Quigley’s Corner 06.04.18: Investment Grade DCM New Issue Market: Goldman Sachs Bank USA Debt IPO

Investment Grade New Issue Re-Cap – IG Dollar DCM on Fiyaaahhhhhh!!

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates For This Week and June

Goldman Sachs Bank USA Inaugural $1bn Debt IPO – 2yr 3(a)2 Exempt Senior Unsecured Notes due 6/05/2020

Goldman Sachs Bank USA Deal Dashboard

Goldman Sachs Bank USA – Commitment to Diversity & Inclusion

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 May 30^th        

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab Tomorrow’s Calendar

So, how brilliant is Moody’s Corp. and our friend Zeeshan Naqvi for timing last Friday’s Moody’s Corp. issuance?  Looks like it’s opened up a whole new world for our IG dollar DCM as 10 issuers priced 16 tranches today totalling $9.95b.  The SSA space was quiet again. What’s more The Goldman Sachs Group, Inc. will now be issuing any tenors 3-years and in thru their new entity – Goldman Sachs Bank USA that issued its debt IPO in today’s session.  As a result, it is the session’s Deal-of-the-Day as Mischler, the nation’s oldest Service Disabled Veteran broker-dealer is proud to have been selected as an active Co-Manager on the inaugural issuance.

We greatly appreciate that Team GS Treasury/Funding and Syndicate!  I’ll also be featuring a nice segment about the wonderful initiatives that Goldman Sachs has been focused on for our nation’s veterans. It highlights GS’s Integration Program, involvement with VOWS, Networking and Mentorship, the Goldman Sachs Gives program and a bit about Goldman’s Community Teamworks.

But before the relative value exercise, book build review and Veteran Diversity Initiative at the House of Gold, let’s first review 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 39.42% of this week’s syndicate midpoint average forecast or $9.95b vs. $25.24b.
• MTD we’ve priced 11.67% of the syndicate forecast for April IG Corporate new issuance or $10.555b vs. $90.44b.
• There are now 18 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

• PSEG Power LLC increased today’s 5-year Senior Notes new issue to $700mm from $600mm at the launch and at the tightest side of guidance.
• Puget Sound Energy Inc. upsized today’s 30-year FMBs to $600mm from $500mm 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 16 IG Corporate-only new issues was <13.375> 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. (1.15 represents a new high. 0.85 is its post-Crisis low set on 1/30).
• Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +153 vs. +155. (+125 represents its post-Crisis low set 2/02).
• Investment grade corporate bond trading posted a final Trace count of $16b on Friday versus $22.5b on Thursday and $6.9b the previous Friday.
• The 10-DMA stands at $16.8b. 

Syndicate IG Corporate-only Volume Estimates For This Week and June 

Goldman Sachs Bank USA Inaugural $1bn Debt IPO – 2yr 3(a)2 Exempt Senior Unsecured Notes due 6/05/2020

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 3-year 3(a)2 Exempt Senior Unsecured Notes new issue for Goldman Sachs Bank USA.  This represents the issuer’s inaugural debt transaction (IPO) and as a result, it’s also Mischler’s first Co-Manager role for this new GS Bank USA entity.

In terms of the relative value approach to today’s issuance I looked at another stalwart U.S. six-pack with its own healthy and historic brand of D&I procurement initiatives making for a nice comparable on myriad levels namely Citigroup NA’s $2bn 3.05% Senior Unsecured Bank Notes due 5/01/2020 and also rated A1/A+ that priced this past March 23^rd. They were G+63 bid with no differential between Goldman and Citi 3-year paper and with the 5-year Holdcos about a nickel or 5 bps between them. That would peg a new GS 2-year at anywhere from G+63-68 so, let’s split the difference to get us to G+65.5 landing NIC on today’s new Goldman Sachs Bank USA issue that priced at T+70 as 4.5 bps.

Goldman Sachs Bank USA Deal Dashboard

Use of proceeds from today’s transaction will be used for general corporate purposes.

………and here’s a snapshot of today’s final Goldman Sachs Bank USA book size and oversubscription rate – the measure of investor demand:

Today’s Goldman Sachs Bank USA final order book finished at $4.20b making the $1b debt IPO 2-year 3(a)2 Exempt Senior Unsecured Notes transaction 4.20x-times oversubscribed. “At the top” or at guidance, the book also happened to top out at the same $4.20b level. That’s right folks, please note it is an exceedingly rare occasion for our IG dollar DCM to feature a new issue that had “NO DROPS” between the book at the top and the final book size.  A clear indicator of a highly successful transaction.  Congrats to the Goldman Sachs Bank USA A-Team formerly known as the Goldman Sachs A-Team!!!

Final Pricing – Goldman Sachs Bank USA
GS $1b 3.20% due 6/05/2020 @$99.977 to yield 3.212% or T+70  MWC +15

Goldman Sachs Bank USA – Commitment to Diversity & Inclusion

You all read here time and time again the wonderful D&I initiatives created by and applied by the largest corporations who issue bonds in our financial services industry. If Mischler is involved, I’m getting YOUR story out there.  Today it is Goldman Sachs’ turn and what a story it has historically been with Team GS and their commitment not only to social responsibility but to Veteran causes.  It is always my privilege and honor to help get Goldman’s story to YOU and to Main Street.  It’s only one week detached from Memorial Day and given that the other two diversity Co-Managers were Veteran-owned and operated firms (Academy and Drexel) I would say this is a nice representative Memorial Day transaction of sorts for the Golden Ones at Team GS in honor of our nation’s heroes.

I ask you to please take a moment to read about just some of the wonderful ways that Goldman Sachs helps our nation’s men and women in uniform and our service-disabled veterans, all who were and are prepared to make the ultimate sacrifice so we can do what we do here in the Land of the Free thanks to the Home of the Brave.

Thank you Team GS.  (Jonny, Jane, Jess, Gaurav, Jason, Liz, Tony, Katie et al).  You make a difference in our veterans’ lives and you help our great nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  Thank yous also go out to our loyal accounts who likewise aren’t just helping us all execute good business in a value-added way but who are also helping us give back a share of those profits to veteran causes. You all know who you are and we appreciate each of you.
Veterans Integration Program

The two-month Goldman Sachs Veterans Integration Program (VIP) provides service men and women exiting the military with an opportunity to develop their professional skills, strengthen their understanding of financial services and prepare for careers in the industry.

Veterans know what it takes to be a part of a team. Goldman Sachs is proud to have them on theirs.

Skills that are second nature to military veterans like leadership, teamwork and problem solving are in high demand in our industry – and Goldman Sachs considers these traits invaluable.

Launched in 2012, the Goldman Sachs Veterans Integration Program (VIP) provides service men and women exiting the military with an opportunity to develop their professional skills, strengthen their understanding of financial services and prepare for careers in the industry.

The program enables Goldman Sachs to recruit talented troops who are transitioning from the military to the civilian workforce. Goldman Sachs encourages those who have completed at least one year of active military service and demonstrate an interest in financial markets to apply.

Outside of their day-to-day responsibilities, participants complete a curriculum including a series of trainings on financial markets and products, networking opportunities and events with Goldman Sachs leaders who share career experiences and insights into the firm’s culture. While in the program, each VIP participant is paired with a peer buddy and a mentor from the Goldman Sachs Veterans Network.

Veterans On Wall Street (VOWS)

Goldman Sachs co-founded Veterans on Wall Street (VOWS), an initiative that helps former and current military personnel discover career opportunities in finance. On November 10, 2015, Goldman Sachs hosted the fifth annual VOWS Symposium and Hiring Fair.

Networking and Mentorship

The Goldman Sachs Veterans Network recruits talented troops and fosters their professional development at the firm. The network also advises on military-related engagements – with nonprofits, veteran-owned businesses and the community – to ensure that Goldman Sachs is a military employer-of-choice and a corporate leader in veterans’ affairs.

Goldman Sachs Gives 

Goldman Sachs Gives (GSG) funded a network of nonprofits whose mission is to reintegrate wounded and disabled veterans. The initiative focuses on job placement and readiness, and family support and counseling.  Partners include: The Mission Continues, offering service-based fellowships to veterans; Vets Prevail, providing mental health counseling and resources; and Team Rubicon, deploying returning veterans to assist in disaster relief. 

