Mischler Financial Group Inc. Serves as Co-Manager for $500 million in green bonds issued by Alliant Energy Corp. subsiidary Interstate Power & Light

MADISON, Wis., Sept. 20, 2018 /PRNewswire/ — Interstate Power and Light Company (“IPL”), a wholly owned subsidiary of Alliant Energy Corporation (NYSE :LNT ), announced the pricing of its inaugural public offering of $500 million aggregate principal amount of 4.100% senior debentures yesterday.  An amount equal to or in excess of the net proceeds from the offering will be or have been used for the construction and development of wind and solar electric generating facilities.  The senior debentures have an interest rate of 4.100% and will be due on September 26, 2028.  The closing of the offering is expected to occur on September 26, 2018, subject to customary closing conditions.

The offering was marketed through a group of underwriters consisting of Goldman Sachs & Co. LLC, MUFG, and Wells Fargo Securities as joint book-running managers, and Comerica Securities, KeyBanc Capital Markets, US Bancorp, Mischler Financial Group, Inc., and Ramirez & Co., Inc. as co-managers.

The offering is being made only by means of a prospectus supplement and accompanying prospectus which are part of a shelf registration statement IPL filed with the Securities and Exchange Commission (the “Commission”).  Copies may be obtained from Goldman Sachs & Co. LLC by calling +1 (866) 471-2526, from MUFG by calling +1 (877) 649-6848, or from Wells Fargo Securities by calling +1 (800) 645-3751.  Electronic copies of these documents will be available from the Commission’s website at www.sec.gov.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor will there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

(more…)

Municipal Debt Market Sees Highest Volumes for Year; New Muni Debt Offerings Scheduled Week of August 13 2018-With last week’s muni debt secondary market volume setting a record for the year, new muni bond issues scheduled for issuance this week is expected to be $11.8bil, more than double the issuance of last week. As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and muni bond market participants with a summary of the prior week’s municipal bond market activity, including credit spreads and money flows, and a look at pending municipal finance offerings tentatively scheduled for the most current week.

The negotiated market is led by $2.3 billion Airport System Subordinate Revenue bonds for the City and County of Denver, Colorado. The competitive market does not have any financings greater than $100.0 million scheduled.

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 203.276.6676

During first half of 2018, and full years 2017 and 2016 alone, minority broker-dealer Mischler Financial Group Inc. underwriting roles (for which MFG has led, co-managed and/or served as selling group member) have included more than $625 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 and Municipal Debt New Issuance outlooks are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

(more…)

Quigley’s Corner 08.06.18  American Water Works Taps Debt Market and Floats Deal with Diversity & Inclusion Faucet

Investment Grade Corporate Bonds New Issue Re-Cap

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

American Water Deal Dashboard

American Water Works: Diversity and Inclusion Flows From the Top Down

New Issues Priced

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

Indexes and New Issue Volume

Global Market Recap

2018 Lipper Report/Fund Flows – Week ending July 25^th

IIG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

QC Geopolitical Risk Monitor

Below is the opening extract from Quigley’s Corner aka “QC”  Monday, Aug 6, 2018  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC is one of three distinctive market comment pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our primary debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rquigley@mischlerfinancial.com or via phone 203.276.6646 

Today the IG dollar DCM hosted 11 issuers across 19 tranches totaling $10.95b.  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 50.53% of this week’s syndicate midpoint average forecast or $10.95b vs. $21.67b.
• MTD we’ve priced 30.86% of the syndicate forecast for July IG Corporate new issuance or $19.985b vs. $64.75b.
• There are now 16 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

• Ventas Realty LP upsized today’s 10-year Senior Notes new issue to $750mm from $600mm 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 18 IG Corporate-only new issues was <18.53> bps.
• Including today’s Prudential $25 par Junior Subordinated Notes transaction spread compression across the 19 IG Corporate new issues was <17.88> bps.
• BAML’s IG Master Index tightened 1 bp to +115 vs. +116. (It’s post-Crisis low is +90 set on 2/01).
• Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.09. (1.24 represents the high on 6/04; 0.85 is the post-Crisis low set on 1/30).
• Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +149 vs. +150. (+125 represents its post-Crisis low set 2/02).
• Investment grade corporate bond trading posted a final Trace count of $11.9b on Friday versus $17b on Thursday and $13.4b the previous Friday.
• The 10-DMA stands at $17.9b.

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

American Water Deal Dashboard

Today Mischler was honored to serve as a passive Co-Manager on American Water’s $1.325b two-part 10- and 30-year Senior Notes transaction.  For relative value we had looked at the following comparables and adjusted for the low dollar price on AWK’s outstanding comps arriving at 2 bps concession per tranche.

AMERICAN WATER (A3/A)

AWK 2.95 09/27  +75   g76     $94

AWK 3.75 09/47  +107           $93

NSTAR ELECTRIC CO (A2/A+)

ES 3.20 05/27     +80   g81     $96

ES 4.40 03/44     +105           $104

CONSOLIDATED EDISON CO NY (A2/A-)

ED 3.80 05/28    +69   g69    $101

ED 3.875 06/47  +112           $95

INDIANA MICHIGAN POWER (A3/A-)

AEP 3.85 05/28    +85   g85       $100

AEP 3.75 07/47    +111              $93

VIRGINIA ELECTRIC & POWER CO (A2/BBB+)

D 3.80 04/28    +84    g84     $100

D 3.80 09/47    +109             $94

Use of proceeds from today’s transaction will be used to lend funds to American Water and its regulated operating subsidiaries; to repay $191.1mm principal amount of the issuer’s 5.62% Senior Notes due 2018 upon maturity on December 21, 2018; to redeem up to $200mm aggregate principal amount of the issuer’s outstanding long-term debt securities due in 2019 and 2022 and which have a weighted-average interest rate of 5.70%; to repay commercial paper obligations of the issuer, including commercial paper incurred to fund in part the acquisition of all of the capital stock of Pivotal Home Solutions Co., and for general corporate purposes.

Here’s a look at price evolution throughout today’s book build followed all the critically important deal information you need and want to know:

American Water’s two-part cumulative order book total finished at $3.80b making the $1.325b transaction 2.87-times oversubscribed.

Here’s a look at the book build at the top and where they finished following launching both tranches at the tightest side of respective guidance.

That’s a very successful outcome!

Final Pricing – American Water

AWK $625mm 3.75% due 9/01/2028 @$99.981 to yield 3.752% or T+82  MWC +15

AWK $700mm 4.20% due 9/01/2048 @$99.946 to yield 4.203% or T+112  MWC +20

American Water Works : Diversity and Inclusion

With a history dating back to 1886, American Water Works Company Inc. (NYSE: AWK) is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 6,900 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 46 states and Ontario, Canada. American Water provides safe, clean, affordable and reliable water services to its customers to make sure they keep their lives flowing.

American Water’s workforce reflects the diversity of customers it serves nationwide.  Diversity of ideas, thoughts and experiences is vital to American Water’s culture and the way it does business. Creating an environment where differences are embraced and where every employee feels engaged and included makes everyone safer, stronger and more successful.

American Water encourages, honors and celebrates differences in its employees, including race, gender, spiritual practice, ethnicity, age, nationality, military/veteran status, sexual orientation, physical capabilities, education and personal style to name just a few. Diverse employees make it more successful in serving its very diverse customers across the country; a philosophy and cultural foundation that has been long embraced and advanced by Mischler Financial et al!

American Water wants to foster an environment where its people can work safely, generate great ideas, provide the best customer service, and make a difference in the communities it serves. By cultivating a diverse and inclusive work environment guided by its core values, American Water enables any one person or group to develop the next big idea, delight their customers, grow the company and create a future of success.

There are a host of certifications that fall under the category of diversity aka minority broker-dealers.  This once “cottage industry” among our financial services experienced growing pains over the last three decades as each company attempted to become more of a full service BD.  Each were challenged by capital consistency, value-added distribution propositions, meaningful capital markets coverage, etc. I am, however, happy to say that a group has emerged from those that have raised the bar so to speak in terms of execution and capabilities.  Today, the guy-in-the-corner affirms and commends American Water for inviting a total of 10, yes that’s right T-E-N diversity firms that served as passive Co-Managers on today’s $1.325b two-part transaction.  It’s a privilege and honor to serve American Water and to be recognized among our brethren in the space.

Mischler sends its five-star salute to American Water’s Treasury/Funding Team today’s honored position to serve on your transaction.  Shout outs, however, aren’t only reserved for the Treasury/Funding teams who embrace and apply their internal corporate D&I mandates by including minority-certified broker dealers on their transactions. Please allow me to now send some shout-outs to those nine additional diversity firms who were featured alongside Mischler Financial Group, Inc., our nation’s oldest Service Disabled Veteran owned & operated broker dealer.  Along with Mischler role, it’s reflective of some of the firms getting it right in the space, in their own unique and different way.

In alphabetical order they are:

Blaylock Van, LLC, C.L. King & Associates, Loop Capital Markets,MFR Securities, Inc.,Multi-Bank Securities, Inc.,Ramirez & Co., Inc., Siebert Cisneros Shank & Co., L.L.C., Telsey Advisory Group, The Williams Capital Group, L.P.

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

(more…)

Quigley’s Corner 07.25.18 – EU & US Closer to Resolving Trade Tariff Tit-for-Tat

Investment Grade New Issue Re-Cap – Breaking News: Trump & Juncker Stymie Trade War Rhetoric

Today’s IG Primary & Secondary Market Talking Points – Mischler in the Selling Group for AT&T’s $25 par Global Notes Transaction

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

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

Lipper Report/Fund Flows-Week of July 18

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights – $463.96 Billion in Cumulative Enterprise Value

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Tomorrow’s Calendar

The “QC” Geopolitical Risk Monitor

Below is the opening extract from Quigley’s Corner aka “QC”  Wednesday,  July 25, 2018  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC is one of three distinctive market comment pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our primary debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. 

