Browsing articles tagged with "credit tightening Archives - Mischler Financial Group"
Investment Grade Debt Commentary–Credit Tightening, Investor Appetite Voracious
May 2017      Debt Market Commentary   

Quigley’s Corner 05.12.17 – Credit Tightening, Investor Appetite Voracious


Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates This Week and May

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

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

Lipper Report/Fund Flows – Week ending May 10th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases


What to do on a no-print Friday in the IG dollar DCM?  Well, how about speaking with the top 24 syndicate desks who underwrite over 80% of all debt issued in our market for starters?  I did just that as is done here in the “QC” each and every Friday.  Next week looks like a very robust one with sizeable upside potential. One syndicate guru noted we could see $40b next week and $150b for the month.  What your corner seer can tell you is that I wrote the following here in the “QC” on Friday April 28th, 2017:

“It’s a weary world folks! However, the good news is that U.S. Corporations are an anomaly. They’re doing just fine and foreign investment into the safe haven of” yieldier” investment grade rated products is immense and growing.  I expect a very robust May of $150-ish of all-in (IG Corporate plus SSA issuance).  Credit is grinding tighter and ……investor appetite is voracious……especially coming off such a noticeably slow April that ended on a high note. So, issuers line up!  Bankers man your stations and syndicate managers get ready because the best story in our world is Corporate America.”

The IG Corporate-only total for May is currently $72.638b and the all-in Corporate plus SSA total is $80.083b.  We have two solid weeks to go in May and if we repeat what we’ve done thus far – along with next week’s upside potential – I do think we hit $150b.  Now wouldn’t that be something…..AGAIN! But why listen to little ‘ole me when all those prestigious professionals manning their respective syndicate desks at the world’s biggest investment banks are patiently waiting for you to run through my recaps and move on to their numbers and thoughts for next week’s IG corporate issuance? They’re all there.  Hurry up and get to it because it’s Friday and people have places to go and people to see.

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.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate


Today’s IG Primary & Secondary Market Talking Points


  • BAML’s IG Master Index tightened 1 bp to +118 vs. +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.12 versus 1.13.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.9b on Thursday versus $19.8b on Wednesday and $17b the previous Thursday.
  • The 10-DMA stands at $16.9b.


Syndicate IG Corporate-only Volume Estimates This Week and May


IG Corporate New Issuance This Week
vs. Current
WTD – $33.67b
May 2017
vs. Current
MTD – $72.638b
Low-End Avg. $30.54b 110.25% $122.27b 59.41%
Midpoint Avg. $31.37b 107.33% $123.42b 58.85%
High-End Avg. $32.21b 104.53% $124.56b 58.32%
The Low $25b 134.68% $100b 72.63%
The High $41b 82.12% $150b 48.43%


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

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  22 are in the top 25 of that same table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 81.91% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re 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’re 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! That’s 2014, 2015 and 2016…

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

Here are this week’s IG new issue volume talking points:


  • The IG Corporate WTD total is now over 10% above this week’s syndicate midpoint average forecast or $33.67b vs. $31.37b.
  • MTD we’ve priced more than 58% of the syndicate projection for May or $72.63b vs. $123.42b.
  • The all-in MTD total (IG Corporates plus SSA) currently stands at $80.038b.
  • This week we breached the half trillion dollar mark for YTD IG Corporate-only issuance.
  • The YTD IG Corporate only volume is now $515.42b which is 7.22% more than a year ago to date.
  • YTD we priced $687.656b of all-in IG Corporate and SSA issuance which is 2.84% more than last year’s total at this point.

Here are this week’s five key primary market driver averages from the 42 IG Corporate-only deals that priced: 

o   NICS:  <0.20> bps

o   Oversubscription Rates: 2.72x

o   Tenors:  8.66 years

o   Tranche Sizes: $802mm

o   Spread Compression from IPTs to the Launch: <19.51> bps

Here’s how this week’s performance data compares against last week’s: 

  • Average NICs widened 0.20 bps this week to <0.2). vs. <0.40>.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased 1.07x to 2.72x vs. 3.79x. 
  • Average tenors dramatically contracted by 3.28 years to 8.66 years vs. 11.94 years.
  • Tranche sizes decreased by $16mm to $802mm vs. $818mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 42 IG Corporate-only new issues tightened <1.87> bps to <19.51> bps vs. <17.64> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to +161 vs. +162.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 3 bps to 1.12 vs. 1.15. 
  • Week-on-week, BAML’s IG Master Index tightened by 3 bps to +118 vs. +121. 
  • Spreads across the four IG asset classes tightened 3.00 bps to 12.25 vs. 15.25 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened by 2.53 bps to 16.79 bps vs. 19.32 bps against their post-Crisis lows.
  • For the week ended May 10th, Lipper U.S. Fund Flows reported an inflow of $2.701b into Corporate Investment Grade Funds (2017 YTD net inflow of $51.877b) and a net outflow of $1.725m from High Yield Funds (2017 YTD net outflow of $6.091b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 46 deals that printed, 34 tightened versus NIP for a 74.00% improvement rate while 8 widened (17.50%) and 4 were flat (8.50%).

Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $33.67b
  • All-in IG (Corps + SSA): $39.42b


We’re in the midst of a Trump Slump. Former-FBI Chief Comey was fired by Trump despite the ongoing “From Russia With Love” investigation.  Russian Foreign Minister Lavrov is then invited into the Oval Office the next day while U.S. press is barred from the room. (Who will be sweeping the office for bugs and other devices?) You can’t make this stuff up folks.  There is a 100% chance of a June rate hike. North Korea continues to threaten its sixth nuclear test.  The French election is now behind us, but the new young President of Gaul has his hands full while Le Pen rebuilds, renames and rebrands her National Front Party with an eye on 2022.  The best story going, however, continues to be very strong U.S. corporate earnings as IG credit spreads grind tighter and tighter offering issuers great opportunities to print NOW!

The “Best and the Brightest” in Their Own Words


……..……and here are their formidable responses: