Quigley’s Corner 04.30.19: $93.6b in IG Bonds Floated In April; Boeing’s $3.5b 5-part Scores Run Batted-In for Month’s Record Tally
Below is the opening extract from Quigley’s Corner aka “QC” Tuesday, April 30, 2019 edition distributed via email to institutional investment managers, lead underwriter syndicate desks and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of Mischler’s primary debt capital markets desk. Commentary 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 deal pipeline. To receive Quigley’s Corner, please email: rquigley@mischlerfinancial.com or via phone 203.276.6646
Investment Grade New Issue Re-Cap – April Hits the Mark with Walk-Off Home Run
Mischler Serves as Active Lead for Both Barclays and Boeing (NYSE:BA)
Today’s IG Primary & Secondary Market Talking Points
Syndicate IG Corporate-only Volume Estimates for This Week, April and a Look at May Expectations
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 April 24th
IG Credit Spreads by Rating
IG Credit Spreads by Industry
IG New Issue Pipeline
IG M&A Pipeline Highlights
Economic Data Releases
Rates Trading Lab
Tomorrow’s Calendar
Investment Grade New Issue Re-Cap – April Hits the Mark with Walk-Off Home Run
Today the IG dollar DCM hosted 7 issuers across 11 tranches totaling $8.80b. Once again, the SSA space was quiet. The big news, however, was that our IG dollar DCM took every bit of April to finally surpass the syndicate estimates for the month. They did it with style and fashion eclipsing the low, average and finally the high estimate for the month. That’s right we priced $93.645b in new IG Corporate product versus $91.11b estimates beating it out by $2.535b or 2.78%. A bit of applause please for all the syndicate desks, bankers, accounts who put paper away and of course the issuers.
Mischler Serves as Active Lead for Both Barclays and Boeing
The two largest deals of the day were Boeing’s 5-part $3.5b Senior Notes and Barclays PLC’s $2b 6nc5 Senior Unsecured fixed-to-floating Notes…..and guess what? The firm known as Mischler Financial Group, Inc. our great nation’s oldest Service Disabled Veteran broker dealer, served as a Co-Manager on both transactions …..and in an active way.
- Barclays PLC finished with a $3.75b book making the deal 875-times oversubscribed and priced with a 5 bps NIC.
- Boeing’s 5 tranche books garnered a total of $10b in orders for a 86-times overall bid-to-cover rate. The 10-year tap, for which Mischler served as an active Co-Manager, was 3.17-times covered ($600mm deal; $1.9b book) and priced with ~7bps NIC.
- Thank you to the Barclays PLC and Boeing Co. Treasury/Funding teams and the wonderful syndicate desks at both Barclays Capital (thank you especially to Anne and Ash) and Team Citigroup. We appreciate our partnership(s) and for your always work with us on deal day. Thanks also to all our valued high-quality accounts whose patronage today and every day is second to none. It all starts with the order! We appreciate it.
Let’s now review the primary market numbers for this week and month:
- The IG Corporate-only WTD total is 77.52% of this week’s syndicate midpoint average forecast or $16.125b vs. $20.80b.
- MTD we’ve priced 102.78% of the syndicate forecast for April IG Corporate-only new issuance or $93.645b vs. $91.11b.
- There is now 4 new issue in the IG credit pipeline.
Today’s IG Primary & Secondary Market Talking Points
- Boardwalk Pipelines LP upsized today’s 10-year Senior Notes new issue to $500mm from $400mm 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 11 IG Corporate-only new issue was <17.64> bps.
- ICE BofAML’s IG Index tightened 1 bp to +116 vs. +117. Friday was a holiday. (It’s post-Crisis low is +90 set on 2/01).
- Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.10. (1.57 represents the high on 1/03/2019; 0.85 is the post-Crisis low set on 2/01/2018).
- Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +155 vs. +156 (use of source is public domain information). (+125 represents its post-Crisis low set 2/02).
- Investment grade corporate bond trading posted a final Trace count of $17.6b on Monday versus $18.1b on Friday and $14b the previous Monday.
- The 10-DMA stands at $18.1b.
