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Investment Grade Corporate Debt Issuance Cools
December 2017      Debt Market Commentary   

Quigley’s Corner 12.08.17 : IG Corporate Debt Issuers Standing Pat

Investment Grade US Corporate Debt New Issue Re-Cap 

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates For This Week

Global Market Recap

The “QC” Geopolitical Risk Monitor

The Best and the Brightest” Investment Grade Corporate Syndicate Forecasts and Sound Bites for Next Week & November

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

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’re Trading

Indexes and New Issue Volume

Rates Trading Lab

Lipper Report/Fund Flows – Week ending Dec 6th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Rates Trading Lab

Economic Data Releases 


Investment Grade New Issue Re-Cap

Today the IG dollar DCM produced zero…….zilch……….nada. It was a December Friday goose egg as they say! The geopolitical risk monitor featured quite a bit of fluid news this week so be sure to review the QC monitor by scrolling below.  Also, the “Best and the Brightest” are back this week albeit there is not much activity lining up to get done. Next week looks like a light front-loaded week of between $5-10b. The average estimate of the 25 top syndicate desks for next week’s IG Corporate only issuance is $7.58b. The FOMC holds its final meeting of 2017 next Tuesday and Wednesday the 12th and 13th with overwhelming expectations for a rate hike that has long been baked into the market………..and despite the absence of inflation.  It looks like December issuance will come to an end a few days earlier than is the historical average with a chance of posting the lowest December IG Corporate issuance volume since $21.10b printed the same week back in 2008.  Team B&B are all waiting below for you to take in their forecasts and comments.  Enjoy the read.


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 98.31% of this week’s syndicate midpoint average forecast or $18.434b vs. $18.75b.
  • MTD we’ve priced 55.86% of the syndicate forecast for December IG Corporate new issuance or $18.434b vs. $33b.
  • There are now 7 issuers in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index was unchanged at +102.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.97.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +143.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16b on Thursday versus $17.9b on Wednesday and $23.6b the previous Thursday.
  • The 10-DMA stands at $16b.

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

IG Corporate New Issuance This Week
vs. Current
WTD – $18.434b
December 2017 vs. Current
MTD – $18.434b
Low-End Avg. $17.50b 105.34% $31.33b 58.84%
Midpoint Avg. $18.75b 98.31% $33b 55.86%
High-End Avg. $20.00b 92.17% $34.67b 53.17%
The Low $15b 122.89% $25b 73.74%
The High $25b 73.736% $28b 65.84%


Global Market Recap 

  • U.S. Treasuries – Closed mixed with no move greater than 0.7 bps.
  • Overseas Bonds – JGB’s unchanged to better. Bunds & Gilts small red. Peripherals more green.
  • 3mth Libor – Set at highest yield (daily occurrence) since December 2008 (1.54878%).
  • U.S. Stocks – Higher heading into the last hour.
  • Overseas Stocks – Global stock rally.
  • U.S. Economic – Very good U.S. Employment Report with tame average hourly earnings.
  • Overseas Economic – China (trade) & Japan (GDP) were strong. Europe data was mixed.
  • Currencies – USD was better bid vs. all of the Big 5.
  • Commodities – Crude oil ended the week with 2 good days. Gold struggled all week.
  • CDX IG: -0.67 to 50.93
  • CDX HY: -4.47 to 316.39
  • CDX EM: -1.37 to 177.35

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

-Tony Farren


The “QC” Geopolitical Risk Monitor

Updates are in BOLD print!


Risk Level/Main Factor Geopolitical Risks
“North Korea”
·        12/05 – U.S. reveals CHAMPs or powerful microwave pulses emitted from missiles launched from B-52s that can disable NOKO’s electronic missile and launching systems. 12/02 – WH Nat’l. Security Advisor H.R. McMaster says “possibility of war with NOKO increases every day.” 11/28 – South Korea’s Joint Chiefs of Staff verified that North Korea fired a ballistic missile that landed in the Sea of Japan. SOKO Olympics begin Friday 2/2018 thru Sunday 2/25. 11/20 – Pres. Trump announced the U.S. designated NOKO as a state sponsor of terrorism. Warns NOKO that “nuclearization puts its regime in grave danger & increases the peril it faces.”
“MENA and
Trumponomics and Beltway Dysfunction”
·        12/06 – Pres. Trump formally recognizes Jerusalem as Israel’s capital. Plans to move U.S. embassy there from Tel Aviv. Could take three years. Palestinian leader Mahmoud Abbas and Jordan’s King Abdullah warn Trump of dangerous consequences for stability and security in the Middle East. Turkey’s Erdogan threatens to cut ties with Israel calling the move a “red line for all Muslims” and decision puts “world and region in a ring of fire.” 12/04 – Former Yemeni President Ali Abdullah Saleh assassinated in Sanaa by former allied and Iranian-backed Houthis.  Yemen, like Lebanon are sights of proxy wars fought between Saudi Arabia and Iran. 11/28 – Israeli Mossad working with Saudi’s General Intelligence Presidency (GIP) over mounting tensions with Iran. Shared interests against Iran are bringing both nation’s closer. Lebanon’s PM al-Hariri resigned from Saudi Arabia 11/05 blaming Iranian aggression. Abandons support of Iran’s Hezbollah terror group.  Beirut, is proving ground for Saudi-Iranian proxy wars. Crown Prince Mohammed bin Salman’s plans sweeping with “Vision 2030” to wean KSA off oil. Saudi inner players arrested in anti-corruption probe involving multi-billion dollar “settlements.” Both Trump and KAS share strong views of an anti-nuclear Iran. KSA needs oil above $81 to break even. Mideast tension expected to boost the price of oil.