Goldman Sachs Gives is committed to fostering innovative ideas, solving economic and social issues, and enabling progress in underserved communities globally. Through a donor-advised fund, Goldman Sachs’ current and retired senior employees work together to recommend grants to qualifying nonprofit organizations to help them achieve their goals.

Community Teamworks

As part of Community TeamWorks, the people of Goldman Sachs support veterans through team-based volunteer projects around the world. In 2015, 550 volunteers contributed 3,500 hours to help 1,300 veterans and their families.

So, when I write here in the “QC” that D&I is in a corporation’s DNA, the aforementioned is a perfect illustration of exactly what that means.

The “QC” Geopolitical Risk Monitor

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Quigley’s Corner 06.01.18 Weekend Edition: Latest Unemployment Rate Trumps Lowest Figure in 50 Yrs; Moody’s Makes It’s Case for Diversity & Inclusion

Investment Grade New Issue Re-Cap – Stealing All Headlines: The Great U.S.A. Flexes Economic Muscle!

Today’s IG Primary & Secondary Market Talking Points – Mischler On Moody’s Corp.

Syndicate IG Corporate-only Volume Estimates For This Week and May

Moody’s Corp. 3yr Global Senior Unsecured Notes due 6/07/2021: Mischler DCM Drill-Down

Utilities Power Up- Thanks to the EEI

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

“Knowing the Past for the Future” – A Look at a Decade’s Worth of June IG Corporate and SSA Issuance

Syndicate IG Corporate-only Volume Estimates for Next Week and June

The “QC” Geopolitical Risk Monitor

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

New Issues Priced

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

Indexes and New Issue Volume              

Global Market Recap

2018 Lipper Report/Fund Flows – Week ending May 30^th        

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

Economic Data Releases

Tomorrow’s Calendar

Pre-release Presidential unemployment tweet or no tweet, this morning’s U.S. domestic data releases were AWESOME!  Recently we’ve witnessed Emerging Markets falling out of bed to rising oil prices; from Italy to trade wars, but today the United States of America trumped the global macro news headlines by posting a 3.8% Unemployment Rate, the lowest in 50+ years. The Underemployment Rate fell two-tenths of 1% to 7.6%.  Personal Income beat, and Spending crushed with a 1.8% number versus 0.8% expectations. U.S. Equity markets rose a couple hundred points and suddenly the U.S. has pushed so much headline risk to the side.  It’s all still there but it should be a sign to Americans, Corporations and the world just how powerful the USA engine is and how critically dependent the world relies on its success.
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Today’s results put a certain rate hike on the table at the FOMC’s next Rate Decision meeting held from, June 12^th  thru the 13^th thereby lending needed clarity to our market.

I’ve said it here before and I will say it again: love him or hate him or anything else in between, the President and his Administration deserve credit for data like today’s and it would be un-American not to cheer for your nation’s success. More importantly in terms of social responsibility,  the African-American and Hispanic American unemployment rates are at the lowest in their history, and Women achieved their highest employment numbers in over 19 years.

Oh, and the June 12^th U.S. North Korean Summit is back on for June 12^th. A nice way to end the week.

It’s Friday and you all know what that means.  The Best and Brightest in our world of investment grade rated Corporate new issuance have all spoken. They shared nice sound bites about next week and the month of June. First up though are the recaps followed by in order:

• The deal drill down of today’s Moody’s Corp. transaction on which Mischler served as an active 3.00% Co-Manager.
• A look into Moody’s D&I initiatives with a focus on the people behind them and their veteran-focused programs.
• Then there’s a brief summary of the Edison Electric Institute’s 2017 Financial Review Annual Report of the investor-Owned Electric Utility Industry
• Then it’s all about the Best and Brightest on their thoughts and forecasts for next week and June.

So, sit back, relax in the comfort of wherever you may be and set the table for next week’s IG dollar primary market expectations. You deserve the two day sojourn just ahead. Get comfortable. This daily is done for YOU thanks to the guy-in-the corner.  ……that would be “Quigley’s Corner!” Enjoy and thanks as always for tuning in!

Today the IG dollar DCM hosted 3 issuers across 3 tranches totaling $605mm.  The SSA space was quiet.

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 28.00% of this week’s syndicate midpoint average forecast or $5.605b vs. $20.02b.
• MTD we’ve priced 89.09% of the syndicate forecast for April IG Corporate new issuance or $120.13b vs. $134.84b.
• There are now 16 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points – Mischler Secures Another Friday Print This Time for Moody’s Corp.

• Mischler Financial served as an active 3.00% Co-Manager on Moody’s Corps. $300mm “will not grow” 3-year Global Senior Unsecured Notes new issue due 6/07/2021. As a result it is today’s featured “Deal-of-the-Day.” However, let’s first review today’s primary market talking points. Please be sure to read about the wildly Moody’s transaction by scrolling below just ahead of today’s Best & Brightest section. Thanks! -RQ
• The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 2 IG Corporate-only new issues was <13.5> bps.
• BAML’s IG Master Index widened 2 bps to +122 vs. +120. (It’s post-Crisis low is +90 set on 2/01).
• Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +1.15. (1.15 represents a new high. 0.85 is its post-Crisis low set on 1/30).
• Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +155 vs. +154. (+125 represents its post-Crisis low set 2/02).
• Investment grade corporate bond trading posted a final Trace count of $22.5b on Thursday versus $21.9b on Wednesday and $16.6b the previous Thursday.
• The 10-DMA stands at $17.1b.
• For the week ended May 30^th, Lipper U.S. Fund Flows reported a net inflow of $848.978m into Corporate Investment Grade Funds (2018 YTD net inflow of $43.822b) and a net outflow of $17.869m from High Yield Funds (2018 YTD net outflow of $15.138b).

• Taking a look at the secondary trading performance of this week’s 11 IG new issues new issues 5 tightened versus NIP for a 50% improvement rate, 5 widened  (45.50%) and 1 were flat (9.00%).
  

Syndicate IG Corporate-only Volume Estimates For This Week and May

Moody’s Corp. 3yr Global Senior Unsecured Notes due 6/07/2021

Mischler Financial is very happy to announce that it was invited to serve as an active 3.00% Co-Manager on today’s $300mm Moody’s Corp. (NYSE: MCO)  3-year fixed rate Global Senior Unsecured Notes new issue due 6/07/2021.

There were a couple logical ways to approach fair value on today’s transaction.  The first path looked to the outstanding MCO 2.75% due 12/15/2021 that was T+78, G+73 this morning pre-announcement pegging new issue concession as negative 3 bps versus today’s T+70 new issue pricing.

However, there were a wide range of quotes on the 2021s so, if you took a mid-point of the 3 joint leads (BAML, Citigroup and JPM), it was T+80 bid or G+75 nailing NIC as <5> bps.

Ever the politician (Ha!) I am averaging the two analyses and taking the average so the guy-in-the-corner calls NIC on today’s Moody’s new issue negative 4 bps. Either way you look at it folks this was a great deal and the timing, well, it’s now officially legendary!

Moody’s Corp. Deal Dashboard

Use of proceeds from today’s transaction will be used for general corporate purposes, which may include repayment of a portion of the $350mm outstanding under the loan agreement between Moody’s, as borrower, the lenders from time to time party thereto and J.P. Morgan Chase Bank, N.A. as administrative agent, entered into on June 6, 2017 to finance the acquisition of Bureau van Dijk (the “term Loan Facility”). .

………and here’s a snap shot of today’s final Moody’s Corp. book sizes and oversubscription rates – the measure of investor demand:

Today’s Moody’s Corp. final order book finished at $1.70b making the 3-year Global Senior Unsecured Notes transaction 5.67x-times oversubscribed. “At the top” or at guidance, the book was as high as $1.90b or 6.33x covered. That folks, is VERY impressive especially given the volatility we’ve been witnessing of late. Congrats to Zeeshan Naqvi on his impeccable timing and Moody’s Corp. as well as Team Citigroup Syndicate (Scott, Frank, Adnes and Andrew) with whom it is always my great pleasure to work with on deal day.

