Browsing articles tagged with "minority broker-dealer Archives - Mischler Financial Group"
Corporate Bond Issuers Return to IG Dollar Market; Toyota Drives DCM
July 2018      Debt Market Commentary   

Quigley’s Corner 07.10.18 – Corporate Bond Issuers Return to IG Dollar Market; Toyota Drives DCM

 

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

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 IG Corporate Bond Issues Priced

Indexes and New Issue Volume              

Global Market Recap

2018 Lipper Report/Fund Flows – Week ending July 4th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

Below is the opening extract from Quigley’s Corner aka “QC”  Tuesday,  July 10, 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 

Investment Grade New Issue Re-Cap

Today the IG dollar Corporate primary market finally awoke. It awoke not from a slumber but rather from a historic streak of sluggishness when considering 10 of the last 12 sessions produced an anemic $3.527b in total volume floated by US corporate bond issuers.  Today’s IG dollar DCM hosted 4 issuers across 7 tranches totalling $5.075b.  The SSA space added 2 issuers and 4 tranches for $7.50b bringing the all-in IG day totals to 6 issuers, 11 tranches and $12.575b. The all-in IG dollar pipeline saw three issuers clear trades today  – Toyota Motor Corp., EIB and JBIC while adding Nonghyup Bank to the forward schedule.  As a generalization, today’s prints were flat to tighter at the break conveying stability and attractive as opposed to aggressive pricing tactics and in line with IG credit spreads coming in the last couple of sessions – a sign of reassurance. We all know too well that the past two weeks’ issuance silence has been deafening as big FIGs lurk on the horizon to provide feed into voracious investor appetite for a new high-quality credit product.

 

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

 

  • The IG Corporate WTD total is 28.07% of this week’s syndicate midpoint average forecast or $5.075b vs. $18.08b.
  • MTD we’ve priced 6.22% of the syndicate forecast for June IG Corporate new issuance or $5.075b vs. $81.54b.
  • There are now 20 issuers in the IG credit pipeline.

                                  

Today’s IG Primary & Secondary Market Talking Points

 

  • PacifiCorp upsized today’s 30.5-year FMB new issue to $600mm from $500mm at the launch after having skipped guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate-only new issues was <11.94> bps.
  • BAML’s IG Master Index tightened 1 bp to +127 vs. +128. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 2 bps to +120 vs. 1.22. (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 tightened 3 bps to +159 vs. +162. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $18.8b on Monday versus $7.6b on Friday and $11.6b the previous Monday.
  • The 10-DMA stands at $15.6b.

 

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

 

IG Corporate New Issuance This Week
7/09-7/13
vs. Current
WTD – $5.075b
July 2018 vs. Current
MTD – $5.075b
Low-End Avg. $16.84b 30.14% $81.04b 6.26%
Midpoint Avg. $18.08b 28.07% $81.54b 6.22%
High-End Avg. $19.32b 26.27% $82.04b 6.16%
The High $10b 50.75% $60b 8.46%
The Low $30b 16.92% $100b 5.075%

 

 

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

 

Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
7/09
AVERAGES
WEEK 7/02
AVERAGES
WEEK 6/25
AVERAGES
WEEK 6/18
AVERAGES
WEEK 6/11
AVERAGES
WEEK 6/04
AVERAGES
WEEK 5/28
New Issue Concessions N/A No Issuance 9.87 bps +7.50 bps +4.02 bps +6.31 bps +9.00 bps
Oversubscription Rates N/A No Issuance 2.03x 2.59x 2.89x 2.70x 2.73x
Tenors N/A No Issuance 12.58 yrs 11.08 yrs 11.10 yrs 9.25 yrs 9.69 yrs
Tranche Sizes N/A No Issuance $504mm $1,134mm $724mm $623mm $467mm
Avg. Spd. Compression
IPTs to Launch
N/A No Issuance <6.58> bps <13.11> bps <13.76> bps <13.80> bps <8.23> bps

 

New Issues Priced

(more…)

Holiday Time is Over for Muni Bond Issuance-NYS Dormitory is Open
July 2018      Muni Market   

Municipal Debt Deals-New Issue Calendar Week of July 9:  NYS Dormitory Authority Sales Tax Bonds…Mischler Muni Market Update looks back to last week’s muni bond issuance, municipal bond fund flow metrics and a focused lens on the muni bond new offerings for this 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.

In advance of the update, a special shout-out to WSJ’s Heather Gillers for her July 9 article: “Municipal Bonds Are Scarce. That’s Good News for Borrowers.” 

Last week muni volume was about $0.2 billion. This week volume is expected to be $8.4 billion. The negotiated market is led by $668.7 million tax-exempt and taxable bonds for Trustees of the California State University. The competitive market is led by $1.8 billion tax exempt and taxable state sales tax bonds for Dormitory Authority of the State of New York on Wednesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6676

mischler-muni-market-update-070918During 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…)

Despite Trade War Saber-Rattling-Bayer’s 15b Bond Issuance is Headache Free
June 2018      Debt Market Commentary   

Quigley’s Corner 06.19.18: Despite Trade War Saber-Rattling, Bayer AG 15b Bond Issuance is Headache Free

 

Investment Grade New Issue Re-Cap – Despite Mounting Trade War Fears Bayer Prints Massive $15b 8-Part Jumbo!

