Browsing articles tagged with " investment grade corporate debt"
Goldman Sachs Bank USA Lights Up Debt IPO-Mischler Comment
June 2018      Debt Market Commentary, Recent Deals   

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 30th        

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 

IG Corporate New Issuance This Week
6/04-6/08
vs. Current
WTD – $9.95mm
June 2018 vs. Current
MTD – $10.555b
Low-End Avg. $24.44b 40.71% $91.24b 11.57%
Midpoint Avg. $25.24b 39.42% $90.44b 11.67%
High-End Avg. $26.04b 38.21% $89.64b 11.77%
The High $20b 49.75% $75b 14.07%
The Low $35b 28.43% $110b 9.60%

 

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 23rd. 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.

GS Issue RATING IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NIC
(bps)
Trading at
the Break
+/-
(bps)
2yr FXD 3(a)2 A1/A+ +80-85/+82.5a +70 the # +70 +70  <12.50> bps 4.5 66/64 <4>

 

………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!!!

 

MCO Issue Tranche Size Book
at-the-Top
Final Book
Size
Bid-to-Cover
Rate
2yr FXD 3(a)2 1bn 4.20b 4.20b 4.20x

 

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

supporting-veterans-goldman-sachs-mischler

 

 

 

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.goldman-sachs-gives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

goldman-sachs-community-teamworks

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…)

IG Debt Market Recap: Iran Deal Scuttled; Dynamite Day for General Dynamics
May 2018      Debt Market Commentary   

Quigley’s Corner 05.08.18: Iran Deal Scuttled; IG Debt Market Recap: Dynamite Deal Day for General Dynamics  

Investment Grade New Issue Re-Cap – Big Time Volume But Stuck at
“The Number Again. NYSE:GD, NYSE:VZ

Today’s IG Primary & Secondary Market Talking Points

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

Vaya Con Dios to Bloomberg Bob, a Great Man and a Dear Friend

Global Market Recap

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

2018 Lipper Report/Fund Flows – Week ending May 2nd      

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

 

Investment Grade New Issue Re-Cap – Big Time Volume But Stuck at“The Number Again. NYSE:GD, NYSE:VZ
Today the IG dollar DCM hosted 7 issuers across 18 tranches totalling $15.539b. 48.3% of that total came in the form of the General Dynamics (NYSE:GD) 7-part transaction –which totalled $7.5b, and runner-up award to Verizon Communications (NYSE:VZ), which brought $1.788b to the corporate treasury. The SSA space was inactive again. Although the deals are clearing for issuers 10 of today’s 17 IG Corporate tranches were guided “at the number!”  Something to keep an eye on. 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 74.35% of this week’s syndicate midpoint average forecast or $23.389b vs. $31.46b.
  • MTD we’ve priced 27.64% of the syndicate forecast for April IG Corporate new issuance or $37.264b vs. $134.84b.
  • There are now 9 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 17 IG Corporate-only new issues was <11.09> bps.
  • BAML’s IG Master Index was unchanged at +117. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +1.12.  (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +149. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $14.1b on Monday versus $13.9b on Friday and $20.9b the previous Monday.
  • The 10-DMA stands at $18.1b. 

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

 

IG Corporate New Issuance This Week
5/07-5/11
vs. Current
WTD – $23.389b
May 2018 vs. Current
MTD – $37.264b
Low-End Avg. $30.83b 75.86% $133.64b 27.88%
Midpoint Avg. $31.46b 74.35% $134.84b 27.64%
High-End Avg. $32.08b 72.91% $136.04b 27.39%
The High $20b 116.945% $110b 33.88%
The Low $40b 58.47% $150b 24.84%