·        12/01 – U.S. Senate GOP passes the most sweeping tax overhaul in over 30 years in a 51-49 vote. This is the biggest tax bill and tax cuts in U.S. history. As promised, President Trump wants to sign the bill into law before Christmas.

·        12/01 – Former Trump national security advisor Michael Flynn pleaded guilty to lying to the FBI about contacts with Russia’s ambassador in 12/2016. This places a senior Trump insider in a cooperative position for the investigators.  Then again, how much credibility does a liar have?

·        U.S. trade protectionism contrarian to the world coming together on trade. Long term impact.

“Russia, Europe,
Uranium 1 & Terror”
·        12/06 – Enjoying an 82%+ Russian approval rating, Vladimir Putin announced he will seek a 4th term as President. Serving out a 4th 6-year term would mean 24 years at the top  including P.M. posts. Only Stalin ruled longer at 29 years. Putin moves 2018 election date to 3/18 – the 4th anniversary of annexation of Crimea….in response to Olympic Committee ruling?

·        12/05 – Russian team barred from 2018 Seoul Winter Olympics. Olympic Committee will allow Russian athletes to compete who meet stringent drug testing but they will be referred to as “athletes from Russia” in which no Russian flag can fly, no Russian anthem played and no Russian gov’t. officials can attend.

·        12/03 – Germany’s Social Democrats (Socialist Party) urged by French President Macron to from ruling coalition with Merkel’s conservative bloc.  Following the 11/20 collapse of the “Jamaica coalition” negotiations in the worst crisis of Merkel’s 12yr chancellorship.  New elections as early as next spring may still be the only solution. Sources of tension are immigration, taxation & the environment. Right wing has seat in German decision-making and wants new elections.

·        12/08 – Britain and Ireland agree on Irish border regulations mainly acknowledging there will be no border controls on the Irish Sea. It clears the way for a second a phase of talks with the EU. Negotiators reached agreement in principle on the BREXIT “divorce bill” earlier in the week in the €45b to €55b range down from €60bn that the EU initially demanded. Agreement promotes further December & January negotiations. U.K. withdrawal from EU takes place in 3/2019.

·        Atty. Gen. Sessions raised the possibility of a special counsel appointment to investigate the Uranium One Deal involving the Clinton Foundation in which a Russian company took control of 20% of entire supply of U.S. uranium supply used to make nuclear weapons in exchange for Clinton Foundation donations. In a decree on March 20, 2008 Russia’s Vladimir Putin, abolished the Federal Agency for Nuclear Power. The public corporation Rosatom (he owns) was vested with the authority to implement on behalf of the Russian Federation the rights of shareholders in the joint-stock companies in the nuclear energy industry. In 2013 Rosatom retained full ownership. Matter of U.S. national security.

·        December MTD Terror Stats a/o 12/08: 21 terrorist attacks; 114 dead; 187 wounded.

·        China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. Debt is 250% of GDP. National Congress of the Chinese Communists Party confirms Xi Jinping as its most powerful leader since Mao. Xi loyalists make up inner sanctum of Chinese politics into the next decade. 6% GDP in 2018 will be difficult.

·        Cybercrime, ransomware, viruses & hacking are winning cyber wars. Recent attacks have hit four continents, law firms, food companies, power grids, pharma and governments.

·        Spain’s Rajoy announces snap elections on Dec. 21st to help defray the Catalonian independence crisis. Could result in breakaway = could spread thru EU. Former Catalan Pres. Puigdemont to appear in court 11/17. On 11/02: 8 Catalan gov’t. members jailed in Spain for role in independence rebellion & sedition.

·        Italian elections in March 2018.

“2018 US Recession?”
·        12/05 – Senate committee approved Jay Powell nomination to replace Janet Yellen in a 22-1 vote.

·        12/08 – FOMC Meeting Tues/Wed Dec. 12th/13th. Rate hike baked in despite absence of inflation. Bearish flattening signals danger for the U.S. economy. Recent bullish flattening has completely disregarded the absence of inflation. The balance sheet or “b/s” normalization program is proceeding and will remain highly incremental. Fed signals 1 more rate hike in 2017 (December12/13 FOMC); 3 in 2018. Dot plots are unchanged for 2017 & ’18; lower for ’19 & longer-term. Shifts/adjustments in monetary policy outweigh chance of a 2018 recession.