Today’s IG Primary & Secondary Market Talking Points

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

Nina Chamberlain Places on USA Cadet National Women’s Water Polo Team

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 June 13th        

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

Economic Data Releases

Tomorrow’s Calendar

 

Investment Grade New Issue Re-Cap – Despite Mounting Trade War Fears Bayer Prints Massive $15b

U.S.-China trade tensions mounted with the latter imposing tariffs on U.S. commodities. Tariffs on U.S. oil alone amount to a $1b monthly clip. This, in response to Trump’s tariffs that took effect last Friday June 15th in the form of 25% on $50b across 900 Chinese imports.  Emerging Markets currencies got hit and their bond yields widened as a result kicking off the session with 200 point loss on the DOW. Trump said last week that if China retaliates the U.S. will pursue additional tariffs. Trump’s tariffs are motivated by property rights violations in addition to new controls and restrictions.

Regardless, Bayer AG (Baa1/A-), as expected issued a blockbuster $15b jumbo transaction thru joint leads Bank of America/Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and J.P. Morgan. The German multinational pharmaceutical and life-sciences company priced the dollar-denominated 144a/REGS eight-tranche transaction across the curve.  Last week’s three days of investor calls wrapped up on Friday the 15th. Bayer AG (Baa3/BBB+) agreed to buy Monsanto Co. (A3/A-) in a deal valued at $66 billion or $128 per share in cash – a 21% premium to Monsanto’s closing price on September 13th, 2017.  It represents the M&A Pipeline’s largest deal of the year and is the single largest takeover by a German company. BAML, CS, GS, HSBC and JPM underwrote the $56.9b acquisition loan.

Meanwhile Walmart Inc. (Aa2/AA) had joint leads Barclays, Citigroup and J.P. Morgan conduct fixed-income investor calls today, Monday, June 18th from 9:30am thru 5:00pm ET. Typically issuers are ready to print the day after.  Walmart will acquire 77% of Flipkart Group, India’s largest e-commerce company for $16b valuing the company at $20.8b. The largest companies need to compete on a scale with Amazon following its acquisition of Whole Foods.  Significant “chatter” from my sources indicates a ~$10b debt transaction across the curve slated for tomorrow.  That volume will only add to what’s expected to be a ~40b week of new IG Corporate supply. So, we may well see a total of at least $26b print between today’s Bayer and Duke Florida combined with tomorrow’s Walmart after just two days and there are 20 other issuers in the pipeline.

Today the IG dollar DCM hosted 2 issuers across 10 tranches totaling $16.00b and representing 42% of this week’s $38.16b midpoint syndicate volume forecast  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 41.93% of this week’s syndicate midpoint average forecast or $16.00b vs. $38.16b.
  • MTD we’ve priced 86.89% of the syndicate forecast for June IG Corporate new issuance or $78.58b vs. $90.44b.
  • There are now 21 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 10 IG Corporate-only new issues was <15.00> bps.
  • BAML’s IG Master Index was unchanged at +121. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.15. (1.16 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 $13.7b on Friday versus $19.3b on Thursday and $13b the previous Friday.
  • The 10-DMA stands at $17.3b.

 

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

 

IG Corporate New Issuance This Week
6/18-6/22
vs. Current
WTD – $16.00b
June 2018 vs. Current
MTD – $78.58b
Low-End Avg. $37.36b 42.83% $91.24b 86.12%
Midpoint Avg. $38.16b 41.93% $90.44b 86.89%
High-End Avg. $38.96b 41.07% $89.64b 87.66%
The High $30b 53.33% $75b 104.77%
The Low $46b 34.78% $110b 71.44%

 

Congratulations!
Nina Chamberlain Places on USA Cadet National Women’s Water Polo Team

Nina Chamberlain(l) USA Cadet National Women’s Water Polo Team

Every day we here at Team Mischler leave it on the floor. Some days we’re on deals, others we’re not. One thing we NEVER do, however, is fault our resolve or efforts therein because we expect to be the best each and every day and we know what is expected of us  – it’s who we are. It’s contagious here and equally so in our respective home lives – the ones that matter most to us all.

Case in point, our fearless leader and CEO Dean Chamberlain’s daughter Nina achieved some well-deserved national attention and recognition today that I’d like to share with you all.

The center of gravity American water polo is California, but this year Greenwich represented the rest of the country by placing an astonishing three athletes on USA National Teams. This historic achievement continues the recent water polo trend started by the Greenwich YMCA standout Thomas Dunstan, who made the 2016 Olympic team and now plays for USC. Last year, Kayla Yelensky represented the USA in the Youth Pan American games. This year the trend continued for both the boys and girls teams in several age groups.

Out of thousands of players trying out for the USA National Water Polo Age-Group Teams, only 22 players in the country make the various National team (Development, Cadet & Youth).

Gavin West, a 14-year-old 8th grader at Brunswick, was one of only two cadets (15U) outside California to make the team. He will be the first representatives from the Eastern Zone in 7 years.  Patrick Mullen,a 13 year old 7th grader at Greenwich Country Day School was the only Eastern representative on the Development team (14U).  Nina Chamberlain, a 14-year-old Freshman at Greenwich High School, made the girls cadet team (15U) as the only Eastern representative from the team.

In total, there were more male national team athletes from Greenwich than all non-California states combined. This speaks to the growing participation at young ages and the quality of the local coaching at the Greenwich YMCA under Head Coach Ulmis Lordache.