 bloomberg

Vaya Con Dios to Bloomberg Bob, a Great Man and a Dear Friend

You have all read in the QC about how I frequently turn the lights off and lock the door behind me here at our nation’s oldest Service Disabled Veteran owned & operated broker-dealer. We always leave it on the floor, driven by a desire to be the best we can be and to always be allegiant to our value-added reputation as providing best in class debt capital market coverage and distribution.  It’s all about delivering high-quality work for our issuers and joint leads while building a sustainable and lasting company. We take great pride in that for we know that one day all we ever really take with us is our reputation.  It’s also what people will most remember us by.  Well, this evening, I got your attention with Bloomberg’s logo above but it’s about the manifestation of a mandate at a world-class company that has a culture unique to itself.  If one were to do a case study of corporate cultures, the names, IBM, GE, Apple, Disney and Bloomberg come to mind.  Each company has its family of employees while others are legendary for their work environments and commitment to make “lifers” out of their personnel. Tonight’s story is about Bloomberg’s commitment to veterans and a tribute/send-off to one veteran, in particular, Bob Elson who many of my 3,501 readers have also come to know.

This is not a deal drill-down day, during which I typically help promote an issuer’s diversity mandate and often more specifically, our veteran and service-disabled veteran certification. So, instead of going granular re General Dynamics’ massive debt issuance, tonight I’ve decided to do something different. Tonight I want to pay tribute to a business news industry legend.

I remember working at Merrill when I sat next to Mac Barnes on our trading floor. Mac was a legendary original Bloomberg programmer and techno-wizard who started with Michael Bloomberg way back when. He was also a super good guy.  Michael had been offered a nascent technology position by Merrill well before tech was remotely considered en vogue. In fact, it was anything but. It meant “the writing was on the wall.”  What emerged from that experiment is the Bloomberg we know today.  When the going gets tough, the tough get going, as they say.  Michael Bloomberg never looked back. His net worth is, as of today $51.2b………... Quite an achievement!

Mike Bloomberg may be a multi-billionaire, but he also knows that mandates at any company start from the top down.  Which brings me to veterans at Bloomberg.

In Mike’s own words, “Veterans have just the kind of leadership, discipline, and work ethic you need to launch a successful business and create jobs and we’re determined to help more veterans succeed.” The businessman, engineer, author, politician and philanthropist knows that both the military and Bloomberg embody a common spirit: the mission comes first. Teamwork. Communication. Adaptability. Integrity. Those are just some of the skills and characteristics that transfer well from military service to a career at Bloomberg.  Mike upped his game by recruiting veterans in software development, sales, data analysis, customer service and network support as well as in the newsroom to showcase the places at his company where veterans should look to work. He knew early on those employees who have served or currently serve in the military, military families and supporters who promote and maintain Bloomberg as a military-friendly work environment stay connected through the Bloomberg Military & Veterans Community. We here at Mischler embrace and endorse that kind of thinking.

bob-elson-bloomberg lp

Bob Elson, US Army Spec 5; Bloomberg LP

However, I’d like to go one further by highlighting one of those veterans whose last day is coming at Bloomberg next Tuesday, May 15th – Robert “Bob” Elson formerly the Bob from the now defunct but legendary Ed and Bob Show that was Bloomberg’s First Word new issue team.  I’ve known Bob since he joined Bloomberg and enjoyed our daily rapport.  He is the consummate professional, all about journalistic integrity, checking data sources multiple times before going out with anything on the tapes and a legend on Wall Street. Along with having logged 47 years working in our financial services industry comes a Yoda-like wisdom about and sense of our global financial markets. For all those millennials out there who have logged their first 10 years and are only now starting to see what an interest rate hike looks like, it’s critical to latch onto the knowledge that market professionals such as Bob Elson possess.  It’s invaluable. Bob certainly deserves his reputation as “Bond Salesman to the Stars Since 1971.”

When my Dad passed away last December, while the family gathered at his wake, Bob was the first person to sign in to pay his respects to our family.  That is the kind of person he is and friend he has become.

As I mentioned Bob’s last day will be next Tuesday, May 15th.  I wanted to scribe something in Bob’s honour BEFORE his last day. This way, you can reach out to Bob prior to his departure. Bob has left an indelible mark in the Bloomberg newsroom. I will personally miss his professional expertise, his unmatched experience although I look forward to more frequent lunches as they’ll be easier to come by given our proximity here in Stamford, Connecticut to his home in Westport. The Bloomberg chat room that both Ed and Bob years ago named “Quigmeister” will be a less active one. When in the throes of covering over 120 accounts, running order books and writing relative value and D&I stories I could always rely on Bob’s comic relief that would get me through the realization that I’d once again be sending my “QC” with an obscenely late time stamp. People come and go in this business and the ones you keep around long after are more than just good minds, great journalists, and experienced market professionals. They become friends.

For those who may not have known, Bob also proudly served his nation in Vietnam joining the U.S. Army in 1968. Following basic training at the Fort Eustis installation near Newport News, Virginia, Bob served in the First Infantry Division (The Big Red One) seeing action in Lai Khe, Vietnam. For those who may not know, Lai Khe was probably the most rocketed base camp in Vietnam except for Khe Sanh during the siege. Bob humbly recalls the sign that hung prominently at the camp’s entry that read, “Welcome to Rocket City.” Bob may well have cultivated his keen sense of humour and comic relief from the legendary Bob Hope who visited the base for his Christmas show. Hope greeted the crowd saying “Here we are in Lai Khe. I’ve been here five minutes and I don’t Like Kaye!  Bob was then off to 1st Field Force Headquarters in Nha Trang returning home in 1970 as a Spec 5 having earned a Bronze Star with Oak Leaf Cluster for service.

It is comforting to know that there’s a place like Bloomberg that gave our veteran a home in his later years. I must say, however, I wish it was longer stay though.

To my good friend, journalist and veteran, it is NEVER fun to see someone ride off into the sunset but as they say, old soldiers never die they simply…………and I choose not to finish that quote, folks!

Thank you for your friendship, professionalism, foresight, advice and market wisdom all these years. Having served on no deals today you Bob Elson are the reason why I’m, turning off the lights and locking the front door here at Mischler Financial this evening.  I’d like you and all 3,501 “QC” readers to know that this edition has been my privilege and honour to write.

Vaya Con Dios my friend! Please reach out to Bob Elson on your Bloomberg terminals to give our military veteran and financial services veteran the send-off he truly deserves.

Thank you all and as always, have a great evening!

Below please find a complete synopsis of the day’s debt capital market activity as seen from the perch of the nation’s oldest investment bank / institutional brokerage owned & operated by Service-Disabled Veterans.

Ron Quigley, Managing Director, Head of Fixed Income Syndicate

(more…)

Trump Tries Trade War Saber Rattling; March IG DCM New Issue Madness
March 2018      Debt Market Commentary   

Quigley’s Corner 03.02.18 – Weekend Edition: Trump Tries Trade War Saber Rattling; March IG Issuance Madness

  

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

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

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week; CVS Getting Set?

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

Syndicate IG Corporate-only Volume Estimates 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

2018 Lipper Report/Fund Flows – Week ending February 28th  

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

Economic Data Releases

Rates Trading Lab

 

Investment Grade New Issue Re-Cap

What with poor market tone, widening spreads, “chatter” of trade wars from Trump Twitter account, a major Northeast storm on the way and CVS heard rumbling into position for next week’s M&A related financing, it was indeed VERY WISE for the IG dollar DCM to stand down today.  I am once again honoured to have received 100% participation for my Friday “QC” edition, from Wall Street’s Best and Brightest Investment Grade Fixed Income Syndicate sophisticates  I surveyed all of them for next week’s forecast and for March IG Corporate volume.  Strap yourselves in for a humdinger of a week next week and what looks like March IG Issuance Madness. Their thoughtful comments, which add color to their forecast numbers are in-depth and formidable, especially in today’s edition.

Here’s a look at the WTD IG Corporate new issue volume as measured against syndicate desk estimates:

  • The IG Corporate WTD total is 136.89% of this week’s syndicate midpoint average forecast or $36.85b vs. $26.92b.
  • There are now 11 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index widened 3 bps to +104 vs. +101. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 3 bps to 0.99 vs. 0.96.  (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread widened 3 bps to +138 vs. +135. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $17b on Thursday versus $23b on Wednesday and $20.1b the previous Thursday.
  • The 10-DMA stands at $18.9b.

 

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

 

IG Corporate New Issuance This Week
2/26-3/02
vs. Current
WTD – $36.85b
Low-End Avg. $25.72b 143.27%
Midpoint Avg. $26.92b 136.89%
High-End Avg. $28.12b 131.05%
The Low $15b 245.67%
The High $40b 92.13%

 

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 25 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 17 of today’s respondents are in the top 18 of the new 2018 League table including 19 of the top 21 according to today’s Bloomberg’s 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 (US Investment Grade Corporates).  The participating desks represent 82.87% 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!

“Happy Friday. You can almost hear the rumble of CVS getting into position! I am looking for forecasts for BOTH MARCH and NEXT WEEK today!

All the data you need to know is here. There’s lots to talk about so let’s run through this week’s key geopolitical risk recapas a segue to the big question: What does Wall Street’s Biggest Syndicate Desks Expect re: Next Week’s IG DCM?

 

NORTH KOREA
The U.S. imposed new sanctions against 28 NOKO ships registered under changing names and under different national flags including China. The ships funnel banned exports into NOKO. The action is another step the U.S. has taken toward a full NOKO blockade. With diplomacy the strongly favored path to resolution, the Trump Administration will agree to a diplomatic resolution to tensions only if NOKO agrees to put denuclearization on the table which it refuses to do. In the interim, the U.S. DoD conducted classified military exercises in Hawaii last weekend and the U.S. is pre-staging equipment and supplies in the Pacific. I reiterate that sources continue to tell me to “watch” mid-March thru April as NOKO will be back to its old tricks and the game will ratchet up with newly announced war games along with a much larger allied force participating together.

 

TRUMP TO LAUNCH A TRADE WAR?
Sighting unfair trade practices and bad policy on the U.S. steel and aluminium industries, Pres. Trump invited sector CEOs to the White House on Thursday and when they departed, the current president declared he will impose trade tariffs/quotas on imports amounting to 25% on steel and 10% on aluminium. The announcement, which apparently did not include his sending any advance memos to key White House advisors such as Gary Cohn or TreasSec Mnuchin, was made in the name of “national security,” setting off the fear and tenor of new “trade wars.” The move, coupled with unrelated comments from newly-appointed Fed Chair Powell, weighed heavily on the DOW, which lost 550 points on Thursday and extended declines into Friday’s early trading.

THE FED
New Fed Chief Jay Powell delivered his testimony before the Senate Thursday. Powell sent jitters across markets on Tuesday following his House testimony and Q&A when he said, “my outlook for the economy has strengthened since December” albeit in the midst of the recent historic though transparent, healthy market correction. The market always likes to be ahead of the curve and is concerned over a tighter monetary policy stance with participants repricing in higher inflation and interests rates. Yesterday Powell said 4 hikes “would be gradual” and sighted that aggressive tightening is challenged with inflation so low.

GERMANY
A poll released today showed that 56% of Germans favor the SPD joining Merkel’s grand coalition or “marriage of convenience” to avoid another vote and further turmoil in the EU’s keystone nation. The SPD Party formally votes therein tomorrow March 2nd. The caveat is the poll surveyed a much wider group of voters whereas the Friday vote includes the actual hardcore Socialist members.

U.K. & BREXIT
Theresa May delivers a speech on Friday, March 2nd outlining her vision for the U.K.’s future relationship with the EU. Key points were hammered out at the PM’s country manor Chequers with her cabinet ministers on Feb. 22nd. After having drawn so many red lines pre-negotiations with the EU, May & Co. have backed themselves into a corner. Now Ireland and Wales are pushing back on May regarding her hard stance on the customs union. N. Ireland wants to remain under EU customs rules with a UK/EU border demarcation zone in the Irish Sea. Wales subsequently fears reduced trade as a result of EU and Irish ships avoiding British ports. Wales voted to leave the EU but favors some EU alignment.

ITALY

Italy’s Sunday March 4th election shows the combined right-wing alliance parties running around 37% likely enough for victory. Silvio Berlusconi’s Forza Italia has a narrow lead. The centre-right coalition is projecting sufficient votes to govern without a second ballot.

CHINA

China’s ruling Communist Party proposed lifting limits on presidential terms, a first step to assuring President Xi remains in power interminably. A vote on the proposal is slated for next month and is expected to pass marking a major departure from rules in place for decades. Power has never been as centralized since the days of Mao. Maybe Xi should contemplate a little red book a la Mao and call it “Xi’s Little Red Book Volume II.”

SPAIN

With no compromise in sight, Spain’s PM Rajoy is challenged by efforts to impose order on the Catalan region. It is highly improbable that self-exiled leader Carles Puigdemont governs de facto from Brussels. Meanwhile, PM Rajoy cannot pass a national budget having lost the support of the Basque party that backs Catalonian independence. This could force new elections. Nationalist parties are subsequently securing more support foretelling new tensions in a nation that was ravaged by civil war from 1936-1939.

Let’s now take a deep dive into the technical data.  Entering this morning’s Friday session – 

  • The IG Corporate WTD total stands at $36.85b. We priced $9.93b more than the week’s average midpoint estimate of $26.92b or +36.89%.
  • February finished the month having priced 105.77% of the syndicate midpoint forecast for IG Corporates new issuance or $94.117b vs. $88.98b.
  • Entering today’s session, the YTD IG Corporate-only volume is $229.452b vs. the $272.358b YoY or <$42.906b> / <18.70%> less than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $311.067b vs. $354.608b YoY <$43.541b> or <14.00%> less than vs. 2017. 

Here are the five key primary market driver averages for the 29 IG Corporate-only deals that priced this week.   

o   NICS:  5.36 bps  

o   Oversubscription Rates: 2.52x

o   Tenors: 13.49 years

o   Tranche Sizes: $768mm

o   Spread Compression from IPTs to the Launch: <14.42> bps 

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

  • Week on week, average NICs widened considerably by 3.41 bps to an average 5.36 bps vs. 1.95 bps across this week’s IG Corporate-only new issues that displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.77x to an average 2.52x vs. 3.29x. 
  • Average tenors extended by 1.52 years to an average 13.49 years vs. 11.97 years.
  • Tranche sizes grew by $142mm to $768mm vs. $626mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 48 IG Corporate-only new issues widened by 2.04 bps to <14.42> bps vs. <16.46> bps.
  • Standard and Poor’s Investment Grade Composite Spread widened 5 bps to +138 vs. +133 week-on-week. 
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 6 bps to 0.99 vs 0.93 week-on-week.
  • Investment grade corporate bond trading posted a final Trace count of $17b on Thursday versus $23b on Wednesday and $20.1b the previous Thursday.
  • The 10-DMA stands at $18.9b.
  • The VIX widened 5.98 or 36.26% to 22.47 at yesterday’s close vs. last Friday’s 16.49.
  • Week-on-week, BAML’s IG Master Index widened 5 bps to +104 vs. +99.  
  • Spreads across the four IG asset classes widened 4.75 bp week-on-week to 12.75 bps vs. 8.00 bps as measured against its cumulative post-Crisis low.
  • Spreads across the 19 major IG industry sectors gapped out 4.73 bps to an average 13.68 bps vs. 8.95 bps as measured against their average cumulative post-Crisis lows!
  • For the week ended February 28th, Lipper U.S. Fund Flows reported a net inflow of $1.372b into Corporate Investment Grade Funds (2018 YTD net inflow of $20.632b) and a net outflow of $702.879m from High Yield Funds (2018 YTD net outflow of $13.202b).
  • Taking a look at the secondary trading performance of this week’s 48 IG Corporate and 5 SSA new issues, of the 53 deals that printed, 11 tightened versus NIP for a 20.75% improvement rate, 33 widened  (62.25%), 9 were flat (17.00%).  

 

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

  • IG Corps: $36.85b
  • All-in IG (Corps + SSA): $43.10b

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


Please know that on each and every new issue, the guy-in-the-corner is ALWAYS be in YOUR corner on deal day! If an issuer asks you who 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” account orders.    

Have a great weekend!

Ron Quigley, Managing Director, Head of Fixed Income Syndicate

The “Best and the Brightest” in Their Own Words

(more…)

Bonds Slightly Bruised, But Who Cares? #BanBumpStocks!
February 2018      Debt Market Commentary   

Quigley’s Corner 02-20-18 Corporate Bonds Slightly Bruised as 30yr Nears 3%. More Important: Ban The Bump Stock!

Before I begin the daily drill down, and according to a Bloomberg report written by Jennifer Epstein at 4:08pm ET today, President Donald Trump ordered a ban on gun accessories known as “bump stocks” that allow semiautomatic rifles to be fired more rapidly.”  Here’s something about me you might not know: I am a gun owner. I shoot skeet, trap and target. A number of my compatriots here at the sell-side’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans are equally-responsible gun owners and share a similar interest in skeet, trap and target shooting.  Having said that, the notion of enabling citizens of our free democracy in this day and age with easy access (or any access) to weapons of war is preposterous. We need to stop the gun violence in our schools, in places where we gather to celebrate and places we go to be entertained.  I am not sorry to say to my fellow gun owners that however justified the spirited debate with regard to the 2nd Amendment is and will likely continue to be, we certainly do not need or want bump stocks to make AR-15s automatic. I do not blame violence on gun ownership and [controlled] availability, but there is NO need for machine guns to be in the hands of citizens! It’s about the kids and it’s about our safety to live in a free democracy without fear of being gunned down.  #BanBumpStocks! Mic Drop.  

 

Investment Grade New Issue Re-Cap- Three’s Company!

Today’s IG Primary & Secondary Market Talking Points – Two Deals Get Upsized

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

Global Market Recap

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

New Issues Priced

Indexes and New Issue Volume

Economic Data Releases           

2018 Lipper Report/Fund Flows – Week ending February 14th

The “QC” Geopolitical Risk Monitor     

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Rates Trading Lab

 

Investment Grade New Issue Re-Cap – Three’s Company!

With inflation picking up slightly in a more hawkish rate environment, the U.S. government kicked off its highest volume week of treasury auctions in history this week, an estimated $258bn in new paper. With Trump’s tax plan comes massive funding and as a result, there’s more risk in owning bills, notes and bonds backed by the full faith and guarantee of the U.S. of A.  CT10 is edging closer to a 3.00% yield and so, UST prices have slid while yields have risen making it more expensive for the government to fund itself. There were four to five issuers looking this morning but only Snap-On Inc. which hit the tapes first at 9:36a.m. followed by Vulcan Materials at 9:45 being the only two announced IG Corporate new issues. A third deal materialized from Daimler Finance North America that printed a $750mm tap of its outstanding FRNs due 2/22/2021 but that was not announced. In total 4 to 5 names were looking earlier in the morning with a couple deciding to stand down.

Today the IG dollar DCM hosted 3 issuers across 4 tranches totaling $2.00b.  The SSA space was inactive with one deal announced for BNG for tomorrow’s pricing.