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


I am happy to announce that the “QC” once again received 100% unanimous participation from all 25 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 20 of today’s respondents are in the top 21 while 23 are among 2017’s YTD top 27 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league 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 81.38% 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.  Below is opening to this week’s survey. 

 “Welcome to Friday. In preparation for takeoff, please ensure all negative attitudes are properly stowed. On behalf of QC Air welcome aboard. I expect sunshine and good intel today for our trip. Enjoy the ride and thanks for flying QC Air.

This week’s geopolitical recap: 

The FOMC meets next Tuesday and Wednesday the 13th and 14th.  Over 94% believe the Fed will hike rates which is already baked in. The nation’s largest Tax Reform bill in over 30 years may in fact get signed by President Trump by Christmas. The situation in North Korea remains the lone high risk event on the global risk monitor despite the U.S. claim to possess powerful CHAMPS microwave pulse technology that can disable NOKO’s missile launch systems. The situation in MENA has been upgraded to elevated with Trump’s announcement that the U.S. formally recognizes Jerusalem as Israel’s capital following warnings from Jordanian, Palestinian and Turkish leadership among others that it will destabilize the region. Yemeni President Ali Saleh was assassinated and Prince Mohammed bin Salman’s “Vision 2030” resulted in multi-billion dollar anti-corruption settlements with members of the house of Saud and major KAS players. MBS, as the Saudi Prince is commonly known, also purged rivals in order to anchor his leadership and future plans. Germany’s Social Democrats agreed to pursue preliminary talks to form a coalition government with Merkel’s conservative CDU party and will include a third CSU party. German political stability is needed to cement the EU’s keystone economy. Ireland and Britain are near an accord on future Irish border regulations that would help promote an agreement in principle on the BREXIT “divorce bill.”  Leveraging his 85% approval rating at home, Vlad Putin announced he will seek a 4th 6-year term as President of Russia that would make it the second longest tenure to Stalin’s 29 year reign. Putin also moved the Russian election to coincide with the 4th year anniversary of its annexation of Crimea, possibly in reaction to the prior day’s Olympic Committee ruling that bars Russian officials, flags and anthem at the 2018 Seoul Olympics in which Russian athletes must also agree to stringent drug testing.       

Entering this morning’s Friday session –  

  • The IG Corporate WTD total stands at $18.434b. We priced $316mm less than this week’s average midpoint estimate of $18.75b or 98.31%.
  • MTD we priced 55.86% of the syndicate projection for November IG Corporates or $18.434b vs. $33b.
  • Entering today’s session, the YTD IG Corporate-only volume is $1,325.402b vs. $1,281.017b on December 8th, 2016 or $44.385b (3.46%) more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,640.543b vs. $1,620.951b on December 8th, 2016 or $19.592b (1.21%) more than the year ago total. 

Entering this morning’s session, here are the five key primary market driver averages for the 33 IG Corporate-only deals that priced this week. 

o   NICS:  1.62 bps  

o   Oversubscription Rates: 3.18x

o   Tenors: 10.69 years

o   Tranche Sizes: $576mm

o   Spread Compression from IPTs to the Launch: <16.34> bps 

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

  • Week on week, average NICs widened by 1.11 bps to an average 1.62 bps vs.0.51 bps across this week’s 33 IG Corporate-only new issues displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.13x to an average 3.18x vs. 3.31x. 
  • Average tenors narrowed by 0.74 years to an average 10.69 years vs. 11.43 years.
  • Tranche sizes decreased by $72mm to $576mm vs. $648mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s IG Corporate-only new issues widened by 1.26 bps to <16.34> bps vs. <17.60> bps.
  • Standard and Poor’s Investment Grade Composite Spreads was unchanged at +143.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightned 1 bp to 0.97 vs. 0.98 week-on-week. 
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +102 vs. +103. 
  • Spreads across the four IG asset classes tightened 0.25 bps to 3.00 bps vs. 3.25 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors tightened 0.68 bps to 6.32 bps from 7.00 bps as measured against their post-Crisis lows.
  • For the week ended December 6th, Lipper U.S. Fund Flows reported an inflow of $622.386b into Corporate Investment Grade Funds (2017 YTD net inflow of $116.331b) and a net inflow of $217.412m into High Yield Funds (2017 YTD net outflow of $12.633b).
  • Taking a look at the secondary trading performance of this week’s 33 IG Corporate and 6 SSA new issues, of the 39 deals that printed, 23 tightened versus NIP for a 59.00% improvement rate, 11 widened  (28.25%) and 5 were flat 12.75%).


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

  • IG Corps: $18.434b
  • All-in IG (Corps + SSA): $24.684b 

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


The “Best and the Brightest” in Their Own Words


……..……and here are their responses: