$25.7b in new IG Corporate Debt Issuance to start the week; Led by $11b Walt Disney Co.; IG Corporate Bond New Issues are The New Magic Kingdom

Below is excerpted from today’s edition of Quigley’s Corner, authored and published by Ron Quigley, Mischler Financial Group Managing Director & Head of Fixed Income Syndicate

Quigley’s Corner 05-11-2020  Today the IG Corporate dollar DCM hosted 11 issuers across 26 tranches totaling $25.70b. The SSA space was quiet with a couple deals announced that are expected to price tomorrow. Mischler Financial served as a Passive Co-Manager on today’s $11b 6-part transaction from The Walt Disney Company – the largest of the day. Naturally that is today’s Deal-of-the-Day but let’s first get through the recaps and then it’s onto the Disney Dashboard and Deal Drill down among others.

 Now let’s run through the weekly recaps:

  • The IG Corporate-only WTD total is 35.38% of this week’s syndicate midpoint average forecast or $25.70b vs. $72.63b.
  • MTD we’ve priced 50.01% of the syndicate forecast for May IG Corporate-only new issuance or $125.325b vs. $250.58b.
  • There are 16 new issues in the IG credit pipeline.
    IG Corporate
    New Issuance
    This Week
    vs. Current
    WTD – $25.70b
    vs. Current
    MTD – $125.325b
    High-End Avg. $73.02b 35.20% $245.58b 51.03%
    Midpoint Avg.  $72.63b 35.38% $250.58b 50.01%
    Low-End Avg. $72.25b 35.57% $255.58b 49.04%
    The High $85b (3) 30.24% $300b (5) 41.77%
    The Low $50b (2) 51.40% $175b (1) 71.61%


    IG Corporate Primary & Secondary Market Talking Points

    *Denotes new high or low

    • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 26 IG Corporate-only new issue was <33.65> bps.
    • ICE BAML’s IG Index widened 1 bp to +222 vs. +221.  (It’s post-Crisis low is +90 set on 2/01).
    • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 2 bps to 2.12 vs. 2.10. (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 widened 1 bp to +260 vs. +259. (+125 represents its post-Crisis low set 2/02).
    • Investment grade corporate bond trading posted a final Trace count of $23.6b on Friday versus $25.7b on Thursday and $22.8b the previous Friday.
    • The 10-DMA stands at $26.5b.
    • For the week ended May 6th, Refinitiv Lipper U.S. Fund Flows reported an inflow of $6.626b into Corporate Investment Grade Funds (2020 net outflow of $49.749b) and inflows of $3.535b into High Yield Funds (2020 net inflow of $5.05b).

    dis debt issuance may 2020

    The Walt Disney Company $11b 6-pArt Senior Notes New Issue

    He made his big screen debut back in 1928’s Steamboat Willie and he never looked back. Thanks to Mickey Mouse the Walt Disney Company is perhaps the world’s most recognizable brand. It’s mission is to entertain, inform and inspire people around the world through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make it the world’s premier entertainment company. But Disney has taken some hard hits due to the pandemic that has shut down its theme parks, theatres, brought film and TV productions to a halt like it has to so many others business.

    Today, The Walt Disney Company issued an $11b 6-part SEC registered Senior Notes transaction across long-5-, 7- and 10-year tranches, a 20-year, a long 30-year and a 40-year tranche. Mischler Financial Group, Inc., our great nation’s oldest Service Disabled Veteran broker dealer is very proud to announce that we were selected from among our industry pers to serve as a Passive Co-Manager on today’s jumbo transaction. Congratulations to The Walt Disney Company on today’s $11b transaction and thank you to Disney’s Team Treasury/Funding for your providing Mischler the opportunity to serve in the course of this funding initiative and for enabling us to place your bonds with long-term investors. We appreciate our partnership and affiliation with this great company and brand.

    Proceeds from today’s transaction will be used to repay commercial paper and repayment of TWDC Enterprises’ $750mm 1.80% notes due 6/2020 as well as its $500mm FRNs due 6/2020.

    ………and here’s a snap shot of today’s final Walt Disney Company book sizes and oversubscription rates – the measure of investor demand: 

    Today’s cumulative final book size was $30.6b or 2.78-times oversubscribed.

    Here’s a look at book splits:

    New Issue
    Tranche Size Final Book
    Long 5yr $1.5b 4.75b 3.17x
    Long 7yr $1b 3.5b 3.50x
    Long 10yr $2.5b 5.75b 2.30x
    20yr $1.75b 5b 2.86x
    Long 30yr $2.75b 6.75b 2.45x
    40yr $1.5b 4.85b 3.23x

    ……and here’s a check of spread compression from IPTs thru the launch and final pricing, NICs and where the paper is currently trading.

    New Issue
    TRADING at
    the BREAK
    Long 5yr A2/A- +175a +145 # +145 +145 <30> bps 20 143/ <2>
    Long 7yr A2/A- +200a +170 # +170 +170 <30> bps 20 149/ <21>
    Long 10yr A2/A- +225a +195 # +195 +195 <30 bps> 20 194/ <1>
    20yr A2/A- +245a +210 # +210 +210 <35> bps 20 207/ <3>
    Long 30yr A2/A- +255a +220 # +220 +220 <35> bps 20 217.5/ <2.5>
    40yr A2/A- +275a +240 # +240 +240 <35> bps 20 237/ <3>

    The Walt Disney Company (NYSE:DIS) Final Pricing Details:
    DIS $1.5b 1.75% due 1/13/26 @ $99.741 to yield 1.798% or T+145  MW T+25

    DIS $1b 2.20% due 1/13/28 $99.675 to yield 2.246% or T+170  MW T+30

    DIS $2.5b 2.65% due 1/13/31 $99.932 to yield 2.657% or T+195  MW T+30

    DIS $1.75b 3.50% due 5/13/40 $99.900 to yield 3.507% or T+210  MW T+35

    DIS $2.75b 3.60% due 1/13/51 $99.864 to yield 3.607% or T+220  MW T+35

    DIS $1.5b 3.80% due 5/13/60 $99.857 to yield 3.807% or T+240  MW T+40

    The Walt Disney Company’s Commitment to Our Nation’s and Veterans

    Back in mid-1918, Walt Disney attempted to join the U.S. Army to fight against the Germans but was rejected for being too young. After forging his date of birth on his birth certificate he joined the Red Cross in 1918 as an ambulance driver. He arrived in France just after the armistice was signed and drew cartoons on the side of his ambulance for decoration which the U.S. Army newspaper Stars and Stripes published. So, as you can see, the origins of Disney and the military pre-date the Disney empire. Those editors of Stars and Stripes sure did recognize talent when they saw it!

    As people across the U.S. observed last year’s Veteran’s Day and honored all who served in the U.S. military in war or peace, employees came together at The Walt Disney Studios lot to show their gratitude and learn more about veterans, military families and their service.

    Bob Iger, chairman and CEO, The Walt Disney Company; Bob Chapek, Chairman, Disney Parks, Experiences and Products; and Jimmy Pitaro, ESPN President and Co-Chair, Disney Media Networks; joined Colonel Jennifer Short, USAF, who in 2017, became the first woman commander of the 23rd Wing—home to the Air Force’s legendary “Flying Tigers”—for the special event. The event was hosted by SALUTE, one of the Company’s veterans Business and Employee Resource Groups, which are open to any employee with a strong connection to the armed forces and featured Young Marines who led the Pledge of Allegiance to kick off the festivities.Disney’s ongoing commitment to veterans and their families extends beyond employment. The Company’s philanthropic support of veteran and military organizations has exceeded $20 million in funding and media support since the launch of Heroes Work Here, and, through the Disney VoluntEARS program, employees have engaged in several service projects with veterans’ organizations in communities around the country.

    In March of 2012, The Walt Disney Company announced Heroes Work Here, a company-wide initiative to hire, train and support returning veterans. Heroes Work Here reflects the long history of respect and appreciation Disney has for the U.S. Armed Services. Disney recognizes the commitment and dedication it takes to serve our country and value the leadership skills and sense of purpose the military has instilled in our men and women who served.Below are some of the veteran resources that Disney works with to understand and place veterans within its company:

    disney-veterans initiativesAbove is the opening extract from Quigley’s Corner aka “QC” 05-11-2020 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 diversity-certified 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