |||
| DAY: | $7.20 bn | DAY: | $11.20 bn | |||
| WTD: | $33.45 bn | WTD: | $37.95 bn | |||
| MTD: | $34.055 bn | MTD: | $38.555 bn | |||
| YTD: | $618.251 bn | YTD: | $772.816 bn | |||
Global Market Recap
- USTs were sold; the yield curve steepened – T2 +2, T5 +4, T10 +4, T30 +4.
- Overseas Bonds: EU, Gilts & Peripherals sold. Asia flat.
- SOFR: -0.05 to 1.75 vs. 1.80.
- 3mth Libor: +0.006 to 2.319 vs. 2.313%.
- Overseas Stocks: Asia up Europe mostly red except the CAC.
- Currencies: DXY Index -0.241 to 93.635 vs. 93.876.
- CDX HY: -3.363 to 338.194 vs. 341.557.
- CDX EM: -0.287 to 171.909 vs. 172.196.
*Index levels are as of 5:00PM ET today.
2018 Lipper Report/Fund Flows – Week ending May 30th
- For the week ended May 30th, Lipper U.S. Fund Flows reported a net inflow of $848.978m into Corporate Investment Grade Funds (2018 YTD net inflow of $43.822b) and a net outflow of $17.869m from High Yield Funds (2018 YTD net outflow of $15.138b).
- Over the same period, Lipper reported a net inflow of $274.880m from Loan Participation Funds (2018 YTD net inflow of $7.156b).
- Emerging Market debt funds reported a net inflow of $27.322m (2018 YTD inflow of $1.990b).
IG Credit Spreads by Rating
The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:
Spreads across the four IG asset classes are 24.50 bps wider versus their new post-Crisis lows
*Denotes new post-Crisis low
| ASSET CLASS | 6/05 | 6/04 | 6/01 | 5/31 | 5/30 | 5/29 | 5/28 | 5/25 | 5/24 | 5/23 | 1-Day Change | 10-Day Trend | PC low |
| IG Avg. | 121 | 120 | 121 | 122 | 120 | 120 | 116 | 116 | 115 | 115 | +1 | +6 | 90 (2/01/18) |
| “AAA” | 62 | 62 | 62 | 63 | 63 | 63 | 60 | 60 | 60 | 60 | 0 | +2 | 48(2/02/18) |
| “AA” | 72 | 71 | 71 | 72 | 70 | 69 | 67 | 67 | 67 | 67 | +1 | +5 | 51 (2/02/18) |
| “A” | 97 | 96 | 97 | 98 | 97 | 96 | 92 | 92 | 92 | 92 | +1 | +5 | 71 (2/01/18) |
| “BBB” | 152 | 152 | 153 | 154 | 152 | 151 | 147 | 147 | 146 | 146 | 0 | +6 | 115 (2/02/18) |
| IG vs. HY | 229 | 229 | 234 | 241 | 244 | 255 | 237 | 237 | 234 | 233 | 0 | <5> | 222(5/15/18) |
IG Credit Spreads by Industry
…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:
Spreads across the major industry sectors are an average 31.42 bps wider versus their post-Crisis lows!
*Denotes new post-Crisis low!
| INDUSTRY | 6/05 | 6/04 | 6/01 | 5/31 | 5/30 | 5/29 | 5/28 | 5/25 | 5/24 | 5/23 | 1-Day Change | 10-Day Trend | PC low |
| Automotive | 106 | 105 | 106 | 107 | 106 | 104 | 102 | 102 | 102 | 102 | +1 | +4 | 67 |
| Banking | 109 | 109 | 110 | 111 | 110 | 109 | 103 | 103 | 102 | 102 | 0 | +7 | 75(2/02/18) |
| Basic Industry | 154 | 153 | 154 | 155 | 153 | 154 | 148 | 148 | 147 | 147 | +1 | +7 | 110 (2/02/2018) |
| Cap Goods | 99 | 98 | 99 | 99 | 99 | 98 | 96 | 96 | 95 | 95 | +1 | +4 | 75(1/12/18) |
| Cons. Prod. | 109 | 108 | 110 | 110 | 108 | 107 | 105 | 105 | 105 | 105 | +1 | +4 | 78(2/01/18) |
| Energy | 154 | 152 | 153 | 154 | 150 | 150 | 146 | 146 | 145 | 145 | +2 | +9 | 115(2/02/18) |
| Financials | 124 | 124 | 124 | 125 | 122 | 121 | 119 | 119 | 119 | 118 | 0 | +6 | 97 |
| Healthcare | 105 | 105 | 105 | 106 | 104 | 103 | 102 | 102 | 101 | 101 | 0 | +4 | 77 (2/02/2018) |
| Industrials | 124 | 123 | 124 | 125 | 123 | 122 | 119 | 119 | 119 | 119 | +1 | +5 | 93 (2/02/18) |
| Insurance | 130 | 130 | 130 | 132 | 130 | 130 | 127 | 127 | 126 | 125 | 0 | +5 | 100 (2/02/18) |
| Leisure | 129 | 127 | 128 | 127 | 126 | 125 | 125 | 125 | 125 | 123 | +2 | +6 | 98 (2/01/18) |
| Media | 156 | 156 | 157 | 157 | 155 | 154 | 150 | 150 | 150 | 148 | 0 | +8 | 113 |
| Real Estate | 129 | 129 | 129 | 130 | 129 | 129 | 128 | 128 | 127 | 127 | 0 | +2 | 100 (2/01/18) |
| Retail | 111 | 111 | 112 | 112 | 112 | 111 | 109 | 109 | 108 | 108 | 0 | +3 | 82(2/02/18) |
| Services | 111 | 111 | 112 | 112 | 110 | 109 | 108 | 108 | 107 | 107 | 0 | +4 | 94 (1/31/18) |
| Technology | 90 | 89 | 91 | 91 | 90 | 90 | 86 | 86 | 86 | 86 | +1 | +4 | 71(2/02/18) |
| Telecom | 159 | 159 | 160 | 162 | 161 | 160 | 155 | 155 | 154 | 153 | 0 | +6 | 122 |
| Transportation | 128 | 124 | 127 | 127 | 125 | 124 | 122 | 122 | 121 | 121 | +4 | +7 | 91(2/02/2018) |
| Utility | 124 | 127 | 124 | 125 | 123 | 123 | 119 | 119 | 119 | 119 | <3> | +5 | 96(2/02/2018) |
New Issue Pipeline
Above is the opening extract from Quigley’s Corner aka “QC” Wednesday, June 6, 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.
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.