“All three athletes have worked really hard over the last four years and it is a top honor to be selected for the National team,” said Iordache. ” Our entire club is so proud of them.” All three will continue their training with the National Team in California over the summer. *Reprinted from the Greenwich Free Press June 16, 2018

Congratulations Nina! This is a great accomplishment for you as well as for women athletics and our great nation!

Below find a synopsis of everything syndicate and secondary from the day’s IG debt capital markets as seen from the perch of Mischler’s Fixed Income Syndicate 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

(more…)

Muni Bond Inflows Continue To Creep Up; Mischler New Issue Outlook
June 2018      Muni Market   

Municipal Debt Deals-New Issue Calendar Week of June 18:  Muni Bond Inflows Continue To Creep Up…Mischler Muni Market Update looks back to last week’s new issuance, muni bond fund flow metrics and a focused lens on the muni bond offerings for this 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.

Last week muni volume was about $6.8 billion. This week volume is expected to be about $7.0 billion. The negotiated market is led by $1.7 billion asset-backed tobacco bonds for Golden State Tobacco Securitization Corporation,California. The competitive market is led by $1.2 billion for the State of Georgia (on Tuesday)

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

Muni Market New Offerings week June 18

During Q1 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…)

Debt Markets Remember D-Day: Normandy 1944; Mischler Financial Comment
June 2018      Debt Market Commentary   

Quigley’s Corner 06.06.18 – 17 Issuers, 29 Tranches $11b in New Issuance; Mischler Financial Tribute to D-Day

Investment Grade New Issue Re-Cap – WTD IG & SSA Issuance Matches 2018 High as 54 Tranches Price in 3 Sessions!

Today’s IG Primary & Secondary Market Talking Points

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

Remembering D-Day

Syndicate IG Corporate-only Volume Estimates For This 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

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     

Today the IG dollar DCM continued rolling along hosting 8 issuers across 14 tranches totaling $7.20b.  The SSA space added KfW’s $4b 2-year Global Notes new issue bringing the all-in IG day totals to 9 issuers, 15 tranches and $11.20b. Week to date we have now priced 54 tranches matching the 2018 weekly high after only three sessions and including 2 IG rated preferreds and 2 SSA issues.

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 132.53% of this week’s syndicate midpoint average forecast or $33.45b vs. $25.24b.
  • MTD we’ve priced 37.65% of the syndicate forecast for April IG Corporate new issuance or $34.055b vs. $90.44b.
  • There are now 14 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • NiSource Inc. upsized today’s 144a/REGS $1,000 par PerpNC5 transaction to $400mm from $350mm 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 14 IG Corporate and Preferred-only new issues was <14.07> bps.
  • BAML’s IG Master Index widened 1 bp to +121 vs. +120. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.15 vs. +1.14 thereby tying its high. (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +153 vs. +152. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $18.3b on Tuesday versus $16b on Wednesday and $21.9b the previous Tuesday.
  • The 10-DMA stands at $17.4b. 

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

 

IG Corporate New Issuance This Week
6/04-6/08
vs. Current
WTD – $33.45mm
June 2018 vs. Current
MTD – $34.055b
Low-End Avg. $24.44b 136.87% $91.24b 37.32%
Midpoint Avg. $25.24b 132.53% $90.44b 37.65%
High-End Avg. $26.04b 128.46% $89.64b 37.99%
The High $20b 167.25% $75b 45.41%
The Low $35b 95.57% $110b 30.96%

Remembering D-Day and the Greatest Generation: 74 years Ago Today

Today marks the 74th anniversary of Operation Overlord, the Allied invasion of Normandy, most commonly known as D-Day. An epic multinational amphibious and airborne operation, D-Day forged partnerships and reinforced trans-Atlantic bonds that remain strong to this day. U.S. service members from 20 units in Europe and the United States have commemorated the D-Day anniversary over the past week in almost 40 locations throughout the Normandy region.

remember-D-Day-Normandy-Mischler-Financial

Never forget!

Have a great evening!
Ron Quigley, Managing Director & Head of Fixed Income Syndicate

 

 

 

*Normandy – American Cemetery

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:

KEY IG CORPORATE
NEW ISSUE DRIVERS
MON.
6/04
TUES.
6/05
AVERAGES
WEEK 5/28
AVERAGES
WEEK 5/21
AVERAGES
WEEK 5/14
AVERAGES
WEEK 5/07
AVERAGES
WEEK 4/30
AVERAGES
WEEK 4/23
New Issue Concessions 6.33 bps 6.61 bps 9.00 bps 9.67 bps 4.59 bps 4.10 bps 5.92 bps 3.63 bps
Oversubscription Rates 2.77x 2.77x 2.73x 2.93x 2.96x 2.70x 2.16x 2.53x
Tenors 7.92 bps 10.40 bps 9.69 yrs 7.70 yrs 10.18 yrs 7.04 yrs 13.17 yrs 9.19 yrs
Tranche Sizes $622mm $741mm $467mm $952mm $842mm $805mm $630mm $786mm
Avg. Spd. Compression
IPTs to Launch
<13.38> bps <13.51> bps <8.23> bps <18.71> yrs <15.12> bps <12.91> bps <12.54> bps <13.85> bps

 