To receive Quigley’s Corner, please email: rquigley@mischlerfinancial.com or via phone 203.276.6646 

Breaking News: Trump & Juncker Stymie Trade War Rhetoric

Amidst global trade tariff fears, U.S. President Trump met with European Commission President Jean-Claude Juncker in Washington to deliver what will hopefully lead to a resolution to the simmering ‘trade tarrif war’ between the US and the EU. Trump said today’s meeting at the White House “marks a new phase of close friendship and close trade relations, global security and jointly fighting against global terrorism.” President Trump further stated, “The U.S. and EU represent $838bn in trade and 50%+ of global trade. The U.S. and EU enjoy a $1 trillion bilateral trade relationship which is the largest in the world.” Trump and Juncker purportedly agreed to work toward “zero” trade tariff schemes, “zero” non-tariff barriers, and “zero” subsidies on non-auto goods. To reduce barriers in trade, soybeans foremost among them, it was reported the EU will start “almost immediately” to buy “vast amounts” of soybeans, helping US Midwest farmers and “resulting in greater prosperity for both the U.S. and EU, while making trade more fair and reciprocal.” The EU’s Juncker purportedly agreed to import “much more” liquefied natural gas and the U.S. agreed to make it easier for the EU to do so. Both leaders are said to have agreed to launch a dialogue to trade barriers, bureaucratic obstacles and to slash costs. There remain negotiations going forward, specifically on auto tariffs- but they both are said to have agreed to work toward a rapid resolution.

Today the IG dollar DCM hosted 6 issuers across 7 tranches totaling $5.15b.  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 59.73% of this week’s syndicate midpoint average forecast or $12.125b vs. $20.30b.
• MTD we’ve priced 71.05% of the syndicate forecast for July IG Corporate new issuance or $57.936b vs. $81.54b.
• There are now 15 issuers in the IG credit pipeline.                                 

Today’s IG Primary & Secondary Market Talking Points – Mischler in the Selling Group for AT&T’s $25 par Global Notes Transaction

• Mischler Financial was honored to be a member of the Selling Group on today’s AT&T $25 par Global Notes transaction due 8/01/2067 (callable 8/01/2023). The deal from NYSE:ATT was upsized to $750mm from $250mm.
  
• A notable rarity: Today’s Burlington Northern Santa Fe LLC 30-year Senior notes new issue was launched at T+112.5 which was 2.5bps tighter than the tightest side of +120 “area” (+/-5) Guidance.
• The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate and Preferred–only new issues was <20.68> bps.
• Not counting the Preferred and only counting the 6 IG Corporates, IPTs to the launch was <23.08>.
• BAML’s IG Master Index tightened 1 bp to +120 vs. +121. (It’s post-Crisis low is +90 set on 2/01).
• Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 2 bps to 1.13 vs. 1.15. (1.24 represents the high on 6/04; 0.85 is its post-Crisis low set on 1/30).
• Standard & Poor’s Investment Grade Composite Spread was unchanged at +153. (+125 represents its post-Crisis low set 2/02).
• Investment grade corporate bond trading posted a final Trace count of $21.4b on Tuesday versus $15.4b on Wednesday and $18.3b the previous Tuesday.
• The 10-DMA stands at $16.9b.

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

Below please find a synopsis of everything Syndicate & Secondary as seen from the perch of Mischler Financial Group’s Investment Grade Capital Markets Desk.

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:

For ratings I use the better two of Moody’s, S&P or Fitch.

IG

Indexes and New Issue Volume              

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

*Denotes new high or low.

Global Market Recap

• USTs: Sold off late on news of U.S.-EU trade agreement.
• Overseas 10-year: Bought globally ex Switz., NZ and Sweden.
• SOFR: +0.03 to 1.90 vs. 1.87.
• 3mth Libor: -0.001 to 2.334 vs. 2.335.
• Overseas Stocks: U.S., Nikkei and HS rally; Core EU and U.K. sold off.
• Currencies: DXY Index -0.416 to 94.197 vs. 94.613.
• CDX HY: -5.847 to 329.940 vs. 335.787.
• CDX EM: -8.068 to 165.647 vs. 173.715.

*Index levels are as of 5:00PM ET today.

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

• For the week ended July 11^th, Lipper U.S. Fund Flows reported a net inflow of $2.021b into Corporate Investment Grade Funds (2018 YTD net inflow of $52.143b) and a net inflow of $260.016 into High Yield Funds (2018 YTD net outflow of $18.217b).

• Over the same period, Lipper reported a net inflow of $358.528m into Loan Participation Funds (2018 YTD net inflow of $8.847b).

• Emerging Market debt funds reported a net inflow of $320.443m (2018 YTD inflow of $1,142b).

IG Credit Spreads by Rating

The 10-day IG spread performance vs. the T10 across the ratings spectrum and how IG compared versus high yield:

Spreads across the four IG asset classes are 22.75 bps wider versus their new post-Crisis lows.

IG Credit Spreads by Industry

…….and a snapshot of the major investment grade sector credit spreads for the past ten sessions:

Spreads across the major industry sectors are an average 29.84 bps wider versus their post-Crisis lows.

New Issue Pipeline

       (more…)

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

(more…)

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.
|
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…)