Browsing articles tagged with "Mischler Financial Archives - Mischler Financial Group"
IG Debt Market Weekend Update: Citi in Sync With Synchrony
May 2018      Debt Market Commentary, Recent Deals   

Quigley’s Corner 05.18.18 Investment Grade Debt Market Commentary:Spotlight On Synchrony Bank

Investment Grade New Issue Re-Cap – Synchrony Bank Owns the Friday Leaderboard

Today’s IG Primary & Secondary Market Talking Points

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

Global Market Recap

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

The “QC” Geopolitical Risk Monitor

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

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

Indexes and New Issue Volume

2018 Lipper Report/Fund Flows – Week ending May 16th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

UST Resistance/Support Table

Today Synchrony Bank (wholly-owned subsidiary of Synchrony Financial NYSE:SYF) owned the IG dollar primary market leaderboard with its $750mm 3(a)5 exempt 3-year senior bank notes transaction. What’s more, Mischler Financial, the nation’s oldest Service Disabled Veteran-owned and operated broker dealer was honored to be named as an active 1.00% Co-Manager. Thank you to stalwart Chris Coffey who is no stranger to diversity and inclusion mandates in our DCM. Chris was there from the get-go back in his days at MBNA when during his time he helped steer that issuer to become a founding father of inclusion transactions along with some other large FIGs. That pre-dates Chris’ GECC days! We appreciate SYF’s patronage and our active role today. Thank you as well to both Citigroup and MUFG Syndicate and of course, to the best darn middle markets distribution network on the street for your loyalty and continued belief in and support of the “value-added” proposition. Congrats also to Chris for his first Friday print at SYF and for his efforts in continuing to implement and guide a stellar diversity mandate that saw 7 diversity firms on today’s new 3-year that included a Service Disabled Veteran-owned broker-dealer three African-American-owned BDs a Hispanic-American owned firm, and a Woman-owned firm.

Today’s final Synchrony order book finished at just over $1.8b making the deal 2.40-times oversubscribed.  Concession on today’s deal was negative 2 bps given new 5-year SYF bank paper is +135. Adjusting <35> bps for the 3s/5s curve gets you to +100 against today’s final T+98 pricing pegs NIC as <2> bps.  A nice day for SYF, the leads and congratulations to Chris on a successful first Friday print at Synchrony! Net, net – a VERY GOOD RESULT for all!

Overseas in the EU two new issues were postponed including the first in 2018 for an investment grade rated issuer pointing to investor fatigue following one of the busier weeks of the year. Here’s a look at the WTD and MTD IG Corporate new issue volume as measured against syndicate desk estimates:

  • The IG Corporate WTD total is 96.86% of this week’s syndicate midpoint average forecast or $32.855b vs. $33.92b.
  • MTD we’ve priced 68.69% of the syndicate forecast for April IG Corporate new issuance or $92.625b vs. $134.84b.
  • There are now 17 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 1 IG Corporate-only new issue was <14.50> bps.
  • BAML’s IG Master Index was unchanged at +114. (It’s post-Crisis low is +90 set on 2/01).
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.09 vs. at 1.08.  (0.85 is its post-Crisis low set on 1/30).
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +147. (+125 represents its post-Crisis low set 2/02).
  • Investment grade corporate bond trading posted a final Trace count of $19.7b on Thursday versus $20.8b on Wednesday and $19.1b the previous Thursday.
  • The 10-DMA stands at $17.9b.
  • Taking a look at the secondary trading performance of this week’s 43 IG new issues comprised of 38 IG Corporates and 5 SSAs new issues 25 tightened versus NIP for a 58.25% improvement rate, 13 widened  (30.25%) and 5 were flat (11.50%).
  • For the week ended May 16th, Lipper U.S. Fund Flows reported a net inflow of $3.069b into Corporate Investment Grade Funds (2018 YTD net inflow of $40.444b) and a net outflow of $541.871m from High Yield Funds (2018 YTD net outflow of $15.381b).

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

 

IG Corporate New Issuance This Week
5/14-5/18
vs. Current
WTD – $32.855b
May 2018 vs. Current
MTD – $92.625b
Low-End Avg. $32.52b 101.03% $133.64b 69.31%
Midpoint Avg. $33.92b 96.86% $134.84b 68.69%
High-End Avg. $35.32b 93.02% $136.04b 68.09%
The High $20b 164.28% $110b 84.20%
The Low $40b 82.14% $150b 61.75%

 

Global Market Recap

  • U.S. Treasuries – ended a poor week with a solid rally.
  • Overseas Bonds – JGB’s unchanged. Bunds/Gilts rallied. Peripheral bonds were hit.
  • SOFR – 1.74% FROM 1.75%.
  • 3mth Libor – 2.32938% from 2.33125%.
  • Stocks – Mixed as of 3pm.
  • Overseas Stocks – Asia closed higher. Europe lost ground.
  • Economic – Nothing on the calendar today.
  • Overseas Economic- – Japan CPI was very tame. Europe inflation data MoM was higher.
  • Currencies – DXY Index traded at a YTD high, Euro YTD low and ADXY Index at a YTD low.
  • Commodities – Crude small loss. Gold up and copper down. Wheat saw a big rally.
  • CDX IG: +0.82 to 61.73
  • CDX HY: +1.60 to 340.22
  • CDX EM: +5.30 to 170.73
  • VIX: -0.09 to 13.34

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

-Tony Farren, Managing Director, Rates Trading

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

Taking a look at the secondary trading performance of this week’s 43 IG new issues comprised of 38 IG Corporates and 5 SSAs new issues 25 tightened versus NIP for a 58.25% improvement rate, 13 widened  (30.25%) and 5 were flat (11.50%).