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

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
Alliant Energy Finance Baa1/A- 3.75% 6/15/2023 400 +115a +100a (+/-5) +95 +95 BAML/JPM/MIZ
Alliant Energy Finance Baa1/A- 4.25% 6/15/2028 300 +145a +135a (+/-5) +130 +130 BAML/JPM/MIZ
Compass Bank Baa2/BBB+ FRN 6/11/2021 450 3mL+equiv 3mL+73 the # 3mL+73 3mL+73 BBVA/CITI/GS/MS
Compass Bank Baa2/BBB+ 3.50% 6/11/2021 700 +110a +95 the # +95 +95 BBVA/CITI/GS/MS
Credit Suisse Group AG BBB+/A- FRN 6NC5
6/12/2024
750 3mL+equiv N/A 3mL+124 3mL+124 CS-sole
Credit Suisse Group AG BBB+/A- 4.207% 6NC5
6/12/2024
1,250 +150a N/A +140 +140
Reset:
3mL+124
CS-sole
Edwards Life Sciences Baa2/BBB- 4.30% 6/15/2028 600 +150-155/+152.5a +140a (+/-5) +135 +135 BAML/JPM (a) + 4 (p)
Jackson Na’l. Life Glbl. Fdg. A1/AA- FRN 6/11/2021 500 3mL+equiv 3mL+48-50 3mL+48 3mL+48 BAML/DB/GS/JPM
Jackson Na’l. Life Glbl. Fdg. A1/AA- 3.30% 6/11/2021 300 +80-85/+82.5a +70-72 +70 +70 BAML/DB/GS/JPM
Jackson Na’l. Life Glbl. Fdg. A1/AA- 3.875% 6/11/2025 400 +110a +98-100 +98 +98 BAML/DB/GS/JPM
KeyBank NA/Cleveland, OH A3/A- 3.35% 6/15/2021 500 +85a +72a (+/-2) +70 +70 GS/JPM/KEY/MS
NiSource Inc. Baa2/BBB+ 3.65% 6/15/2023 350 +105-110/+107.5a +90a (+/-2.5) +87.5 +87.5 CS/JPM/MS/MUFG
NiSource Inc. BBB-/BB+ 5.65% PerpNC5 400 5.875%a 5.70%a (+/-5) 5.65% $1000 par CS/JPM/MS/MUFG
Western Union Co. Baa2/BBB+ 4.25% 6/09/2023 300 +145a N/A +145 +145 BAML/BARC

 

SSA

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED LEADS
KfW Aaa/AAA 2.75% 7/15/2020 4,000 MS<2>a MS<2>a MS<3> +23.8 BARC/HSBC/RBC

 

Indexes and New Issue Volume              

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

*Denotes new high or tight.

 

Index Open Current Change  
IG30 64.169 63.742 <0.427>
VIX 12.40 11.64 <0.76>
CT10 2.929% 2.973% 0.044
S&P 2,749 2,772 23  
DOW 24,800 25,146 346
Nasdaq 7,638 *7,689 51
OIL 65.52 65.01 <0.51>  
GOLD 1,296 1,296 0  
 

USD

 

IG Corporates

 

USD

 

Total (IG + SSA)

DAY: $7.20 bn DAY: $11.20 bn
WTD: $33.45 bn WTD: $37.95 bn
MTD: $34.055 bn MTD: $38.555 bn
YTD: $618.251 bn YTD: $772.816 bn

 

Global Market Recap

 

  • USTs were sold; the yield curve steepened – T2 +2, T5 +4, T10 +4, T30 +4.
  • Overseas Bonds: EU, Gilts & Peripherals sold.  Asia flat.
  • SOFR: -0.05 to 1.75 vs. 1.80.
  • 3mth Libor: +0.006 to 2.319 vs. 2.313%.
  • Overseas Stocks: Asia up Europe mostly red except the CAC.
  • Currencies: DXY Index -0.241 to 93.635 vs. 93.876.
  • CDX HY: -3.363 to 338.194 vs. 341.557.
  • CDX EM: -0.287 to 171.909 vs. 172.196.

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

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

  • For the week ended May 30th, 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).
  • Over the same period, Lipper reported a net inflow of $274.880m from Loan Participation Funds (2018 YTD net inflow of $7.156b).
  • Emerging Market debt funds reported a net inflow of $27.322m (2018 YTD inflow of $1.990b). 

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 24.50 bps wider versus their new post-Crisis lows

*Denotes new post-Crisis low

 

ASSET CLASS 6/05 6/04 6/01 5/31 5/30 5/29 5/28 5/25 5/24 5/23 1-Day Change 10-Day Trend PC
low
IG Avg. 121 120 121 122 120 120 116 116 115 115 +1 +6 90 (2/01/18)
“AAA” 62 62 62 63 63 63 60 60 60 60 0 +2 48 (2/02/18)
“AA” 72 71 71 72 70 69 67 67 67 67 +1 +5 51 (2/02/18)
“A” 97 96 97 98 97 96 92 92 92 92 +1 +5 71 (2/01/18)
“BBB” 152 152 153 154 152 151 147 147 146 146 0 +6 115 (2/02/18)
IG vs. HY 229 229 234 241 244 255 237 237 234 233 0 <5> 222 (5/15/18)

 

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 31.42 bps wider versus their post-Crisis lows!
*Denotes new post-Crisis low!