Syndicate IG Corporate-only Volume Estimates for This Week, April and a Look at May Expectations
| IG Corporate New Issuance | This Week 4/29-5/03 |
vs. Current WTD – $16.125b |
April 2019 |
vs. Current MTD – $93.645b |
May 2019 |
| High-End Avg. | $21.44b | 75.21% | $91.76b | 102.05% | $124.48b |
| Midpoint Avg. | $20.80b | 77.52% | $91.11b | 102.78% | $123.83b |
| Low-End Avg. | $20.15b | 80.02% | $90.46b | 103.52% | $123.19b |
| The High | $30b (3) | 53.75% | $100b (6) | 93.645% | $140b (2) |
| The Low | $10b (2) | 161.25% | $80b (2) | 117.06% | $100b (2) |
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 Monday’s session followed by the averages over the prior six weeks:
| KEY IG CORPORATE NEW ISSUE DRIVERS |
MON. 4/29 |
AVERAGES WEEK 4/22 |
AVERAGES WEEK 4/15 |
AVERAGES WEEK 4/08 | AVERAGES WEEK 4/01 |
AVERAGES WEEK 3/25 |
AVERAGES WEEK 3/18 |
| New Issue Concessions | <2.17> yrs | 1.57 bps | 3.21 bps | <1.18> bps | <1.19> bps | 3.35 bps | 2.32 bps |
| Oversubscription Rates | 4.26x | 3.12x | 2.64x | 4.21x | 3.26x | 3.70x | 2.93x |
| Tenors | 19.31 yrs | 14.25 yrs | 10.38 yrs | 8.04 yrs | 11. 27 yrs | 12.05 yrs | 12.73 yrs |
| Tranche Sizes | $563mm | $633mm | $1,338mm | $994mm | $9891mm | $934mm | $810mm |
| Avg. Spd. Compression IPTs to Launch |
<16.33> yrs | <18.42> bps | <15.66> bps | <21.53> bps | <21.06> bps | <19.37> bps | <15.74> bps |
New Issues Priced
Today’s recap of visitors to our IG dollar Corporate and SSA DCM:
I use the better two of Moodys, Fitch or Composite Ratings
IG
| Issuer | Ratings | Coupon | Maturity | Size | IPTs | GUIDANCE | LAUNCH | PRICED | LEADS |
| Aon Corp | Baa2/BBB+ | 3.75% | 5/02/2029 | 750 | +137.5a | +125 # | +125 | +125 | BARC/CITI/CS |
| Barclays PLC | Baa3/A | 3.932% | 6nc5 F-t-F 5/07/2025 |
2,000 | +180a | +165 # | +165 | +165 back-end: 3mL+161 |
BARC-sole |
| Boardwalk Pipelines LP | Baa3/BBB- | 4.80% | 5/03/2029 | 500 | +250a | +235a (+/-5) | +230 | +230 | BARC/JPM/MUFG |
| Boeing Company | A2/A | 2.70% | 5/01/2022 | 600 | +75a | +55a (+/-3) | +52 | +52 | CITI/MIZ/SG (a) +3 (p) |
| Boeing Company | A2/A | 3.10% | 5/01/2026 | 650 | +90-95/+92.5a | +78a (+/-3) | +75 | +75 | CITI/CACIB/MUFG (a) +3 (p) |
| Boeing Company (tap) New Total: $1bn |
A2/A | 3.20% | 3/01/2029 | 600 | +100a | +88a (+/-3) | +85 | +85 | BAML/CITI/JPM (a) +3 (p) |
| Boeing Company | A2/A | 3.60% | 5/01/2034 | 850 | +135a | +115a (+/-3) | +112 | +112 | CITI/SMBC/WFS (a) + 3 (p) |
| Boeing Company | A2/A | 3.90% | 5/01/2049 | 800 | +125a | +110a (+/-3) | +107 | +107 | CITI/BNPP/GS (a) +3 (p) |
| Ford Motor Credit Co. LLC | Baa3/BBB | 5.113% | 5/03/2029 | 1,250 | +265a | +260 # | +260 | +260 | BAML/BARC/CACIB/GS RBC (a) + 3 (p) |
| Northern Trust Corp. | A2/AA- | 3.15% | 5/03/2029 | 500 | +80a | +65a (+/-2) | +65 | =65 | BAML/MS/UBS/WFS |
| Textron Inc. | Baa2/BBB | 3.90% | 9/17/2029 | 300 | +170a | +145a (+/-5) | +140 | +140 | CITI/GS (a) MS/SMBC (p) |
Indexes and New Issue Volume
Countable IG volume includes maturities of 18-months and out and IG-rated Preferreds.
*Denotes new high or low.
| Index | Open | Current | Change | |||
| IG32 | 57.745 | 57.401 | <0.344> | |||
| VIX | 13.11 | 13.12 | 0.01 | |||
| CT10 | 2.527% | 2.503% | <0.024> | |||
| S&P | 2,943 | *2,945 | 2 | |||
| DOW | 26,554 | 26,592 | 38 | |||
| Nasdaq | *8,161 | 8,095 | <66> | |||
| OIL | 63.50 | 63.91 | 0.41 | |||
| GOLD | 1,279.90 | 1,283.53 | 3.63 | |||
|
USD |
IG Corporates |
USD |
Total (IG + SSA) |
|||
| DAY: | $8.80 bn | DAY: | $8.80 bn | |||
| WTD: | $16.125 bn | WTD: | $16.125 bn | |||
| MTD: | $93.645 bn | MTD: | $104.995 bn | |||
| YTD: | $429.269 bn | YTD: | $524.619 bn | |||
Global Market Recap
- USTs: Treasuries closed out the month of April with yields richer by ~2-3 bps across the curve led by T5s. 5s/10s and 5s/30s steepened by ~1bp. CT10 closed at 2.504%.
- Overseas 10-year: Italy’s BTPs rose as Bunds declined on U.S. as Q1 GDP expanded0.2% surprising to the upside; bunds fell on stronger inflation .
- SOFR: +0.02 to 2.48 vs. 2.46.
- 3mth Libor: -0.003 to 2.579 vs. 2.582.
- Overseas Stocks: Mixed with Core EU, Switzerland and Peripherals closing with gains and the UK and giving some back.
- Currencies: DXY Index -0.378 to 97.479 vs. 97.857.
- CDX HY: +0.009 to 107.668 vs. 107.578.
- CDX EM: +0.074 to 190.645 vs. 190.571.
*Index levels are as of 5:00PM today.
2019 Lipper Report/Fund Flows – Week Ending April 24th
- For the week ended April 24th, Lipper U.S. Fund Flows reported an inflow of $5.864b (the second largest inflow on record) into Corporate Investment Grade Funds (2019 net inflow of $33.294b) and outflows of $520.633m from High Yield Funds (2019 net inflow of $13.834b).
- Over the same period, Lipper reported outflows of $236.464m from Loan Participation Funds (2019 net outflow of $12.385b).
- Emerging Market debt funds reported a net outflow of $721.126m (2019 YTD inflow of $392.874m).
IG Credit Spreads by Rating
Above is the opening extract from Quigley’s Corner aka “QC” Tuesday, April 30, 2019 edition distributed via email to institutional investment managers, lead underwriter syndicate desks and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of Mischler’s primary debt capital markets desk. Commentary 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 deal 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, ITC Markets, Market News International, Prospect News, Stone & McCarthy Research, Refinitiv, 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.