Have a look:

Final Pricing – Moody’s Corp.
MCO $300mm 3.25% due 6/07/2021 @$98.85 to yield 3.303% or T+70

Moody’s Corp. – Commitment to Diversity & Inclusion

When we talk about diversity in our financial services industry, it begins with issuers like GECC and MBNA just before that. If you work in our IG dollar DCM and never heard of Kitty Yoh, well then ………you never did.  She is retired, but have no doubt she is legendary.  Her past senior Treasury team featured some pretty impactfull people who helped create, develop and execute GECC’s iconic D&I initiative in our financial services industry.  Chris Coffey, now with Synchrony Financial and Zeeshan Naqvi, Moody’s Treasurer, are two such legends in our business, who came up through the ranks and are among the best there is in Treasury/Funding.  I’ll sneak in here that my wife, formerly Natalie Armenteros, priced the first-ever Euro denominated issue on the planet (it was for EIB), as well as a slew of GECC’s Euro issuances, including GE’s first Euro new issue whilst she served as head of Paribas’ Syndicate desk in Geneva, Switzerland. I have known Zeeshan for as long as I can remember, from the bulge bracket to the D&I b/d space over 12 years ago. Moody’s D&I and Zeeshan are the focus of this evening’s D&I drill down.

Zeeshan took what he learned in life and working at GECC and brought it with him to Moody’s Corp. bridging the issuer’s already sprouting commitment to social responsibility.  As Zeeshan told me today, “Moody’s takes great efforts to execute Diversity and Inclusion not only internally here within the Company and in their transactions, but we are incredibly active in the community.” As with all such corporate though-leading initiatives, here they begin with the senior leadership team, and at Moody’s Corp. that means President and Chief Executive Officer Randall W. McDaniel. Moody’s leadership team is committed to making diversity and inclusion part of the fabric of its organization. From the office of the CEO to Zeeshan in Treasury/Funding, D&I is implemented across every aspect of Moody’s business.  That only helps create an environment that maximizes every employee’s contribution, widens the leadership pipeline and ultimately increases the quality of opinions, products and services.

I can tell you that in dealing with Zeeshan he is passionate about educating us here at Team Mischler to understand his Company’s diversity and inclusion initiatives, and values our partnership as the nation’s oldest Service-Disabled Veteran broker dealer. Moody’s Diversity Council is responsible for implementing its diversity and inclusion strategies. To achieve its goals, the council is organized into working groups that focus on strategic priorities, developing an action plan and making it a reality. They prioritize educating its employees so that they understand the value of its D&I mandate.

Moody’s and Veterans

As it pertains specifically to Mischler Financial’s Service-Disabled Veteran certification, Moody’s Veteran Employee Resource Group or “ERG” was created to recognize and support veterans, active duty military personnel and military families both at Moody’s and in its communities. Members primarily focus on outreach efforts, including workforce integration and raising awareness around issues that impact veterans. Moody’s is a Global partner with VOWS or Veterans on Wall Street, Diversity Best Practices, and Columbia University Military Veterans Program.

If you didn’t know it before reading today’s “QC” you do now – legendary prints are being made by legendary companies that embrace legendary diversity and inclusion initiatives. It is always my great privilege, honor and personal responsibility to help get those and YOUR D&I stories to the Street – from Wall Street to Main Street.

It is this social responsibility aspect of my job that will always drive and motivate me to go the extra mile.  Friday no print?  Are you kidding me?  Bring it on folks. This is what it’s all about.

Congratulations to Moody’s Corp and to my friend Mr. Zeeshan Naqvi. Thank you both for everything you do for D&I and the greater good, and congratulations on a job very well done today.

Utilities Power Up Thanks to the EEI

Edison Electric Institute today released its 2017 Financial Review Annual Report of the investor-Owned Electric Utility Industry that always provides a great recap of the financial performance and strategic direction of investor-owned utilities for the year.

Matching this morning’s stellar domestic economic data releases, the U.S. electric utility industry continues to benefit from its solid financial foundation. The EEI Index returned 11.7%, posting a second consecutive year of double-digit gains after 2016’s 17.4% return, and has now produced a positive total return in 13 of the last 15 years. The industry invested $113.6 billion in 2017 for a sixth-straight year of record-high capital expenditures, while continuing to improve its overall credit profile. Electric utilities continue to be a top dividend-paying sector and 88% of the industry increased the dividend in 2017, the second-highest percentage on record.

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

Thanks as always for tuning in to the daily “QC”, enjoy your read in preparation for the week ahead and enjoy a fabulous weekend with you and yours!I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 desks surveyed for today’s “Best & Brightest” Syndicate edition!  Thank you to all of them. 21 of today’s respondents are in the top 22 syndicate desks including 22 of the top 25 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 terminals at “LEAG” + [GO] after which you select (U.S. Investment Grade Corporates).  The participating desks represent 81.48% 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.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years – 2014, 2015 and 2016 !  More importantly, however, you are helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way.  So, thank you all! –RQ

“Friday arrived so fast.  Nothing beats the four day work week!

First let’s dive right into all the muck in our world by recapping the most up to date geopolitical event risk factors that impacted our markets this week:

• 5/31 – Sec. of State Mike Pompeo is encouraged by recent talks with NOKO envoys and an announced meeting on June 1^st between a senior nuclear negotiator and Pres. Trump. A personal letter will be hand delivered to Trump today at the White House by Kim Yong-chol, former director of NOKO’s intel bureau and vice-chair of the Cent. Comm. Of the Worker’s Party of Korea.
• 6/01 – Italy swore in new PM Giuseppe Conte, a former law professor as well as a coalition cabinet that includes both 5-Star Movement head Luigi Di Maio and League’s Mateo Salvini. The Borsa Italiana was up 2.50%. The EU released a statement saying they are confident the ruling coalition government will cooperate with Brussels.  Time will tell. On 5/31 – Right or wrong, EU chief Jean-Claude Juncker slammed Italians saying they need to work hard and stop blaming the EU to resolve their problems which will only exacerbate populist support tensions in the boot nation.  On 5/27 President Mattarella vetoed the coalition’s euro skeptic candidate, Paolo Savona as finance minister. Mattarella then vetoed all cabinet ministers, installed a EU friendly neutral gov’t. headed by an interim PM and former IMF economist as Italy looked to be headed for new elections. Di Maio and Salvini agreed to back down from Savona as Finance Minister. Still, Italy had gone without a government for 89 days shattering the old record of 82 set in 1996. The two populist parties have over 50% support, promote tough immigration reform, spending hikes, no sanctions against Russia, two tax brackets of 15% and 20%, erasing the previously boosted retirement age and a citizen’s income for the poor. Europe should have a contingency plan in place for a derailment of the Union. Italy had 70 post WWII gov’ts in 72 post-WWII years – one every 1.02 years. It is the EU’s 3^rd largest economy, has the world’s 3^rd highest debt-to-GDP ratio at 132.5% and a $2.8 trillion (equiv.) national debt. Italy is clearly the EU’s biggest economic risk. Italy’s banking sector holds $220bn of bad loans.
• 5/31 – Trade War fears heated up again. Sighting no progress with Europe and re-negotiating NAFTA, the Trump Admin. announced 25% tariffs on imported steel and 10% on aluminum on national security grounds against the EU, Canada, Mexico effective midnight. Counter tariffs were levied against U.S. goods in response roiling markets. 5/29 – Motivated by intellectual property rights violations, the Trump Admin. will levy 50% tariffs on Chinese imports as well as new controls and restrictions. Despite reduced tensions post Mnuchin’s 5/01 statement that Trump would “put the trade war on hold” negotiations have failed to produce a resolution. Trump indicated a list of tariffed imports will be available on June 15^th.
• 5/29 – Iran’s Ayatollah is concerned the EU will not be able to salvage their end of the Iran nuclear deal as EU nations that link their security to U.S. security will cave to U.S. demands. Iran doubts the EU can prevent major companies from withdrawing due to new U.S. sanctions. 5/08 – President Trump pulled the U.S. from JCPOA while imposing mort stringent sanctions against Iran. He also warned heavy sanctions against nations assisting Iran’s nuclear pursuits. On 4/30 Israeli PM Netanyahu showed evidence of Iran’s continued nuclear ambitions in violation of the JCPOA.
• 5/29 – Gaza Strip based Hamas and rebels launched over two dozen rockets into southern Israel in the largest barrage of Palestinian fire since 2014. Israel answered with targeted bombings.
• 5/29 – U.S. interest rates: Amidst a rising rate environment, Italy, Spain and trade war fears counter by pushing investor cash into the safe haven of USTs thereby compressing yields.
• 5/31 – Spain’s Prime Minister Mariano Rajoy will highly likely be ousted in a vote on Friday, June 1^st as Socialists have enough votes of no confidence to boot the leader of a corrupt Administration that has seen nearly 30 officials convicted on various crimes of graft and conspiracy. The disgraced PM can resign ahead of tomorrow’s demoralizing vote. Rajoy has been at the helm of the Spanish gov’t. through the sovereign debt crisis, a national bailout and its own recession and ongoing Catalan independence crisis. Socialist leader Pedro Sanchez looks to win a slim majority in the 350 member Parliament but his party would rule as a minority with less than 25% support but is backed by his own Socialist cause, the Basque nationalist party and far left groups, similar to Italy.
• 5/31 – Hard vs. soft BREXIT battle continues.  UK PM May is under increasing Tory pressure to defy hard-liners in her party to compromise for a more pragmatic solution. Talk of May’s hardline stance could result in a vote of no confidence.
• May 2018 Terror Event MTD Casualty Total: 135 terrorist attacks; 917 dead; 1,133

