Quigley’s Corner 06.14.18 – GM Drives Debt Capital Markets Deal Deal; In Step With Vets
Investment Grade New Issue Re-Cap – Push Me, Pull You – Our Inextricably Global Linked World Economy
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates For This Week and June
General Motors Financial Co. Inc. $1bn 5-year Senior Notes due 6/19/2023
General Motors Financial Co. Inc. Deal Dashboard
General Motors Diversity & Inclusion Starts From the Top Down
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 June 6th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
New Issue Pipeline
M&A Pipeline Highlights – $596.02 Billion in Cumulative Enterprise Value
Economic Data Releases
Rates Trading Lab
UST Resistance/Support Table
Tomorrow’s Calendar
ECB President Mario Draghi announced that the European monetary body voted to stop its massive bond-buying program though assuring markets that rates will remain unchanged thru the summer of 2019. The bond purchase program will end in December which caused European equity markets to surge 1.10% on average as the dollar gained against the single currency. Draghi also “warned” against U.S. trade tariffs. Draghi was stern in declaring that trade negotiations have to take place within the “existing multilateral framework.” He pointed out that the framework in question was developed post World War II creating prosperity throughout Europe that could be undermined by trade wars. That’s rather ominous coming from the ECB head. Considering the new world order’s multiple “bad players” I’d be more reasonable on trade negotiations and much more concerned about the defense and protection of my continent and what surly customers might decide to turn off their gas pipelines to Eastern Europe in the middle of February. It’s been done before and nothing should surprise anyone anymore.
With the days of easing money coming to end, Emerging Markets currencies are set up to take a hit much like Argentina’s peso did today plunging 6.1% to $27.70 per dollar, a record low.
Today the IG dollar DCM continued rocking and rolling following its FOMC hiatus yesterday hosting 10 issuers across 18 tranches totaling $12.35b. The SSA space was quiet.
Today’s largest deal was UnitedHealth Group’s $4b 5-part but the Deal-of-the-Day belongs to General Motors Financial Co. Inc. You know why right? That’s right………because Mischler Financial, the nation’s oldest SDVBE was involved.
But before we get to that deal drill down and GM D&I segment, let’s first recap the day..
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 120.10% of this week’s syndicate midpoint average forecast or $24.62b vs. $20.50b.
- MTD we’ve priced 69.20% of the syndicate forecast for June IG Corporate new issuance or $62.58b vs. $90.44b.
- There are now 18 issuers in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points
- Deutsche Telkom International Finance BV upsized its 144a/REGS two-part Senior Notes new issue to $1.75b from $1.5b at the launch.
- The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 16 IG Corporate-only new issues – that displayed spread compression – was <14.84> bps.
- BAML’s IG Master Index tightened 1 bp to +121 vs. +122. (It’s post-Crisis low is +90 set on 2/01).
- Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.15. (1.16 represents a new high; 0.85 is its post-Crisis low set on 1/30).
- Standard & Poor’s Investment Grade Composite Spread was unchanged at +153. (+125 represents its post-Crisis low set 2/02).
- Investment grade corporate bond trading posted a final Trace count of $20.4b on Wednesday versus $19.6bon Tuesday and $19.2b the previous Wednesday.
- The 10-DMA stands at $17.9b.
Syndicate IG Corporate-only Volume Estimates For This Week and June
| IG Corporate New Issuance |
This Week
6/11-6/15 |
vs. Current
WTD – $24.62b |
June 2018 |
vs. Current
MTD – $62.58b |
| Low-End Avg. | $19.30b | 127.56% | $91.24b | 68.59% |
| Midpoint Avg. | $20.50b | 120.10% | $90.44b | 69.20% |
| High-End Avg. | $21.70b | 113.46% | $89.64b | 69.81% |
| The High | $12b | 205.17% | $75b | 83.44% |
| The Low | $30b | 82.07% | $110b | 56.89% |
General Motors Financial Co. Inc. $1bn 5-year Senior Notes due 6/19/2023
Mischler Financial is very happy to announce that it was invited to serve as an active 0.50% active Co-Manager on today’s $1b 5-year Senior Notes new issue for General Motors Financial Co. Inc. We appreciate the opportunity to serve GM.
In terms of relative value, I looked to the outstanding GM Financial 3.70% due 5/09/2023 that was G+133 pre-announcement pegging NIC on today’s new print at T+137.5 as 4.5 bps.
Use of proceeds: added to the general funds of GM Financial and will be available for general corporate purposes.