Here’s a look at MTD IG Corporate new issue volume as measured against syndicate desk estimates:

  • The IG Corporate WTD total is 10.65% of this week’s syndicate midpoint average forecast or $2.00b vs. $18.78b.
  • MTD we’ve priced 49.52% of the syndicate forecast for February IG Corporate new issuance or $44.067b vs. $88.98b.
  • There are now 10 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points – Two Deals Get Upsized!

  • Snap-On Inc. increased its 30-year Senior Notes new issue to $400mm from $350mm at the launch and at the tightest side of guidance.
  • Vulcan Materials Co., upsized today’s 3NCL FRN tranche to $500mm from $300mm at the launch and at the tightest side of guidance brining the two-part deal size to $850mm from $650mm.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues was <15.00> bps.
  • BAML’s IG Master Index was unchanged at +98. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.93.  (+85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +133. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $14.2b on Friday versus $19.2b on Thursday and $17.9b the previous Friday.
  • The 10-DMA stands at $19b. 

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

 

IG Corporate New Issuance This Week
2/19-2/23
vs. Current
WTD – $2.00b
February 2018 vs. Current
MTD – $44.067b
Low-End Avg. $17.74mm 11.27% $88.28b 49.92%
Midpoint Avg. $18.78mm 10.65% $88.98b 49.52%
High-End Avg. $19.82mm 10.09% $89.68b 49.14%
The Low $30mm 6.67% $70b 62.95%
The High $10mm 20.00% $110b 40.06%

 

Global Market Recap

 

  • U.S. Treasuries – Another losing day as the UST market could not handle the massive supply.
  • Overseas Bonds – JGB’s, Bunds and Gilts little changed. EU Peripherals unchanged to red.
  • 3mth Libor – Set at 1.90394% the highest yield since December 2008.
  • Stocks – Mixed at 2:30pm: Dow and NASDAQ heading in opposite directions.
  • Overseas Stocks – Asia closed red. China was closed. Europe closed with gains.
  • Economic – No economic data in the U.S. today.
  • Overseas Economic – Japan data solid. Europe data weaker.
  • Currencies – Very good day for the USD and DXY Index.
  • Commodities – Poor day for gold, copper and silver. Small gain for crude oil.
  • CDX IG: +1.95 to 53.33
  • CDX HY: +5.39 to 324.97
  • CDX EM: +3.32 to 123.21
  • VIX: +0.35 to 19.81

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

-Tony Farren

Below is the complete story of today’s investment grade corporate debt market activity as seen from the perch of Mischler Financial Group’s Fixed Income Syndicate perch. Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

banbumpstocks-ban-bump-stocks-

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:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
2/12
TUES.
2/13
WED.
2/14
TH.
2/15
FRI.
2/16
AVERAGES
WEEK 2/12
AVERAGES
WEEK 2/05
AVERAGES
WEEK 1/29
AVERAGES
WEEK 1/22
AVERAGES
WEEK 1/15
AVERAGES
WEEK 1/08
New Issue Concessions 3.50 bps 2.10 bps N/A 2.50 bps N/A 2.62 bps 2.67 bps <0.13> bps 0.43 bps 1.73 bps <0.725> bps
Oversubscription Rates 1.70x 2.36x N/A 1.83x N/A 1.96x 4.09x 2.98x 2.02x 2.15x 3.75x
Tenors 11.50 yrs 22.57 yrs N/A 17.62 yrs N/A 18.16 yrs 14.85 yrs 13.80 yrs 5.74 yrs 7.43 yrs 8.12 yrs
Tranche Sizes $600mm $357mm N/A $572mm N/A $499mm $823mm $847mm $623mm $1,137mm $747mm
Avg. Spd. Compression
IPTs to Launch
<14.25> bps <14.10> bps N/A <11.31> bps N/A <12.82> bps <17.02> bps <17.42> bps <13.87> bps <14.11> bps <19.12> bps

 

New Issues Priced

(more…)