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

Attention Syndicate Desks: Please note that the five key primary market driver averages in the below survey question have been updated from this morning to include today’s Moody’s, Texas Instruments or MetLife $25 Preferred new issues that priced or were green shoed  Nothing but the best for the “Best and the Brightest!” 

• The IG Corporate WTD total stands at $5.00b. We priced $15.02b less than this week’s average midpoint estimate of $20.02b or <75.02%>.
• MTD we priced 88.64% of the syndicate midpoint forecast for IG Corporate new issuance or $119.525b vs. $134.84b.
• Entering today’s session, the YTD IG Corporate-only volume is $584.196b vs. the $652.039b YoY which is <$67.843b> or <10.40%> less than a year ago.
• The all-in or IG Corporate plus SSA YTD volume is $734.261b vs. $808.831b YoY which is <$74.57b> or <9.22%> less than vs. 2017.

Here are the five key primary market driver averages for the 9 IG Corporate-only deals that priced this week.  

• NICS: 9.00 bps  
• Oversubscription Rates: 2.73x
• Tenors: 9.69 years
• Tranche Sizes: $467mm
• Spread Compression from IPTs to the Launch: <8.23> bps

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

• Week on week, average NICs tightened 0.67 bps to an average 9.00 bps vs. 9.67 bps across this week’s 11 IG Corporate-only new issues that displayed relative value.
• Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.20x to an average 2.73x vs. 2.93x. 
• Average tenors expanded by 1.99 years to an average 9.69 years vs. 7.70 years.
• Tranche sizes decreased by $485mm to $467mm vs. $952mm last week.
• Spread compression from IPTs to the launch/final pricing of this week’s 11 IG Corporate and Preferred-only new issues widened by 10.48 bps to <8.23> bps vs. <18.71> bps.
• Standard and Poor’s Investment Grade Composite Spread widened 5 bps to +155 bps vs. +150 week-on-week. 
• Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened by 6 bps to a new high of 1.15 vs. 1.09 week-on-week.
• Investment grade corporate bond trading posted a final Trace count of $22.5b on Thursday versus $21.9b on Wednesday and $16.6b the previous Thursday.   
• The 10-DMA stands at $17.1b.
• The VIX widened 2.21 or 16.717% to 15.43 at yesterday’s close vs. last Friday’s 13.22 close.

• Week-on-week, BAML’s IG Master Index widened 7.00 bps to +122 vs. +115 week-on-week.  
• Spreads across the four IG asset classes widened 5.00 bps week-on-week to 25.50 vs. 20.00 bps as measured against its cumulative post-Crisis low.
• Spreads across the 19 major IG industry sectors widened 5.73 bps to an average 32.26 vs. 26.53 bps as measured against their average cumulative post-Crisis lows!
• For the week ended May 30^th, Lipper U.S. Fund Flows reported a net inflow of $848.978m into Corporate Investment Grade Funds (2018 YTD net inflow of $43.822b) and a net outflow of $17.869m from High Yield Funds (2018 YTD net outflow of $15.138b).

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

• IG Corps: $5.00b
• All-in IG (Corps + SSA): $5.00b

And now it’s time for today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

The “Best and the Brightest” in Their Own Words (more…)

Quigley’s Corner 05.18.18 Investment Grade Debt Market Commentary:Spotlight On Synchrony Bank

Investment Grade New Issue Re-Cap – Synchrony Bank Owns the Friday Leaderboard

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates For This Week and May

Global Market Recap

The Best and the Brightest” Syndicate Forecasts and Sound Bites 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

Indexes and New Issue Volume

2018 Lipper Report/Fund Flows – Week ending May 16^th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Today Synchrony Bank (wholly-owned subsidiary of Synchrony Financial NYSE:SYF) owned the IG dollar primary market leaderboard with its $750mm 3(a)5 exempt 3-year senior bank notes transaction. What’s more, Mischler Financial, the nation’s oldest Service Disabled Veteran-owned and operated broker dealer was honored to be named as an active 1.00% Co-Manager. Thank you to stalwart Chris Coffey who is no stranger to diversity and inclusion mandates in our DCM. Chris was there from the get-go back in his days at MBNA when during his time he helped steer that issuer to become a founding father of inclusion transactions along with some other large FIGs. That pre-dates Chris’ GECC days! We appreciate SYF’s patronage and our active role today. Thank you as well to both Citigroup and MUFG Syndicate and of course, to the best darn middle markets distribution network on the street for your loyalty and continued belief in and support of the “value-added” proposition. Congrats also to Chris for his first Friday print at SYF and for his efforts in continuing to implement and guide a stellar diversity mandate that saw 7 diversity firms on today’s new 3-year that included a Service Disabled Veteran-owned broker-dealer three African-American-owned BDs a Hispanic-American owned firm, and a Woman-owned firm.

Today’s final Synchrony order book finished at just over $1.8b making the deal 2.40-times oversubscribed.  Concession on today’s deal was negative 2 bps given new 5-year SYF bank paper is +135. Adjusting <35> bps for the 3s/5s curve gets you to +100 against today’s final T+98 pricing pegs NIC as <2> bps.  A nice day for SYF, the leads and congratulations to Chris on a successful first Friday print at Synchrony! Net, net – a VERY GOOD RESULT for all!

Overseas in the EU two new issues were postponed including the first in 2018 for an investment grade rated issuer pointing to investor fatigue following one of the busier weeks of the year. 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 96.86% of this week’s syndicate midpoint average forecast or $32.855b vs. $33.92b.
• MTD we’ve priced 68.69% of the syndicate forecast for April IG Corporate new issuance or $92.625b vs. $134.84b.
• There are now 17 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 1 IG Corporate-only new issue was <14.50> bps.
• BAML’s IG Master Index was unchanged at +114. (It’s post-Crisis low is +90 set on 2/01).
• Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.09 vs. at 1.08.  (0.85 is its post-Crisis low set on 1/30).
• Standard & Poor’s Investment Grade Composite Spread was unchanged at +147. (+125 represents its post-Crisis low set 2/02).
• Investment grade corporate bond trading posted a final Trace count of $19.7b on Thursday versus $20.8b on Wednesday and $19.1b the previous Thursday.
• The 10-DMA stands at $17.9b.
• Taking a look at the secondary trading performance of this week’s 43 IG new issues comprised of 38 IG Corporates and 5 SSAs new issues 25 tightened versus NIP for a 58.25% improvement rate, 13 widened  (30.25%) and 5 were flat (11.50%).
• For the week ended May 16^th, Lipper U.S. Fund Flows reported a net inflow of $3.069b into Corporate Investment Grade Funds (2018 YTD net inflow of $40.444b) and a net outflow of $541.871m from High Yield Funds (2018 YTD net outflow of $15.381b).
  

