Quigley’s Corner 01.10.19-ABIBB 6-Part Beer Bonds Go Down Smoothly w Corporate Debt Buyers
Investment Grade New Issue Re-Cap – $17.80 Billion Day and One Heck of a Lot of Beer Money – ABIBB’s $15.5b 6-Part
“QC” Q&A: Celebrating Beer Bonds with Classics From Norm Peterson and Cliff Clavin
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates for This Week and January
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
The “QC” 2019 Geopolitical Risk Monitor
2019 Lipper Report/Fund Flows – Week Ending January 9th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
Investment Grade Corporate Debt New Issue Pipeline
IG M&A Pipeline Highlights – $330.75 Billion in Cumulative Enterprise Value
Economic Data Releases
Rates Trading Lab
Tomorrow’s Calendar
It was a prolific day for IG Corporate issuance as Anheuser-Busch/InBev priced a $15.5b 6-part Senior Notes transaction thereby pushing this week’s IG Corporate new issue total 35% above the syndicate desk estimate or $37.236b vs. $27.54b. NICs were generous averaging ~23 bps with average books ~2.70x. Average spread compression across the 6 ABIBB tranches was <18.33> bps so optically this deal was a positive for the IG Corporate market. Additionally, American Honda Finance added a $1.6b 3-part along with CenterPoint Energy Houston Electric LLC’s $700mm 30-year GMBs to bring the IG Corporate day totals to 3 issuers, 10 tranches and a whopping $17.80b.
Not to be outdone, the European IG primary market news also continued along its current incredible issuance pace with the Euro WTD now at €75.48b from 56 issuers across 70 tranches!
What’s more, it was announced that yesterday’s postponed $3b two-part Danske Bank transaction will, in fact, price tomorrow.
Thursday night has always keep me here especially late on the Mischler DCM Desk as I scribe my weekly syndicate data download survey question for Friday morning’s “Best and Brightest Edition” of the “QC”. ….but then again this IS the “QC”, where it’s not always just about the data. So, to commemorate the great job that issuers, bankers and of course, syndicate managers have done this week, especially on today’s Anheuser-Busch deal, it’s only fitting that I say “this Bud’s for you!” while featuring two special guests for this evening’s edition –
“QC” Q&A: Celebrating Beer Bonds with Classics From Norm Peterson and Cliff Clavin
“Can I draw you a beer, Norm?”
“No, I know what they look like. Just pour me one.”
“How’s a beer sound, Norm?”
“I dunno. I usually finish them before they get a word in.”
“What’s shaking, Norm?”
“All four cheeks and a couple of chins.”
“What would you say to a nice beer, Normie?”
“Going Down?”
“What’s new, Normie?”
“Terrorists, Sam. They’ve taken over my stomach and they’re demanding beer.”
“What’ll it be, Normie?”
“Just the usual Coach. I’ll have a froth of beer and a snorkel.”
“What would you say to a beer, Normie?”
“Daddy wuvs you.”
“What’d you like, Normie?”
“A reason to live. Give me another beer.”
“What’ll you have, Normie?”
“Well, I’m in a gambling mood Sammy. I’ll take a glass of whatever comes out of that tap.”
“Looks like beer, Norm.”
“Call me Mister Lucky.”
“What’d you say, Norm?”
“Any cheap, tawdry thing that will get me a beer.”
“What would you say to a beer, Norm?”
“Hiya, sailor. New in town?”
(Coming in from the rain)
“Evening everybody.”
Everybody: “Norm!”
“Still pouring, Norm?”
“That’s funny, I was about to ask you the same thing.”
“Whaddya say, Norm?”
“Well, I never met a beer I didn’t drink.”
“Hey Norm, how’s the world been treating you?”
“Like a baby treats a diaper.”
“Would you like a beer Mr. Peterson?”
“No, I’d like a dead cat in a glass.”
“How’s life treating you?”
“It’s not, Sammy, but you can.”
“What’s the story, Mr. Peterson?”
“The Bobbsey twins go to the brewery. Let’s cut to the happy ending.”
“Beer, Norm?”
“Have I gotten that predictable? Good.”
“What’s going on, Mr. Peterson?”
“A flashing sign in my gut that says, ‘Insert beer here.'”
“Hey Mr. Peterson, Jack Frost nipping at your nose?”