General Motors Financial Co. Inc. Deal Dashboard
| GM Issue | RATING | IPTs | GUIDANCE | LAUNCH | PRICED |
Spread
Compression |
NIC
(bps) |
Trading at
the Break |
+/-
(bps) |
| 5yr FXD | Baa3/BBB | +155a | +140a (+/-2.5) | +137.5 | +137.5 | <17.50> | 4.5 | 136/134 | <1.5> |
………and here’s a snap shot of today’s final General Motors Financial Co. Inc. book size and oversubscription rate – the measure of investor demand:
Today’s General Motors Financial Co. Inc. final order book finished at $3.10b making the $1b 5-year Senior Notes transaction 3.1-times oversubscribed. “At the top” or at guidance, the book was $4.0b. Clearly a highly successful transaction on a day in which 10 issuers tapped the IG dollar DCM pricing 18 tranches between them!
Our Mischler five-star salute goes out to Team General Motors Treasury/Funding on this – Flag Day – especially Anne. I enjoyed speaking with you today and appreciated your accessibility and feedback! But I can’t stop there………..
Thank you as always to team Barclays Syndicate especially Ray Zeek. It’s always a great pleasure working with any members of the Barclays A-Team. Ray – I appreciated your thoroughness, updates, data exchanges and working with me on all the fine details for this evening’s “QC” GM relative value drill-down. Thank you pal!
Last but NEVER least hats off to the best darn middle markets distribution network out there. You’re all great and I/we appreciate your loyalty and patronage on each and every deal.
| GM Issue | Tranche Size |
Book
at-the-Top |
Final Book
Size |
Bid-to-Cover
Rate |
| 5yr FXD | 1bn | $4.0b | $3.1b | 3.10x |
Final Pricing – General Motors Financial Co. Inc.
GM $1b 4.15% due 6/19/2023 @$99.852 to yield 4.183% or T+137.5 MWC +25
General Motors Diversity & Inclusion Starts From the Top Down
We know General Motors embraces a diverse work force. They always have. The difficulty comes in sustaining such great programs and the challenge is growing and expanding them. These mandates begin from the top down and that means from the office of Chairman and CEO, Mary Barra. In fact, GM’s new Chief Financial Officer Dhivya Suryadevara starts in her new role on September 1st. Now THAT is what I call a value-added diversity and inclusion proposition literally starting from the top down. Bravo General Motors!
GM celebrates the unique perspectives it gains from its global employees. Its workforce provides a wide-array of diverse backgrounds and experiences and it’s their contributions that place GM at the forefront of innovation. By embracing a diversity of thought, GM is able to develop mobility solutions that meet the needs of a rapidly changing global society and move humanity into the future.
To learn more about General Motors D&I please click on this link for GM’s 2017 Diversity and Inclusion Report:
More to the core of our shared ethos here at Mischler Financial Group, Inc., our great nation’s oldest Service Disabled Veteran broker dealer, are some more specifics about the wonderful initiatives taken by General Motors to help our men and women in uniform – those that are prepared to make the ultimate sacrifice for us all.
Below please find a synopsis of today’s DCM data as curated by the Investment Grade Syndicate Desk at Mischler Financial Group. Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate
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:
|
KEY IG CORPORATE
NEW ISSUE DRIVERS |
MON.
6/11 |
TUES.
6/12 |
WED.
6/13 |
AVERAGES
WEEK 6/04 |
AVERAGES
WEEK 5/28 |
AVERAGES
WEEK 5/21 |
AVERAGES
WEEK 5/14 |
AVERAGES
WEEK 5/07 |
AVERAGES
WEEK 4/30 |
| New Issue Concessions | 3.40 bps | 5.60 bps | N/A | 6.31 bps | 9.00 bps | 9.67 bps | 4.59 bps | 4.10 bps | 5.92 bps |
| Oversubscription Rates | 2.74x | 2.44x | N/A | 2.70x | 2.73x | 2.93x | 2.96x | 2.70x | 2.16x |
| Tenors | 9.77 yrs | 8.52 yrs | N/A | 9.25 yrs | 9.69 yrs | 7.70 yrs | 10.18 yrs | 7.04 yrs | 13.17 yrs |
| Tranche Sizes | $579mm | $1,080mm | N/A | $623mm | $467mm | $952mm | $842mm | $805mm | $630mm |
|
Avg. Spd. Compression
IPTs to Launch |
<12.11> bps | <13.90> bps | N/A | <13.80> bps | <8.23> bps | <18.71> yrs | <15.12> bps | <12.91> bps | <12.54> bps |
Above is the opening extract from Quigley’s Corner aka “QC” Thursday, June 14 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.