Syndicate IG Corporate-only Volume Estimates For This Week and May

Global Market Recap

• U.S. Treasuries – ended a poor week with a solid rally.
• Overseas Bonds – JGB’s unchanged. Bunds/Gilts rallied. Peripheral bonds were hit.
• SOFR – 1.74% FROM 1.75%.
• 3mth Libor – 2.32938% from 2.33125%.
• Stocks – Mixed as of 3pm.
• Overseas Stocks – Asia closed higher. Europe lost ground.
• Economic – Nothing on the calendar today.
• Overseas Economic- – Japan CPI was very tame. Europe inflation data MoM was higher.
• Currencies – DXY Index traded at a YTD high, Euro YTD low and ADXY Index at a YTD low.
• Commodities – Crude small loss. Gold up and copper down. Wheat saw a big rally.
• CDX IG: +0.82 to 61.73
• CDX HY: +1.60 to 340.22
• CDX EM: +5.30 to 170.73
• VIX: -0.09 to 13.34

*CDX levels are as of 3:30PM ET today.

-Tony Farren, Managing Director, Rates Trading

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

Taking a look at the secondary trading performance of this week’s 43 IG new issues comprised of 38 IG Corporates and 5 SSAs new issues 25 tightened versus NIP for a 58.25% improvement rate, 13 widened  (30.25%) and 5 were flat (11.50%).

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

Thanks as always for tuning in to the daily “QC”, enjoy your read in preparation for the week ahead along with my impassioned plea to enjoy a fabulous weekend with you and yours!

Okay, the fixed income syndicate sound test is complete.  I have over 3,500 readers in the audience. Fade out the overture. Lights, camera, action!:

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 desks surveyed for today’s “Best & Brightest” Syndicate edition!  Thank you to all of them. 21 of today’s respondents are in the top 22 syndicate desks including 21 of the top 24 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 terminals at “LEAG” + [GO] after which you select (U.S. Investment Grade Corporates).  The participating desks represent 81.00% 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.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years – 2014, 2015 and 2016 !  Syndicate Desks: Please Note that we had a Friday print today from “SYF” so I updated the below survey question data to reflect Synchrony Bank’s 3-year new issue. If you notice any differences that’s why. Thanks! -RQ

As always, before we get to the technical data let’s first review this week’s top geopolitical risk factors:

• 5/17 – Kim Jong-un warned that the de-nuclearization summit could be compromised due to John Bolton’s paralleling a NOKO-U.S. de-nuke deal with the Libyan “model of nuclear abandonment.” Bolton is highly qualified but needs to tone down and save the rhetoric for if and when needed – not prior to the historic summit.
• 5/14 – Although Pres. Trump reversed sanctions on China’s ZTE telecom it was done in exchange for China agreeing not to impose tariffs on U.S. agricultural products that had been levied in response to Trump’s earlier steel and aluminum tariffs.
• 5/14 – Tensions mounted in the Middle East as Israeli troops fired on protesting Palestinians along the fenced Gaza strip killing 55 and wounding over 1,700. More violent and armed men were intermingled with the mostly peaceful Palestinian demonstrators including families with children. Once they burst through fencing Israeli snipers began to shoot into the onrushing crowd. The protest happened to coincide with the opening of the U.S. embassy in Jerusalem leaving friction at its highest level in years in the historic conflict.  
• 5/16 – U.S. interest rates: The strong U.S. economy is supporting rising UST yields. T2s & 5s reached highs since 2008; CT10 since 2011 and the LB peaked at 3.10% (2015) a higher yield trading band is established. The sensitivity of EM currencies to higher rates is chronic. Combined with their own additional political risks, EM risks falling out of favor as currencies fall out of bed. 
• 5/17 – Pressure on UK PM Theresa May mounts as Britain’s House of Lords dealt BREXIT its 15^th defeat, this time over environmental protections issues by a 54%-46% margin. In addition, friction intensified between supporters of a post-BREXIT customs partnership with the EU vs. resistance by those who support technology to monitor the critical border between Ireland and Northern Ireland.
• May 2018 Terror Event MTD Casualty Total: 79 terrorist attacks; 618 dead; 781 wounded.
• 5/17 – Italy’s two ant-establishment parties 5-Star and League plan tough immigration reform, lifting all sanctions against Russia, creating 2 tax brackets of 15 and 20%, dropping a previously increased retirement age and a citizen’s income for the poor. Wishful thinking!
  

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

• The IG Corporate WTD total stands at $32.855b. We priced $1.065b less than this week’s average midpoint estimate of $33.92b or <3.14%>.
• MTD we priced 68.69% of the syndicate midpoint forecast for IG Corporate new issuance or $92.625b vs. $134.84b.
• Entering today’s session, the YTD IG Corporate-only volume is $557.296b vs. the $574.314b YoY which is <$17.018b> or <2.96%> less than a year ago.
• The all-in or IG Corporate plus SSA YTD volume is $705.361b vs. $717.956b YoY making it  <$12.595b> or <1.75%> less than vs. 2017.
  

Here are the five key primary market driver averages for the 57 IG Corporate-only deals that priced this week: 

• NICS:  4.59 bps  
• Oversubscription Rates: 2.96x
• Tenors: 10.18 years
• Tranche Sizes: $842mm
• Spread Compression from IPTs to the Launch: <15.12> bps
  

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

• Week on week, average NICs widened 0.49 bps to an average 4.59 bps vs. 4.10 bps across this week’s 43 IG Corporate-only new issues that displayed relative value.
• Over subscription or bid-to-cover rates, the measure of demand, increased by 0.26x to an average 2.96x vs. 2.70x. 
• Average tenors extended by 3.14 years to an average 10.18 years vs. 7.04 years.
• Tranche sizes increased by $37mm to $842mm vs. $805mm last week.
• Spread compression from IPTs to the launch/final pricing of this week’s 43 IG Corporate-only new issues tightened by 2.21 bps to <15.12> bps vs. <12.91> bps.
• Standard and Poor’s Investment Grade Composite Spread tightened 1 bps to +147  bps vs. +148 week-on-week. 
• Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 2 bps to 1.09 vs. 1.11 week-on-week.
• Investment grade corporate bond trading posted a final Trace count of $19.7b on Thursday versus $20.8b on Wednesday and $19.1b the previous Thursday.  
• The 10-DMA stands at $17.9b.
• The VIX widened 0.78 or 6.16% to 13.43 at yesterday’s close vs. last Friday’s 12.65 close.

• Week-on-week, BAML’s IG Master Index tightened 2.00 bps to +114 vs. +116 week-on-week.  
• Spreads across the four IG asset classes tightened 2.00 bps week-on-week to 18.75 vs. 20.75 bps as measured against its cumulative post-Crisis low.
• Spreads across the 19 major IG industry sectors tightened 1.89 bps to an average 25.11 vs. 27.00 bps as measured against their average cumulative post-Crisis lows!
• For the week ended May 16^th, Lipper U.S. Fund Flows reported a net inflow of $3.069b into Corporate Investment Grade Funds (2018 YTD net inflow of $40.444b) and a net outflow of $541.871m from High Yield Funds (2018 YTD net outflow of $15.381b).

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

• IG Corps: $32.855b
• All-in IG (Corps + SSA): $37.355b

And now it’s time for today’s question posed to the senior members of the Industry’s top 24  fixed income syndicate desks: “What are your thoughts and numbers for next week’s IG Corporate new issue volume?”
 

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 are some of the best diversity firms are, my hope is that you’ll mention Mischler Financial and the guy-in-the-corner.  Our distribution is high quality, prolific and consistent. On deal day, we perform enough to influence your bid-to-cover rates with REAL high quality and unpadded “sticky” investor orders. The “QC” won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years….2014, 2015 and 2016! But most of all we have a great certification-the nation’s oldest Service Disabled Veteran owned and operated broker dealer.

Wishing you and yours a wonderful weekend!
Ron Quigley, Managing Director, Head of Fixed Income Syndicate

The “Best and the Brightest” in Their Own Words

(more…)

Quigley’s Corner 01.17.18 – FIGs Float Just Fine (CITI, DB, PNC, WBK)

 “Neither the depth of despondency nor the height of euphoria tells you how long either will last.” Thomas Sowell

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points: FIGs in Focus

Syndicate IG Corporate-only Volume Estimates For January

Global Market Recap

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

The “QC” Geopolitical Risk Monitor

New Issues Priced

Indexes and New Issue Volume              

Lipper Report/Fund Flows – Week ending January 11^th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Rates Trading Lab

Economic Data Releases

Tomorrow’s Calendar 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 7 issuers across 13 tranches totaling $10.70b.  The SSA space added 3 issuers and 3 tranches for $3.75b bringing the all-in IG day totals to 10 issuers, 16 tranches and $14.45b.
Here’s a look at MTD IG Corporate new issue volume as measured against syndicate desk estimates:

• The IG Corporate WTD total is 81.98% of this week’s syndicate midpoint average forecast or $23.15b vs. $28.24b.
• MTD we’ve priced 64.06% of the syndicate forecast for January IG Corporate new issuance or $82.825b vs. $129.29b.
• There are now 10 issuers in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points 

• Mischler Financial served as a Junior Co-Manager on today’s Citigroup Inc. $1b 21nc20 Senior Unsecured Notes tranche. Thanks and appreciation to Citi Team Treasury/Funding and Syndicate for working with me today. Today’s 21nc20 tranche finished with a $1.9b book for a 1.90x bid-to-cover rate.
• Mischler Financial also served as a Junior Co-Manager on today’s Deutsche Bank AG/New York Branch $2.15b two-part 3-year Fixed and FRN Senior Notes new issue.  Thank you to Team DB Treasury/Funding and Syndicate for their patronage. Today’s DB 2-part finished with a cumulative 3.375b order book total for an overall oversubscription rate of 1.57x.  The book splits were as follows – FRN: $875mm or 1.35x and the Fixed tranche was $2.5b (1.67x).  NIC was about one nickel or 5 bps on both.
• TPG Specialty Lending Inc. upsized today’s 5-year Senior Notes new issue to $150mm from $100mm at the launch and after skipping guidance.
• The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 13 IG Corporate-only new issues was <15.52> bps.
• The “BBB” (+121) asset class set new post-Crisis low.
• The IG Average (+94), “AA” (+53) and “A” (+73) asset classes all tied their post-Crisis lows.
• 13 of the 19 major investment grade sector credit spreads (68.4%) either set or tied post-Crisis.
• These 6 sectors set new post-Crisis lows: Basic Industry (+118), Energy (+122), Leisure (+104), Services (+96), Transportation (+96) and Utility (+100).
• These 7 Sectors tied their lows: Banking (+79), Consumer Products (+80), Healthcare (+80), Industrials (+98), Insurance (+105), Real Estate (+106) and Retail (+86),
• BAML’s IG Master Index was unchanged at +94 tying its post-Crisis low.
• Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.89 vs. 0.90.
• Standard & Poor’s Investment Grade Composite Spread was unchanged at +131 tying its new post-Crisis low.
• Investment grade corporate bond trading posted a final Trace count of $19.7b on Tuesday versus $16.2b on Friday and $20.7b the previous Tuesday.
• The 10-DMA stands at $17.3b.

Syndicate IG Corporate-only Volume Estimates For This Week and January

Global Market Recap

• U.S. Treasuries – 7yr leads USTs south. 2yr, 3yr and 5yr traded at high yields in years.
• Overseas Bonds – JGB’s weaker. Bunds and Gilts little changed. Peripherals mixed.
• 3mth Libor – Set at 1.73918% the highest yield since December 2008.
• Stocks – Big rally at 3pm. Dow traded at its all-time high.
• Overseas Stocks – Asia closed mixed. Europe had a losing day.
• Economic – Mixed data favoring the upside. Cap U the highest since January 2015.
• Overseas Economic – Japan core machine orders strong. EU CPI YoY very tame.
• Currencies – DXY Index hit its low since January 2015.
• Commodities – CRB traded at its high since November 2015.
• CDX IG: -0.21 to 47.80
• CDX HY: -0.54 to 298.76
• CDX EM: -0.48 to 109.88
• VIX: -0.16 to 11.50

*CDX levels are as of 3:30PM ET today.

-Tony Farren

Have a great evening!
Ron Quigley, Managing Director, 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 Tuesday’s session followed by the averages over the prior six weeks:

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

Please Note: for ratings I use the better two of Moody’s, S&P or Fitch.

IG

SSA

Indexes and New Issue Volume              

Countable IG volume includes maturities of 18-months and out and IG-rated Preferreds.

*Denotes new all-time high or tight.

2018 Lipper Report/Fund Flows – Week ending January 11^th

• For the week ended January 11^th, Lipper U.S. Fund Flows reported an inflow of $4.186b into Corporate Investment Grade Funds (2018 YTD net inflow of $5.151b) and a net inflow of $2.651b from High Yield Funds (2018 YTD net inflow of $2.837b).

• Over the same period, Lipper reported a net outflow of $12.514m from Loan Participation Funds (2018 YTD net outflow of $209.799m).

• Emerging Market debt funds reported a net inflow of $1.532b (2018 YTD inflow of $2.005b).

IG Credit Spreads by Rating

(more…)

Quigley’s Corner 11.28.17 Bearish Flattening; Tax Reform; US Corporate Debt Capital Markets Unscathed; Rinse Repeat

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates For This Week

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

Rates Trading Lab

New Issues Priced: Synchrony Financial and Deutsche Bank AG New York 

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending Nov 22

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 8 issuers across 8 tranches totaling $4.25b.  The big story for our nation’s oldest Service Disabled Veteran broker dealer – Mischler Financial Group, Inc., is that we were named a Co-Manager on the day’s two largest issues – Deutsche Bank AG New York Branch’s $1bn 15NC10 fxd-to-fxd Reset Sub Tier 2 Notes and Synchrony Financial’s 10-year Senior Notes new issue.  Those two transactions also just happened to account for 47% of today’s IG Corporate issuance!  You know what that means? Both DB and SYF are today’s Deals-of-the-Day which I will get to in alphabetical order following a review of an incredible day for markets and geopolitical events risk factors that I strongly advise you stay tuned to.

The S&P 500, the DOW and Nasdaq all closed at new all-time highs.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate desk estimates:

• The IG Corporate WTD total is 47.81% of this week’s syndicate midpoint average forecast or $13.875b vs. $29.02b.
• MTD we’ve priced 109.03% of the syndicate forecast for October IG Corporate new issuance or $105.079b vs. $96.38b.
• There are now 11 issuers in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

• IHS Markit Ltd. (Ba1/BBB) bumped up its 8.25-year 144a/REGS Senior Notes new issue this afternoon to $500mm from $400mm at the launch and at the tightest side of guidance.
• Physicians Realty LP increased today’s 10-year Senior Notes new issue to $350mm from $300mm at the launch and at the tightest side of guidance.
• Life Storage LP upsized its 10-year Senior Notes new issue today to $450mm from $400mm at the launch and at the tightest side of guidance.
• BAML’s IG Master Index was unchanged at +104.
• Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.99.
• Standard & Poor’s Investment Grade Composite Spread was unchanged at +145.  The +140 reached on July 30^th 2014 represents the post-Crisis low.
• Investment grade corporate bond trading posted a final Trace count of $16.9b on Monday versus $1.7b on Friday and $15.7b the previous Monday.
• The 10-DMA stands at $14b.

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

Global Market Recap

• U.S. Treasuries – Unchanged (30yr) to small losses (balance of curve) in a choppy session.
• Overseas Bonds – JGB’s mixed. EU core & semi core little changed. Peripherals more green.
• 3mth Libor – Set at the highest level since December 2008 (1.47882%).
• U.S. Stocks – Big rally to all-time highs.
• Overseas Stocks – China rallied. Nikkei & HS tiny losses. Winning day in Europe.
• U.S. Economic – Mixed data today but the strong data was very, very strong.
• Overseas Economic – Not a factor today but will be tomorrow.
• Currencies – USD outperformed 4 of the Big 5. Solid rally for the DXY Index.
• Commodities – Down day from crude oil, gold, cooper, silver, etc. Strong session for natural gas.
• CDX IG: -0.89 to 52.65
• CDX HY: -4.71 to 317.68
• CDX EM: -1.15 to 179.38

*CDX levels are as of 3:30PM ET today.

-Tony Farren

The “QC” Geopolitical Risk Monitor

Deutsche Bank AG New York Branch 15NC10 fxd-to-fxd Reset Sub Tier 2 Notes Deal Dashboard 

Mischler Financial Group, Inc., the nation’s oldest Service Disabled Veteran broker dealer was honored today to serve on today’s $1b Deutsche Bank AG/New York Branch 15NC10 fixed-to-fixed Reset Subordinated Tier 2 Notes new issue. We thank Team DB for selecting Mischler as a Junior Co-Manager from among the host of diversity firms in our industry.

For the DB fair value study I looked at the outstanding 4.296% 15NC10 Global Sub Notes (5/24/2028) that was 4.63% to call or 4.70 YTM which is equal to T+237 vs. T10.  Adding 9 bps to account for the swap curve from 2028s to 2032s gets you to T+246 pegging NIC on today’s T+255 print at 9 bps. A personal “thank you” to Margaret Szczerbicki!

Use of proceeds from today’s transaction will be used for general corporate purposes.

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand:

Final Pricing – Deutsche Bank AG New York Branch 15NC10 fixed-to-fixed Reset Subordinated Tier 2 Notes

DB $1bn 4.875% (15nc10) fxd-to-fxd due 12/01/2032 @ $99.968 to yield 4.878% or T+255  Reset 5yr MS +255.3

Synchrony Financial $1bn 10-year Senior Notes Deal Dashboard 

Mischler Financial Group, Inc., is proud to announce that it also served as an active 1.00% Co-Manager on Synchrony Financial’s $1bn 10-year Senior Notes new issue today.  We have enjoyed a longtime partnership with Synchrony.

For the Synchrony Financial relative value study I looked to the outstanding SYF 3.70% Senior Unsecured Global Notes due 8/04/2026 that were T+148 (G+153) pre-announcement. Adding 5 bps for the extension from the SYF 8/2026 to today’s SYF 12/2027 gets us to G+158 landing on today’s +165 print as 7 bps.

Use of proceeds from today’s transaction will be used for general corporate purposes.

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand:

Final Pricing – Synchrony Financial 10-year Senior Notes

SYF $1bn 3.95% due 12/01/2027 @ $99.714 to yield 3.985% or T+165

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Quigley’s Corner 10.24.17 – A Common Thread re Ford Motor Credit and Goldman Sachs Corporate Debt Issuance  

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points: Spotlight on Ford Motor Credit & GS

Global Market Recap

Syndicate IG Corporate-only Volume Estimates For This Week and October

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

Rates Trading Lab

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending October 18^th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

The “QC” Geopolitical Risk Monitor

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 3 issuers across 7 tranches totaling $9.45b.  The SSA space featured 4 issuers and 6 tranches for $7.50b bringing the all-in IG day totals to 7 issuers, 13 tranches and $16.95b. Clearly the mega deal of the day belongs to The Goldman Sachs Group, Inc. that issued a $7b three-part Senior Unsecured Global Notes transaction for which Mischler served as an active Co-Manager on the 21nc20 fixed-to-floating tranche due 10/31/2038.  That deal and more specifically that tranche is today’s Deal-of-the-Day.

Here are the day’s recaps first:

The DOW skyrocketed 168 points to close at a new all-time high of 23,441 propelled by stellar earnings from the likes of Caterpillar, 3M, GM and Fiat Chrysler.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate estimates:

• The IG Corporate WTD total is 108.88% of this week’s syndicate midpoint average forecast or $23.724b vs. $21.79b.
• MTD we’ve priced 98.36% of the syndicate forecast for October IG Corporate new issuance or $90.178b vs. $91.68b.
• There are now 8 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

• Mischler Financial is proud to have been named a Selling Group member on today’s $1bn Ford Credit Auto Lease Trust Series 2017-B. Thank you Team Ford for choosing Mischler from among your diversity candidates.
• The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate-only new issues was <18.71> bps.
• BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
• BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
• 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
• 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
• Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.
• Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +144 vs. +143.  The +140 reached on July 30^th 2014 represents the post-Crisis low.
• Investment grade corporate bond trading posted a final Trace count of $15.5b on Monday versus $13.8b on Friday and $14.3b the previous Monday.
• The 10-DMA stands at $16.4b.

Global Market Recap

• U.S. Treasuries – USTs market continues to struggle. 10yr closed over 2.40%.
• Overseas Bonds – JGB’s mixed & flatter. Down day in Europe.
• 3mth Libor – Set at its highest yield (1.37064%) since January 2009.
• Stocks – Earnings sends U.S. stocks higher. Dow at all-time high.
• Overseas Stocks – Asia weaker expected. Japan (record winning streak). Europe better.
• Economic – All 3 Markit PMI’s were better but Richmond manufacturing was weaker.
• Overseas Economic – Japan data weaker. Europe data mixed but solid overall.
• Currencies – USD better bid vs. 4 of the Big 5 bit the DXY Index was little changed.
• Commodities – CRB traded at high since May. Crude & gasoline up. Gold down.
• CDX IG: -0.20 to 52.73
• CDX HY: -0.44 to 308.86
• CDX EM: +0.34 to 174.84

*CDX levels are as of 3:30PM ET today.

-Tony Farren

Syndicate IG Corporate-only Volume Estimates For This Week and October

The Goldman Sachs Group, Inc. $2.5b 21nc20 Fixed-to-Floating Senior Unsecured Global Notes

Today’s Goldman Sachs transaction was a $7bn three-part comprised of a 5nc4 fixed-to-floater as well as a 5yr FRN both due 10/31/2022.  Mischler proudly served as an active Co-Manager on today’s longest tranche of that issuance – the 21nc20 fixed-to-floating due 10/31/2038 so I am writing about that tranche this evening.

It’s important to note that in speaking with today’s accounts they like the pro-U.S. growth sentiment and rates that are helping to boost markets especially for bank and finance issuers.  Broader corporate tax reform will certainly lead to additional M&A activity ahead which is good for banks/finance. Several international accounts expressed their view that U.S. banks as flight to relative safety underscore an overall bullish sentiment in the sector.  Other investors were attracted by some additional yield compared to the risk-reward in European banks and Asian banks.  We’ve seen some front-loaded supply in the sector post Q3 earnings but the demand for GS paper has been consistently strong.

• BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.
• BAML’s IG Master Index saw 3 of the 4 IG asset classes set or tied new post Crisis lows as follows: “AA” +59 (tied), “A” +79 (tied) and “BBB” +130 (set).
• 3 of the 19 major IG sectors set new post Crisis lows as follows: Banking (+84), Basic Industry (+127) and Industrials (+105).
• 6 of the 19 major IG sectors tied their post Crisis lows as follows: Cap Goods (+79), Consumer Products (+85), Insurance (+110), Services (+102), Technology (+76) and Transportation (+106).
• Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 0.95 vs. 0.96 while setting yet another new low.

Use of proceeds on today’s transaction will be used for general corporate purposes.

For relative value we looked to the outstanding GS 3.691% due 6/05/2028 6nc5 fixed-to-floating that priced on May 31^st that was quoted today T+119 (G+120) pre-announcement.

Curves on comparable FIGs show an average 11- to 21-year spread differential of <13> bps. Applying that to the GS 11nc10 pegs fair value at T+106 nailing NIC on today’s new 21nc20 F-t-F as 2 bps.