“Yep, now let’s get Joe Beer nipping at my liver, huh?”
“What’s going on, Mr. Peterson?”
“Another layer for the winter, Wood.”
“Whatcha up to, Norm?”
“My ideal weight if I were eleven feet tall.”
“How’s it going Mr. Peterson?”
“Poor.”
“I’m sorry to hear that.”
“No, I mean pour.”
“Pour you a beer, Mr. Peterson?”
“Alright, but stop me at one….make that one-thirty.”
“What’s the story, Norm?”
“Boy meets beer. Boy drinks beer. Boy meets another beer.”
“How’s about a beer, Norm?”
“That’s that amber sudsy stuff, right? I’ve heard good things about it!”
“What’s going on, Mr. Peterson?”
“The question is, `what’s going ‘in’ Mr. Peterson?” A beer, please, Woody.”
“Can I pour you a beer, Mr. Peterson?”
“A little early isn’t it, Woody?”
“For a beer?” “No, for stupid questions.”
Let’s now review the monthly primary market numbers:
- The IG Corporate-only WTD total is 135.21% of this week’s syndicate midpoint average forecast or $37.236b vs. $27.54b.
- MTD we’ve priced 42.78% of the syndicate forecast for December IG Corporate-only new issuance or $48.836b vs. $114.15b.
- There are now 28 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 10 IG Corporate-only new issues was <17.65> bps.
- ICE BofAML’s IG Index tightened 2 bps to +156 vs. +168. (It’s post-Crisis low is +90 set on 2/01).
- Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 3 bps to +148 vs. 1.51. (57 represents the high on 1/03; 0.85 is the post-Crisis low set on 1/30).
- Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +187 vs. +198. (+125 represents its post-Crisis low set 2/02).
- Investment grade corporate bond trading posted a final Trace count of $23.9b on Wednesday versus $21.8b on Tuesday and $15.1b the previous Wednesday.
- The 10-DMA stands at $14.3b.
- For the week ended January 9th, Lipper U.S. Fund Flows reported an outflow of $1.137b from Corporate Investment Grade Funds (2019 net outflow of $5.654b) and inflows of $1.048b from High Yield Funds (2019 net inflow of $420.011m).
Syndicate IG Corporate-only Volume Estimates for This Week and January
| IG Corporate New Issuance | This Week
12/07-12/11 |
vs. Current WTD – $37.236b |
January 2019 |
vs. Current MTD – $48.836b |
| High-End Avg. | $28.37b | 131.25% | $116.19b | 42.03% |
| Midpoint Avg. | $27.54b | 135.21% | $114.15b | 42.78% |
| Low-End Avg. | $26.70b | 139.46% | $112.11b | 43.56% |
| The High | $35b (4) | 106.39% | $150b | 32.56% |
| The Low | $10b (1) | 372.36% | $100b | 48.836% |
Below is a synopsis of everything Syndicate and Secondary as seen from the perch of Mischler Financial Group’s Debt Capital Markets Desk. 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. 1/07 |
TUES. 1/08 |
WED. 1/09 |
AVERAGES WEEK 12/31 |
AVERAGES WEEK 12/24 |
AVERAGES WEEK 12/17 |
AVERAGES 12/10 |
AVERAGES WEEK 12/03 |
AVERAGES WEEK 11/26 |
| New Issue Concessions | 6.33 bps | 5.18 bps | <3.00> bps | 20.00 | N/A | N/A | 12.25 bps | 5.83 bps | 9.99 bps |
| Oversubscription Rates | 3.90x | 3.58x | 5.09x | 2.19x | N/A | N/A | 4.62x | 2.35x | 2.27x |
| Tenors | 16.87 yrs | 9.43 yrs | 34.48 yrs | 8.53 yrs | N/A | N/A | 11.25 yrs | 8.56 yrs | 9.03 yrs |
| Tranche Sizes | $617mm | $1,000mm | $434mm | $644mm | N/A | N/A | $601mm | $478mm | $725mm |
| Avg. Spd. Compression IPTs to Launch |
<19.08> bps | <22.00> bps | <30.00> bps | <10.22> bps | N/A | N/A | <16.83> bps | <10.67> bps | <10.69> bps |
New Issues Priced
Above is the opening extract from Quigley’s Corner aka “QC” Thursday, January 03, 2019 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 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: [email protected] 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.