INDUSTRY 6/05 6/04 6/01 5/31 5/30 5/29 5/28 5/25 5/24 5/23 1-Day Change 10-Day Trend PC
low
Automotive 106 105 106 107 106 104 102 102 102 102 +1 +4 67
Banking 109 109 110 111 110 109 103 103 102 102 0 +7 75 (2/02/18)
Basic Industry 154 153 154 155 153 154 148 148 147 147 +1 +7 110 (2/02/2018)
Cap Goods 99 98 99 99 99 98 96 96 95 95 +1 +4 75 (1/12/18)
Cons. Prod. 109 108 110 110 108 107 105 105 105 105 +1 +4 78 (2/01/18)
Energy 154 152 153 154 150 150 146 146 145 145 +2 +9 115 (2/02/18)
Financials 124 124 124 125 122 121 119 119 119 118 0 +6 97
Healthcare 105 105 105 106 104 103 102 102 101 101 0 +4 77 (2/02/2018)
Industrials 124 123 124 125 123 122 119 119 119 119 +1 +5 93 (2/02/18)
Insurance 130 130 130 132 130 130 127 127 126 125 0 +5 100 (2/02/18)
Leisure 129 127 128 127 126 125 125 125 125 123 +2 +6 98 (2/01/18)
Media 156 156 157 157 155 154 150 150 150 148 0 +8 113
Real Estate 129 129 129 130 129 129 128 128 127 127 0 +2 100 (2/01/18)
Retail 111 111 112 112 112 111 109 109 108 108 0 +3 82 (2/02/18)
Services 111 111 112 112 110 109 108 108 107 107 0 +4 94  (1/31/18)
Technology 90 89 91 91 90 90 86 86 86 86 +1 +4 71 (2/02/18)
Telecom 159 159 160 162 161 160 155 155 154 153 0 +6 122
Transportation 128 124 127 127 125 124 122 122 121 121 +4 +7 91 (2/02/2018)
Utility 124 127 124 125 123 123 119 119 119 119 <3> +5 96 (2/02/2018)

                                   

New Issue Pipeline

(more…)

Muni Bond New Issue Volume Bumps Up to 2018 Record-Mischler Update
June 2018      Muni Market   

Municipal Debt Deals-New Issue Calendar Week of June 4 : Week’s Muni Bond New Issue Volume Approaching 2018 Record…Mischler Muni Market Update looks back to last week’s new issue and muni bond fund flow metrics and provides a focused lens on the muni bond offerings for this 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.

Last week was holiday shortened and muni volume was about $2.2 billion. This week volume is expected to be about $9.6 billion. The negotiated market is led by $1.2 billion bonds for California Municipal Finance Authority for the LINXS APM Project. The competitive market is led by $423.8 million bonds for New Mexico Finance Authority on Thursday.

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

muni-market-new-issue-calendar-mischler

During Q1 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…)

Wall Street Rating Interest Rates: Trading at the Corner of Hollywood and Wall
May 2018      Debt Market Commentary   

Quigley’s Corner 05.16.18 – Financial Markets Rating Impact of Higher Interest Rates: Trading at the Corner of Wall Street & Hollywood Blvd.

Investment Grade New Issue Re-Cap – Wall Street & Hollywood; Reality & Illusion

Today’s IG Primary & Secondary Market Talking Points

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

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

2018 Lipper Report/Fund Flows – Week ending May 9th       

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today the suddenly subdued IG dollar DCM hosted one $800mm two-part deal from Harley-Davidson Financial Services in the form of a 2-year FRN and a 3-year fixed rate senior unsecured transaction. In fact, the SSA space outperformed on the volume front thanks to Kommuninvest’s $1b 3-year bringing the all-in IG day total to 2 issuers, 3 tranches and a mere $1.8b…………What gives?  Well, look at the CT10-year that closed out yesterday’s session yielding 3.07% and 3.10% today. U.S. interest rates are going up, though they’ve been tame thus far as they begin their trajectory.

In speaking with Mischler’s resident Treasury guru Tony Farren about the subject of rising rates today, the very first week of 2018 (Jan. 2-5) saw the 2yr (1.891%), 5yr (2.213%), 10yr (2.416%) and the 30yr (2.749%) all trading at their 2018 YTD low yields. Fast forward to today – both the 2yr (2.589%) and 5yr (2.941%) are at the highest yields since 2008; the 10yr (3.10%) is at its highest yield dating back to 2011 while the CT30yr (3.22%) came to within 1 bp of its YTD high which was the highest yield since 2015. The market IS and always has been ahead of the curve, while the Fed has ALWAYS and will forever be a market laggard. It’s the nature of the beast we call “the market.”  Rates are finding a new level and that level is HIGHER folks!

Things could certainly be changing especially after S.F. Fed Chief Williams’ comments yesterday in which he said he’s “very positive” on the domestic economic outlook and shared his view that we can sustain 3 to 4 rate hikes in 2018!  The statement has more impact than it typically would, especially considering that Mr Williams will soon upgrade to a much more powerful role as the NY Fed Chief. There is a large contingent of people and market participants who would like to see Fed-speak banned (other than post-FOMC Press Conferences and Q&A). Still, rates are going up folks. Just have a look at the emboldened U.S. dollar for evidence. Look at Emerging Markets, especially Argentina and Turkey. They are signals not only of their own domestic issue,s but also the rising rate environment.  Sprinkle on some powerful geopolitical risk factors like the bubbling Middle East, Iran vs. the unlikely Dynamic Duo that is quickly becoming Saudi Arabia and Israel, and Kim Jong-un’s recent comments threatening to un-schedule the June 12th denuclearization talks.  China, Italy, Washington dysfunction – they are all among the starring players in an endlessly rewritten historical epic scenario that beckons a script doctor’s skills to fill in the holes, add some character arcs and tie all the plots and subplots together to achieve a nice, neat denouement.  Guess what? That happy ending is not coming; after all, this is the reality, not illusion and we, readers are realists.  This is Wall Street, not Hollywood. At least I think and hope so.

So, the 3.095% CT10yr yield was the wake-up call that gave pause for today.  We are also running $7b shy of this week’s syndicate estimate, but tomorrow’s another 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 79.32% of this week’s syndicate midpoint average forecast or $26.905b vs. $33.92b.
  • MTD we’ve priced 64.28% of the syndicate forecast for April IG Corporate new issuance or $86.675b vs. $134.84b.
  • There are now 15 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 2 IG Corporate-only new issues was <15.00> 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 tightened 1 bp to +145 vs. +146. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $19.9b on Tuesday versus $16b on Monday and $17.4b the previous Tuesday.
  • The 10-DMA stands at $17.4b.

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

 

IG Corporate New Issuance This Week
5/14-5/18
vs. Current
WTD – $26.905b
May 2018 vs. Current
MTD – $86.675b
Low-End Avg. $32.52b 82.73% $133.64b 64.86%
Midpoint Avg. $33.92b 79.32% $134.84b 64.28%
High-End Avg. $35.32b 76.17% $136.04b 63.71%
The High $20b 134.53% $110b 78.80%
The Low $40b 67.26% $150b 57.78%

 Global Market Recap

  • U.S. Treasuries – Small losses. 2yr reached its highest yield since 2008.
  • Overseas Bonds – JGB’s mixed. Bunds/Gilts better. Italy/Greece hit very hard.
  • SOFR – 1.79% from 1.70%.
  • 3mth Libor – 2.32563% from 2.32063%.
  • Stocks – Solid gains at 3pm with the NASDAQ leading the way.
  • Overseas Stocks – Asia closed down. Europe more green than red. Italy hit hard.
  • Economic – Mixed U.S. data with more good than bad.
  • Overseas Economic – Japan GDP was negative. EU, Germany and Italy CPI’s were tame.
  • Currencies – DXY Index traded at its YTD high and the Euro its YTD low.
  • Commodities – Small gains. Gold hit its YTD low. Gasoline reached its high since 2014.
  • CDX IG: -0.59 to 60.68
  • CDX HY: -2.45 to 338.22
  • CDX EM: -2.13 to 158.88
  • VIX: -1.19 to 13.44

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

(more…)

Muni Bond Offerings Set To Take Off Week of May 14-San Fran Airport Commission
May 2018      Muni Market   

Municipal Bond New Issue Calendar Week of May 14:  Nearly $10bil in New Issues Scheduled…Mischler Muni Market Update looks back to last week’s new issue and muni bond fund flow metrics and provides a focused lens on the muni bond offerings for this 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.

Last week muni volume was about $6.6 billion. This week volume is expected to be about $9.9 billion. The negotiated market is led by $914.0 million tax-exempt, AMT and taxable bonds for the Airport Commission of the City and County of San Francisco, California. The competitive market is led by $1.2 billion general obligation bonds for the Commonwealth of Pennsylvania (Wednesday).

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

mischler-muni-market-comment 05142018

During Q1 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…)

Municipal Bond New Issue Calendar Week of May 7 : Energy Northwest
May 2018      Muni Market   

Municipal Bond New Issue Calendar Week of May 7:  Tax Exempt and Taxable Bonds from Energy Northwest…Mischler Muni Market Update looks back to last week’s new issue and muni bond fund flow metrics and provides a focused lens on the municipal debt new issue calendar for this 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.

Last week muni volume was about $4.7billion. This week volume is expected to be about $6.3 billion. The negotiated market is led by $634.0 million tax-exempt and taxable bonds for Energy Northwest, Washington. The competitive market is led by $382.0 million tax-exempt and taxable general obligation bonds for the City and County of San Francisco, California in 3 bids (Tuesday).

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

muni-update-municipal-debt-offering-calendar week may 7 2018

Mischler 2018 Memorial Day Month Pledge Dedicated To…

Those not familiar with the financial industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans should know that our capital market desk(s) works with more than 135 Fortune corporation treasury teams, each of Wall Street’s lead underwriter investment banks, dozens of municipal debt issuers and a discrete spectrum of the industry’s most demanding investment managers and public plan sponsors. Of equal importance, our ethos is driven by giving back and paying forward to those members of the US military service-disabled veteran community and their families who simply do not have the depth of resources and access to advanced education programs and private sector job opportunities that so many of us take for granted.

Throughout the year, Mischler Financial Group advocates on behalf of the SDV community through sponsorship of mentoring programs and direct financial assistance to veteran-centric philanthropic organizations. During the months of May and November, we dedicate a percentage of the firm’s profits to honor Memorial Day and Veterans Day respectively. In our recognition of Memorial Day 2018, we have made our annual Memorial Day Month pledge to the Semper Fi Fund, one of the highest rated non-profit organizations. A full release of this announcement was made May 1 and we thank our clients and partners in advance for working with our primary DCM and ECM teams and our secondary market trading desks to make this Memorial Day month memorable for the veterans and their family members who have sacrificed so much to make our lives safer.

During Q1 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…)

Debt Market Comment Week in Review and Looking Ahead -Mischler Viewpoint
May 2018      Debt Market Commentary   

Quigley’s Corner 05.04.18 Debt Market Comment Week in Review and Looking Ahead

Mischler 2018 Memorial Day Month Pledge Dedicated To…

Today’s IG Primary & Secondary Market Talking Points : Reprieve

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

The Best & Brightest Fixed Income Syndicate Forecasts and Sound Bites

QC Geopolitical Monitor

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

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

Indexes and New Issue Volume              

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

 

Mischler 2018 Memorial Day Month Pledge Dedicated To…

Those not familiar with the financial industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans should know that our capital market desk(s) work with more than 135 Fortune corporation treasury teams, each of Wall Street’s lead underwriter investment banks, dozens of municipal debt issuers and a discrete spectrum of the industry’s most demanding investment managers and public plan sponsors. Of equal importance, our ethos is driven by giving back and paying forward to those members of the US military service-disabled veteran community and their families who simply do not have the depth of resources and access to advanced education programs and private sector job opportunities that so many of us take for granted.

Throughout the year, Mischler Financial Group advocates on behalf of the SDV community through sponsorship of mentoring programs and direct financial assistance to veteran-centric philanthropic organizations. During the months of May and November, we dedicate a percentage of the firm’s profits to honor Memorial Day and Veterans Day respectively. In our recognition of Memorial Day 2018, we have made our annual Memorial Day Month pledge to the Semper Fi Fund, one of the highest rated non-profit organizations. A full release of this announcement was made May 1 and we thank our clients and partners in advance for working with our primary DCM and ECM teams and our secondary market trading desks to make this Memorial Day month memorable for the veterans and their family members who have sacrificed so much to make our lives safer.


Debt Market Comment |Investment Grade New Issue Re-Cap 


It was a great day for a goose egg with nothing having priced in our IG dollar DCM heading into the weekend and given the recent soft primary market tone in anticipation of a potentially much busier week ahead.  That’s right, I’ve spoken with the top 24 syndicate desks with some interesting sound bites. Most prominently, volume ahead can be heavily influenced by any one or a combination of anticipated M&A related financings among which are United Technologies Corp., Dr. Pepper Snapple Group, Bayer AG and General Dynamics Corp. Also, “if” HSBC decides to print a massive transaction, it too can upward skew the numbers. The big assumption, as one person in the know expressed, is, “it’s going to be busy if the market doesn’t completely melt down!”

 But why listen to me when you can read it direct from the 24 syndicate desks who price over 80% of the IG debt deals in Corporate America? That’s what the Friday “QC” brings you every week and that’s why this edition is called the “Best and the Brightest!” They are all waiting patiently below with their numbers and meaningful comments but as always let’s first run through this week’s recaps before I set the table for you for next week.

Get informed and enjoy the read but most of all…

Have a great weekend!

Ron Quigley, Managing Director & Head of Fixed Income Syndicate

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 85.00% of this week’s syndicate midpoint average forecast or $22.05b vs. $25.94b.
  • MTD we’ve priced 10.29% of the syndicate forecast for April IG Corporate new issuance or $13.875b vs. $134.84b.
  • There are now 12 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • BAML’s IG Master Index widened 1 bp to +116 vs. +115. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to +111 vs. 1.10.  (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +150 vs. +149. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $16.4b on Thursday versus $19.3b on Wednesday and $22b the previous Thursday.
  • The 10-DMA stands at $18.8b.
  • Taking a look at the secondary trading performance of this week’s 35 IG Corporate and 1 SSA new issues, of the 36 IG deals that priced, 22 tightened versus NIP for a 61.00% improvement rate, 7 widened  (19.50%) and 7 were flat (19.50%).
  • For the week ended May 2nd, Lipper U.S. Fund Flows reported a net inflow of $996.495m into Corporate Investment Grade Funds (2018 YTD net inflow of $36.571b) and a net inflow of $526.111m into High Yield Funds (2018 YTD net outflow of $14.084b) which was the largest HY inflow since December 2016.

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

 

IG Corporate New Issuance This Week
4/30-5/04
vs. Current
WTD – $22.05b
May 2018 vs. Current
MTD – $13.875b
Low-End Avg. $25.24b 87.36% $133.64b 10.38%
Midpoint Avg. $25.94b 85.00% $134.84b 10.29%
High-End Avg. $26.64b 82.77% $136.04b 10.20%
The High $20b 110.25% $110b 12.61%
The Low $35b 63.00% $150b 9.25%

 

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 desks surveyed for today’s “Best & Brightest” Syndicate edition!  Thank you to all of them. 20 of today’s respondents are in the top 21 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 80.25% 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 Wall Street’s most widely read debt market commentaries. 

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

Kim Jong-Un offered to readjust North Korea’s “Pyongyang” time zone that runs 30 minutes behind South Korea to match its southern neighbor as a symbol of his commitment to peace. The heads of North and South Korea met on 4/27 in the demilitarized zone to begin negotiations and mutual commitments to completely denuclearize the Korean peninsula. The meeting was historic and made for great photo ops, but was devoid of details. Still, some are holding on to hope this meeting could be the start of one of the great foreign affairs coups of the past century. Meanwhile, U.S. Treasury Secretary Steve Mnuchin is “cautiously optimistic” about negotiations with China over trade tariffs and regulations in the aftermath of Trump’s $50b tariffs in retaliation for China’s stealing of corporate America’s intellectual property. Markets are fearful of a full blown trade war. Talks could reduce tensions, and perhaps even the playing field. China will NOT change its economic policies and was vocal when saying it won’t be “bullied” by the U.S. If talks do bear fruit, it could result in Trump backing off tariff threats. Members of the U.S. delegation include Peter Navarro, Larry Kudlow, Wilbur Ross, Robert Lighthizer and Ambassador Terry Branstad.   

In the Middle East, Israeli PM Netanyahu held a televised address last Monday, revealing 50k+ documents and 180+ CDs of data proving Iran’s secret nuclear weapons program is underway in violation of the 2015 deal that Trump wants to renegotiate or abandon. Netanyahu said the docs were moved to a secret Tehran locale post deal. The IAEA, however, sees no “credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009.”    

Italian President Sergio Mattarella prefers to resolve the coalition deadlock by ruling with a short-term gov’t. rather than new national elections. On 4/30, Italy’s leftist 5-Star Movement head, Luigi Di Maio acknowledged his failure to form a coalition gov’t, calling for new elections. 5SM approached the center-left Democratic Party (“PD”) to enter into exploratory talks after it refused to negotiate with the right alliance lest ties with Berlusconi are severed. The nation has had no government for 58 days, or 24 days less than the record 82 set in 1992. Italy had 70 post WWII gov’ts in 72 post-WWII years – one every 1.02 years! – and it is the EU’s 3rd largest economy, the world’s 3rd highest debt-to-GDP ratio at 132.5% and a $2.8 trillion (equiv.) national debt. It’s the EU’s biggest economic risk. Italy’s banking sector holds $220bn of bad loans. 

Soft market tone prevails in our IG dollar DCM. In terms of primary markets, of the last 69 IG Corporate deals that priced, 32 saw guidance stagnate “at the number” while 3 of those deals launched at the widest side of guidance. That’s 46.4% of all deals priced in the past 9 sessions!  What’s more, many have traded in the gray wider to much wider and with 4 bps average NIC across that period, that’s going in the wrong direction.  This week should have been a table setter for what’s expected to be a much bigger week next week in a month that is historically robust.  

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

  • The IG Corporate WTD total stands at $22.05b. We priced $3.89b less than this week’s average midpoint estimate of $25.94b or <15.00%>.
  • MTD we priced 10.29% of the syndicate midpoint forecast for IG Corporate new issuance or $13.875b vs. $134.84b.
  • Entering today’s session, the YTD IG Corporate-only volume is $478.546b vs. the $515.420b YoY which is <$36.874b> or <7.15%> less than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $622.111b vs. $647.736b YoY making it  <$25.625b> or <3.96%> less than vs. 2017.

Here are the five key primary market driver averages for the 35 IG Corporate-only deals that priced this week.   

o   NICS:  5.92 bps  

o   Oversubscription Rates: 2.16x

o   Tenors: 13.17 years

o   Tranche Sizes: $630mm

o   Spread Compression from IPTs to the Launch: <12.54> bps 

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

  • Week on week, average NICs widened 2.29 bps to an average 5.92 bps vs.  3.63 bps across this week’s 35 IG Corporate-only new issues that displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased by 0.37x to an average 2.16x vs. 2.53x. 
  • Average tenors extended by 3.98 years to an average 13. 17 years vs. 9.19 years.
  • Tranche sizes decreased by $156mm to $630mm vs. $786mm last week.
  • Spread compression from IPTs to the launch/final pricing of this week’s 35 IG Corporate-only new issues widened by 1.31 bps to <12.54> bps vs. <13.85> bps.
  • Standard and Poor’s Investment Grade Composite Spread widened 4 bps to +150 vs. +146 week-on-week. 
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 3 bps to 1.11 vs. 1.08 week-on-week.
  • Investment grade corporate bond trading posted a final Trace count of $16.4b on Thursday versus $19.3b on Wednesday and $22b the previous Thursday.  
  • The 10-DMA stands at $18.8b.
  • The VIX widened 0.49 or 3.18% to 15.90 at yesterday’s close vs. last Friday’s 15.41 close.
  • Week-on-week, BAML’s IG Master Index widened 4 bps to +116 vs. +112.  
  • Spreads across the four IG asset classes widened 3.50 bps week-on-week to 22.00 vs. 18.50 bps as measured against its cumulative post-Crisis low.
  • Spreads across the 19 major IG industry sectors widened 4.84 bps to an average 27.05 vs. 22.21 bps as measured against their average cumulative post-Crisis lows!
  • For the week ended May 2nd, Lipper U.S. Fund Flows reported a net inflow of $996.495m into Corporate Investment Grade Funds (2018 YTD net inflow of $36.571b) and a net inflow of $526.111m into High Yield Funds (2018 YTD net outflow of $14.084b) which was the largest HY inflow since December 2016.

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

  • IG Corps: $22.05b
  • All-in IG (Corps + SSA): $22.60b

And now it’s time for today’s question posed  to the industry’s leading investment grade debt syndicate desks:  “What are your thoughts and numbers for next week’s IG Corporate new issue volume?”
Wishing you and yours a wonderful weekend!
Ron

 

The “Best and the Brightest” in Their Own Words

(more…)

Pages:1234567...18»