Quigley’s Corner Veterans Day 2018 Edition: Digging In For DowDupont Deal

ALL POINTS BULLETIN – Calling All “QC” Readers: EEI Conference NOV 11-13 
An important Veteran’s Day Announcement and Thank You!

Investment Grade New Issue Re-Cap – “QC” Q&A

Today’s IG Primary & Secondary Market Talking Points

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

The Best and the Brightest” IG Fixed Income Syndicate Forecasts and Sound Bites for Next Week

The “QC” Weekly Data Download

The “Best and the Brightest” in Their Own Words

Syndicate IG Corporate-only Volume Estimates for Next Week

The “QC” Geopolitical Risk Monitor

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Global Market Recap

2018 Lipper Report/Fund Flows – Week ending November 7th   

IG Credit Spreads by Rating

IG Credit Spreads by Industry

IG New Issue Pipeline: Can You Say, “DowDuPont” 5x Fast? You’ll need to next week!

IG M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Below is the opening extract from Quigley’s Corner aka “QC” Friday, November 09, 2018  edition and distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group. One of three distinctive market comment pieces produced by Mischler, QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our primary 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. 

I always attend the EEI Annual Financial Conference being held this year in San Francisco, beginning Sunday Nov 11, and thru next Tuesday, November 13. As a result, I will be out Tuesday, and in my absence, Mischler’s highly-trusted and uniquely-capable capital markets desk analyst and US Marine Corp. Veteran, Jonathan Herrick, will generate the daily “QC” for that session. While Jonathan will be penning the “QC”, it will be coming to you from my Outlook station.

For those not aware, The Edison Electric Institute (EEI) is the association that represents all U.S. investor-owned electric companies. EEI members provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to our U.S. members, EEI has more than 60 international electric companies with operations in more than 90 countries. The EEI event is the annual conference for electric company chief executive officers, chief financial officers, treasurers, and investor relations executives as well as Wall Street security analysts, fund managers, the rating agencies and commercial and investment bankers. Discussion at the conference provides updates on issues and strategies that impact the electric power industry’s financial performance and its access to the global marketplace. Energy storage, electrification, ESG and sustainability, changes in the regulatory framework and market construction are among the topics that will be discussed.

An important Veteran’s Day Announcement and Thank You!   

Our ethos is driven by giving back and paying forward. In that spirit, each year, Mischler Financial Group, Inc. (“Mischler”), our great nation’s oldest Service Disabled Veteran broker dealer, pledges a percentage of the firm’s profits to veteran and service-disabled veteran philanthropies as part of its annual Veterans Day charitable initiative. This year, Mischler is proud to announce that Army Ranger Lead The Way Fund will be the recipient of the Mischler 2018 Veterans Day Month pledge.


Established in 2007, Army Ranger Lead The Way Fund, Inc. (“LWTF”) is a 501c3 Non-Profit created in honor of Sgt. James J. Regan (“Jimmy”) who served with Charlie Company, 3d Battalion, 75th Ranger Regiment. Jimmy was killed in action while serving in Baqubah, Iraq on February 9, 2007, at the age of 26. Since its formation, the organization has been dedicated to raising funds to support disabled U.S. Army Rangers and the families of Rangers who have died, have been injured or are currently serving in harm’s way around the world. LTWF provides spouses and children of deceased, disabled or active duty Rangers with assistance for acute medical care, recovery and wellness programs, warrior transition programs and other services determined to be vital to the family’s well-being, beyond what the government can offer.

From our SDV’s Chairman, Walt Mischler and CEO Dean Chamberlain; from our CFO & President Doyle Holmes to the guy-in-the-corner and all of us in DCM, ECM, Trading, Sales, Operations and Administration, each and every member of Team Mischler is grateful to the many clients of our firm who provide us with the opportunity to demonstrate our capabilities and in turn, afford us the ability to pay back and pay forward to carefully-selected veteran philanthropies throughout the year. When paying tribute to Veterans Day, in particular, we believe that Army Ranger Lead The Way Fund meets and exceeds the objectives of our firm’s philanthropic mission.

Thank you all so very much for choosing to do business with us. We are relentlessly serious about our value-added proposition and even more so about giving back to our veteran men and women.

We appreciate that YOU make that possible.

Investment Grade New Issue Re-Cap – “QC” Q&A

Question me an answer bright and clear.
I will answer with a question clear and bright.
Even though your answer may be wrong my question will be right.
Question me an answer.
Answer with a question.
“Question Me an Answer” / Composed by Burt Bacharach / Lyrics by Hal David / Performed by Bobby Van / Film: Lost Horizon – 1973

Today was a no print Friday after a week that was all about Wednesday wedged between the U.S. midterm elections and yesterday’s FOMC Rate Decision and Policy Statement.

I had a thoughtful e-mail exchange with a thought leader in our business who wrote to me, “Don’t you think that GE and Ford credits’ ‘leaking’ is a much bigger problem for Jay Powell than 2% inflation, which is almost at target, and the current unemployment rate, which is at 50-year lows? Isn’t it a clear sign that rate hikes are working and actually slowing the corporate USA?  And, now that we don’t have any hope for future fiscal stimulus, I will abstain from developing on how easily you “win” trade wars by killing fewer of your own businesses. Sounds like he will need to pour cold water on future rate hikes in December or we are risking accelerating to downside.”

Just a thought! Feel free to comment! Question me an answer or Answer with a question.

You’re probably tuning in today for the Friday “Best and Brightest” edition. I have some wonderful news in that regard – I’ve added yet another syndicate desk to my stable of reliable syndicate seers and sages setting a new record of 27 different syndicate desks in today’s survey.  Additionally, the “QC” set a new record high percentage of respondents’ cumulative IG Corporate underwriting market share of 93.92%. That’s right. They’re all here.  What a group of people. I am privileged and honored each and every week to provide you with the best primary market table setter for the week, and as the case may be, for the month ahead.

Next week looks to be the last clear week of the year ahead of the holiday slow down. Hasn’t it gone by fast?  DowDuPont Inc. investor calls regarding a pending $12b debt offering is slated for next Tuesday, and it would appear that Dow is likely to “go” on Wednesday.  That’s a big volume booster, to say the least.  I look for $40b-plus in new IG Corporate issuance next week, although the midpoint average of the 27 surveyed syndicate desks I spoke with today is $29.06b. However, it is a long weekend for everyone else, and you know what that means – they’re eager to start their weekends. So, without further ado, let’s recap this week and then we’ll move on to the 27 syndicate aficionados who get the mandates and run the deals in our IG dollar DCM.

Now let’s take a look at the numbers:

  • The IG Corporate WTD total is 158.88% of this week’s syndicate midpoint average forecast or $28.98b vs. $18.24b.
  • MTD we’ve priced 43.37% of the syndicate forecast for October IG Corporate new issuance or $36.88b vs. $85.04b.
  • There are now 27 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index was unchanged at +122. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.14 vs. 1.13. (1.24 represents the high on 6/04; 0.85 is the post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +153 vs. +154. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $19b on Thursday versus $19.7b on Wednesday and $23.1b the previous Thursday.
  • The 10-DMA stands at $19.8b.
  • For the week ended November 7th, Lipper U.S. Fund Flows reported a net inflow of $1.849b into Corporate Investment Grade Funds (2018 YTD net inflow of $69.745b) and a net inflow of $1.04b into High Yield Funds (2018 YTD net outflow of $20.096b).
  • Taking a look at the secondary trading performance of this week’s 36 IG-rated new issues (35 IG Corporates and 1 SSA), 25 tightened versus NIP for a 50% improvement rate, 8 widened  (22.00%) and 3 were flat (8.50%).

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

IG Corporate New Issuance This Week


vs. Current
WTD – $28.98b
vs. Current
MTD – $36.88b
High-End Avg. $17.64 164.29% $84.24b 43.78%
Midpoint Avg. $18.24b 158.88% $85.04b 43.37%
Low-End Avg. $18.84b 153.82% $85.84b 42.96%
The High $25b 115.92% $50b 73.76%
The Low $10b 289.80% $100b 36.88%

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week

First, I’d like to welcome aboard a new syndicate desk participant to the Friday “Best and Brightest” crew.  I’ll always preserve your anonymity, but rest assured your brethren in the syndicate space all know you.  It’s a privilege to have you and the team on boarded. Waste not want not, and let’s get to it shall we?