………and here’s a snap shot of today’s final book size and oversubscription rate:

Final Pricing – The Goldman Sachs Group, Inc. f-t-f Perp NC5 Preferred

GS $2.5b 4.017% 10/31/2038 21nc20 fixed-to-floating @ $100.00 T+108 (Back-end: 3mL+137.3)

Have a great evening!

Ron Quigley

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:

Rates Trading Lab

Most of today’s trading was confined to a tight range with yields slowly migrating higher as the curve steepened. Then came the news that John Taylor had reportedly won a straw poll on a show of hands when President Trump asked GOP Senators about their Fed pick. Market got hit with the belly leading the sell-off and 5yrs traded at 2.044%, 10yr at 2.4225% and 30yr 2.934%. Stops were hit in futures as TY touched 124-18 before bouncing. Taylor had a big day in the betting pools, for what it’s worth, solidifying his second place standing. https://www.predictit.org/Market/3306/Who-will-be-Senate-confirmed-Fed-Chair-on-February-4%2C-2018 Lost in the fray were reports that the trio of Corker, McCain and Paul might not support a tax cut program if not revenue neutral and that Jeff Flake bowed out of the Arizona Republican race, but not before saying that “[w]ithout fear of the consequences and without consideration of the rules of what is politically safe, we must stop pretending that the conduct of some in our executive branch are normal. They are not normal. Reckless, outrageous and undignified behavior has become excused as telling it like it is when it is actually reckless, outrageous and undignified.” Meanwhile, stocks carried on, with records falling once again and the financial networks straining to contain their giddiness.

Thoughts:

Today’s price action was a textbook case of why this market is becoming so difficult to trade. I understand that a Taylor chairmanship and its potentially consequential rules-based policy metrics is a decidedly hawkish event. Countering that, however, is more stagnation on the legislative front. Senators Corker and Flake are now question marks in the Republican camps along with the fiscal conservatives. I know we have broken through established support levels and that it may trigger a further sell-off on that basis alone, but I think this is a counter-trade. Whatever happens, it will happen fast. Machines can hit bids and lift offers faster than you can blink.

-Jim Levenson

UST Resistance/Support Table

New Investment Grade Corporate Debt Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

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Mischler Muni Market Market Update for the week of 08-28-17 looks back to last week’s metrics and provides a focused lens on muni bond new issuance scheduled for the upcoming week. Of greatest importance, the entire team at Mischler Financial Group extends heartfelt prayers and thoughts to the tens of thousands of Texans who are impacted by Hurricane Harvey. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $4.4 billion. This week volume is expected to be $6.9 billion. The negotiated market is led by $2.5 billion general obligation bonds for the State of California. The competitive market has only two bond issues more that $100 million, and is led by $480.9 million for Prince George’s County, Maryland in 2 bids on Tuesday. 

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below 

Minority broker-dealer Mischler Financial Group Inc., the oldest diversity firm owned and operated by Service-Disabled Veterans is widely-known for our presence across the primary Primary Debt Capital Markets (DCM) space. Since 2014 alone, Mischler Financial has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt underwriting and issuance of preferred shares by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not 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.

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Mischler Muni Market Market Update for the week of 08-14-17 looks back to last week’s metrics and provides a focused lens on muni bond new issuance scheduled for the upcoming week, with a “Aloha” to GO Bonds-Hawaiian Style, as City and County of Honolulu, Hawaii is scheduled to issue $411 mil in tax exempt and taxable general obligation bonds. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $5.6 billion. This week volume is expected to be $6.7 billion. The negotiated market is led by $411.0 million tax exempt and taxable general obligation bonds (GO Bonds) for the City and County of Honolulu, Hawaii. The competitive market is led by $1.3 billion general obligation bonds for the State of Maryland on Wednesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below 

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not 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.

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Quigley’s Corner 08.07.17 :  Another New Corporate Debt Issue Milestone

Investment Grade New Issue Re-Cap – Most Amount of Issuers YTD; 14 Issuers, $14b+

Today’s IG New Debt Issuance & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

The Best and the Brightest: IG DCM Syndicate Forecasts and Sound Bites for Next Week 

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

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending August 2^nd               

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today’s IG Corporate dollar DCM finished with a YTD record of 14 issuers that priced 22 tranches between them totaling $14.675b.  Leading the pack: Aetna (NYSE: AET), American Water Capital, Ares Capital (NASDAQ: ARCC), Duke Energy (NYSE: DUK), Kraft Heinz (NYSE:HNZ), Regions Financial (NYSE: RF), and UBS Group (NYSE: UBS).  The SSA space was quiet.  This past March 6^th the IG Corporate space featured 12 issuers and April 27^th also hosted 12 IG Corporate issuers.  But today takes the cake for the most number of issuers YTD. The DJIA closed at its 9^th consecutive new high. The S&P also ended the session at a new all-time high.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

• The IG Corporate WTD total is 42.80% of this week’s syndicate midpoint average forecast or $14.675b vs. $34.29b.
• MTD we’ve priced 45.13% of the syndicate forecast for July or $35.70b vs. $79.10b.
• There are now 4 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

• Kimco Realty Corp. upsized its $25 par PerpNC5 Class “L” cumulative redeemable preferred stock new issue to $225mm from $150mm at the launch and at the tightest side of price talk.
• Regions Financial Corp. dropped the 5-year FRN tranche from today’s earlier announced two-part 5-year FXD/FRN new issue having secured sufficient funding in the 5-year fixed rate tranche.
• The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 20 IG Corporate-only but ex-Kimco Realty $25 par Preferred new issues, was <15.69> bps.
• The spread compression across all 21 IG Corporate new issues including the Kimco Realty $25 par Preferred was <15.24> bps.
• The average spreads of 1 of the 19 major industry sectors set a new post-Crisis low while 2 of the 19 tied their post-Crisis lows. That’s 15.79% of the sectors.
• BAML’s IG Master Index was unchanged at +109.  +106 represents the post-Crisis low dating back to July 2007.
• Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.05 vs. 1.04.
• Standard & Poor’s Investment Grade Composite Spread tightened 2 bps to +150 vs. +152.  The +140 reached on July 30^th 2014 represents the post-Crisis low.
• Investment grade corporate bond trading posted a final Trace count of $14.2b on Friday versus $19.6b on Thursday and $14.3b the previous Friday.
• The 10-DMA stands at $17.6b.

Global Market Recap

• U.S. Treasuries – Not fazed by strong Employment Report & this week’s Treasury Refunding.
• Overseas Bonds – JGB’s down. Good day Gilts. Bund unchanged. Peripherals better.
• Stocks – Dow looking for 9th record high close & 11th winning day in a row.
• Overseas Stocks – Asia rallied to a 10yr high. Europe had more red than green.
• Economic – Not a factor in the U.S. today. PPI on Thursday & CPI on Friday.
• Overseas Economic – China foreign reserves up. Japan better. Germany IP weaker.
• Currencies – Quiet day on the FX front. U.S. outperformed 4 of the Big 5 (small).
• Commodities – Crude oil small loss, gold basically unchanged & copper 2+ year high.
• CDX IG: +0.24 to 57.95
• CDX HY: +0.38 to 322.22
• CDX EM: -3.47 to 183.20

*CDX levels are as of 3:30PM ET today.

-Tony Farren

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

UBS Funding Group (Switzerland) AG $3.25bn 2-part 6NC5 Fixed-to-Floating and 6NC5 FRNs Deal Dashboard

Let’s go straight to the “QC” Deal Dashboard for pricing intel and book sizes/bid-to-cover rates.  Here’s a look at spread compression throughout price evolution during today’s two-part book build from IPTs to the launch and final pricing:

………and here’s a snap shot of today’s final book sizes and oversubscription rates:

Final Pricing – UBS Funding Group (Switzerland) AG $3.25bn 2-part 6NC5 Fixed-to-Floating and 6NC5 FRNs

UBS $1.25bn 6nc5 FRNs due 8/15/2023(22) @ $100.00 3mL+95.

UBS $2bn 2.859% 6nc5 due 8/15/2023(22) @ $100.00 to yield 2.859% or T+105.

Have a great evening!

Ron Quigley

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

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

…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

New Issues Priced

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