I am happy to announce that the “QC” once again received 100% unanimous participation from get this –  27 desks – surveyed for today’s “Best & Brightest” Syndicate edition!  Thank you to all of them. Today’s respondents include 23 of the top 24 syndicate desks including 25 of the top 29 according to today’s Bloomberg U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  The 2018 League table can be found on your Bloomberg terminal at “LEAG” + [GO] after which you select “U.S. Investment Grade Corporate Bonds”.  The participating desks represent 93.92% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they are 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 are 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. All of us on the Mischler Primary Debt Capital Markets team greatly appreciate your time to contribute your thoughts and for making this edition of the “QC” among the most widely read by corporate treasurers and the primary fixed income syndicate community!

The “QC” Weekly Data Download

Before sharing our canvass of syndicate desk(s) thoughts and forecasts for next week’s IG Corporate supply, let’s first review this week’s recently updated geopolitical event risk factors that impacted our markets:

 11/08 – Pres. Trump and Xi still plan on getting together at the G20 Summit in Argentina in late November in a last attempt to resolve differences to get to the trade negotiating table. However, post-election it “appears” that despite having talked about trade in Beijing and Wash. D.C. earlier this year, they have not begun discussing the subjects of intellectual property rights and more open Chinese financial markets. Expectations are low for a breakthrough. Trump’s Admin. is prepping to hike tariffs on all Chinese goods remaining (~$260bn) as early as December. China’s economy and manufacturing continues to slow as a result of tariffs. YTD the S&P 500 is now 94% while China’s Shanghai Shenzen CSI 300 Index is down <25.21%>. The difference is <30.15%>.

  • 11/07 – For just the third time since 1945, the House and Senate moved in opposing directions. Dems gained 30 seats in Congress while the GOP gained 3 to control 54 seats in the Senate – the second most powerful body next to the President. The Senate gains create a clear path for yet another Supreme Court nominee prior to the 2020 Presidential election.   Post-election, Pres. Trump asked for Atty. Gen. Jeff Sessions’ resignation and got it. The new acting Atty. Gen. is Matt Whitaker, someone who has long been critical of the scope of the Mueller investigation.
  • 11/08 – Some UK & EU negotiators are working on and hoping for a possible Brexit deal by end of week, though Irish border questions remain. A Brussels- based meeting was postponed Thursday evening and UK Ministers were asked to “be available, in case,” causing many to surmise a deal could be imminent. The UK proposed unilateral withdrawal from the customs union, which the EU opposes without a backstop prompting some EU leaders to call for a postponement of a summit until December or January. 11/01 – Gov. of the Bk. of England, Mark Carney said on Wednesday that a disorderly Brexit could force a rate hike, whereas a smooth departure would be economically helpful. EU leaders agreed to an extension of the 21-month transition period for the UK. This in advance of the mid-November summit that will finalize EU/U.K. trade relations. The U.K. is slated to leave the EU on March 29th, 2019.
  • 11/08 – Italy refuses to submit a new national budget at the request of the European Commission by Nov. 13th. The EC said Italy is dead last in growth among all 19 Euro Zone nations. Italy forecasts 1.5% growth vs. the EC’s 1.2% projection. In 2020 the numbers are 1.3% and 1% respectively. Italy’s domestic spending plan is 3-times the EC target. The fear is that if the EU fines/sanctions Italy, it risks antagonizing other EU nationalist parties to rise. 10/29 – EU economists warn that Italy’s 2.4% budget proposal will cause a deepening financial crisis, higher rates, downgrades and flight risk. The BTP is yielding 391% or +2.937 vs. the Bund. Italy is the world’s #3 debtor nation and the EU’s 3rd largest economy. Some think Italy could eventually break from the EU. Italian banks hold ~$215b equiv. of non-performing loans, more than any EU nation. Italy’s debt to GDP ratio is 130%.  EU’s target is 60%.
  • 11/08 – Pres. Trump deployed 7,000 active duty soldiers from Fort Bragg, NC to Arizona’s southern border as part of “Operation Secure Line” in anticipation of the slow advancing, migrant caravan that is 1,300 miles from Nogales and 600 miles from the South Texas border. On 11/01 Trump took a firmer stance on illegal immigration emphasizing stronger border security, the Wall and suggested the U.S. end birthright citizenship. He also called illegal immigration unfair to those people who want to come to the U.S. through our legal process.
  • 11/08 – An Insa Institute poll shows 62.2% of Germans believe Angela Merkel should resign her Chancellorship. Merkel always said holding both roles at CDU and as Chancellor were critical and dividing them would lead to conflict. Only 37.8% in the poll said she should remain as CDU head. On 10/29 Merkel announced she would not seek re-election as Chancellor in 2021 and will abandon her CDU role in December. She lost 12% of votes in the St. of Hesse gaining only 27% – lowest in 52 years. Voters sent a “protest message” to Berlin. Party division in Germany may force a coalition with the far right, anti-immigration AfD previously thought inconceivable.  AfD holds 16 seats in regional parliaments and the Bundestag. Nationalism continues sweeping thru the EU.
  • 11/08 – North Korea’s cancelled NY meeting with Sec. of St. Mike Pompeo is perceived as a negotiating tactic. Kim Jong-Un’s best chance of securing concessions will ostensibly come from dealing with Trump directly.  Trump said he expects to meet with Jong-un “sometime early next year.” NOKO wants the U.S. to impose sanctions relief, but the U.S. will do so only post denuclearization.
  • November MTD 2018 Terror Event Casualty Total: 53 terrorist attack; 222 dead; 304

………………and now let’s take a look at the critical week-on-week primary market stats:

  The IG Corporate WTD total stands at $28.98b. We priced $10.74b more than this week’s average midpoint estimate of $18.24b.

  • MTD we priced 43.37% of the syndicate midpoint forecast for November IG Corporate new issuance or $36.88b vs. $85.04b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,119.01b vs. the $1,242.754b YoY which is <$123.744b> or <9.96%> less than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,362.48 vs. $1,547.195b YoY which is <$184.715b> or <11.94%> less than vs. 2017.

 Here are the five key primary market driver averages for the IG Corporate-only deals that priced this week and that displayed relative value: 

  • NICS: 6.64 bps  
  • Oversubscription Rates: 2.81x
  • Tenors: 10.81 years
  • Tranche Sizes: $828mm
  • Spread Compression from IPTs to the Launch: <20.62> bps

Here’s how this week’s critical primary market data compares against the numbers:.   

  • Week on week, average NICs tightened by 1.67 bps to an average 6.64 bps vs. 8.31 bps or flat across this week’s IG Corporate new issues that displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, increased by 0.62x to an average 2.81x vs. 2.19x. 
  • Average tenors contracted by 2.32 years to an average 10.81 years vs. 13.13 years.
  • Tranche sizes increased by $282mm to $828mm vs. $546mm last week.
  • Spread compression from IPTs to the launch/final pricing of this week’s IG Corporate-only new issues tightened by 9.66 bps to <20.62> bps vs. <10.96> bps.
  • Standard and Poor’s Investment Grade Composite Spread tightened 6 bps to +153 vs. +159 week-on-week. 
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 5 bps to 1.14 vs. last Friday’s 1.19 close.
  • The VIX tightened by 2.79 or 14.30% to 16.72 at yesterday’s close vs. last Friday’s 19.51 close.
  • Week-on-week, BAML’s IG Master Index tightened 4 bps to +122 vs. +126 bps week-on-week.  
  • Spreads across the four IG asset classes tightened by 5.00 bps to 22.25 vs. 27.25 bps as measured against their cumulative post-Crisis lows.
  • Spreads across the 19 major IG industry sectors tightened 4.11 bps week-on-week to an average 33.89 bps vs. 38.00 bps as measured against their average cumulative post-Crisis lows!

Entering today’s Friday session here’s a look at this week’s IG issuance volume totals:

  • IG Corps: $28.98b
  • All-in IG (Corps + SSA): $30.23b 

Please know that on each and every new issue, the guy-in-the-corner is ALWAYS in YOUR corner on deal day! If an issuer asks you who some of the best diversity firms are, my hope is that you’ll mention Mischler Financial’s value-added DCM and distribution proposition and the guy-in-the-corner.  Our distribution is high quality, prolific and consistent.

Wishing you and yours a safe, healthy and enjoyable Veteran’s Day weekend!

The “Best and the Brightest” in Their Own Words

……..……and here are their formidable responses:

Above is the opening extract from Quigley’s Corner aka “QC” Friday, November 09, 2018  edition and distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group. One of three distinctive market comment pieces produced by Mischler, QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our primary 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: rquigley@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* (*public domain information), Stone & McCarthy Research, 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.

Quigley’s Corner Veterans Day 2018 Edition: Digging In For DowDuPont Debt Deal