 

Issuer Ratings Coupon Maturity Size IPTs GUIDANCE LAUNCH PRICED TRADING
Synchrony Bank BBB/BBB- 3.65% 5/24/2021 750 +112.5a +100a (+/-2) +98 +98 97/96
Charles Schwab Corp. A2/A FRN 5/21/2021 600 3mL+equiv 3mL+equiv 3mL+32 3mL+32 3mL+33/30
Charles Schwab Corp. A2/A 3.25% 5/21/2021 600 +65a +50 the # +50 +50 50/47
Charles Schwab Corp. A2/A 3.85% 5/21/2025 750 +95a +80 the # +80 +80 80/77
Svenska Handelsbanken Aa2/AA FRN 5/24/2021 1,250 3mL+equiv 3mL+47 the # 3mL+47 3mL+47 3mL+44/41
Svenska Handelsbanken Aa2/AA 3.35% 5/24/2021 1,250 +80a +65 the # +65 +65 65/62
Valero Energy Corp. Baa2/BBB 4.35% 6/01/2028 750 +137.5a N/A +125 +125 124/121
Province of New Brunswick Aa2/A+ 3.625% 2/24/2028 500 MS +50a MS +50a MS +50 +53.3 53/52
Harley-Davidson Finc’l Svcs. A3/A FRN 5/1/2020 450 3mL+65a 3mL+53 (+/-3) 3mL+50 3mL+50 3mL+43/41
Harley-Davidson Finc’l Svcs. A3/A 3.55% 5/21/2021 350 +95a +83 (+/-3) +80 +80 79/76
Kommuninvest Aaa/AAA 2.875% 3/01/2021 1,000 MS +8a MS +8 MS +6 +20.7 21/19
Avista Corp. A2/A- 4.35% 6/01/2048 375 +125a +115 the # +115 +115 114/111
Citigroup Inc. Baa1/A FRN 6NC5
6/01/2024
1,000 3mL+equiv 3mL+equiv 3mL+102.3 3mL+102.3 3mL+98/94
Citigroup Inc. Baa1/A 4.044% 6NC5
6/01/2024
1,250 +115-120/+117.5a +112.5 the # +112.5 +112.5
Back-end:
3mL+102.3
109/106
Citigroup Inc.
(tap) New Total: $3.85b
Baa3/A- 4.45% 9/29/2027 350
WNG
+high 160a
+167.50a
+163 the # +163 +163 163/161
Diageo Capital plc A3/A- FRN 5/18/2020 500 3mL+equiv 3mL+equiv 3mL+24 3mL+24 3mL+21/18
Diageo Capital plc A3/A- 3.00% 5/18/2020 500 +60-65/+62.5a +47a (+/-2) +45 +45 40/37
Diageo Capital plc A3/A- 3.50% 9/18/2023 500 +75-80/+77.5a +65a (+/-2) +63 +63 62/59
Diageo Capital plc A3/A- 3.875% 5/18/2028 500 +95-100/+97.5a +87a (+/-2) +85 +85 82/79
Perusahaan Listrik Negara
PT Persero
Baa2/BBB 5.45% 5/21/2028 1,000 5.80%a 5.50% the # 5.50% +241.4 236/232
Perusahaan Listrik Negara
PT Persero
Baa2/BBB 6.15% 5/21/2048 1,000 6.50%a 6.20% the # 6.20% +299.6 292/288
Royal Bank of Scotland Baa3/BBB+ 4.892% 11NC10 F-t-F
5/18/2029
1,750 +200a +185a (+/-3) +182 +182
Back-end:
3mL+175.4
185/181
Republic of South Africa Baa3/BB+ 5.875% 6/22/2030 1,400 6.00%a 5.875% the # 5.875% +280.5 285/280
Republic of South Africa Baa3/BB+ 6.30% 6/22/2048 600 6.375%a 6.30% the # 6.30% +310.1 315/312
Swedish Export Credit Corp. Aa1/AA+ 2.875% 5/22/2021 1,000 MS +12a MS +10a (+/-1) MS +9 +24.8 25/24
AEP Texas Inc. Baa1/A- 3.95% 6/01/2028 500 +110a +100-105 +100 +100 96/93
Ameren Illinois Co. A1/A 3.80% 5/15/2028 430 +95a +85a (+/-3) +82 +82 78/75
American Express Co. A3/A FRN 5/17/2021 800 3mL+equiv 3mL+equiv 3mL+52.5 3mL+52.5 3mL+46/
American Express Co. A3/A 3.375% 5/17/2021 1,200 +low 80s/+82.5a +70a (+/-2) +68 +68 68/63
Bank of America Corp. A3/A 3.499% 5/17/2022 2,250 +100a N/A N/A +80
Back-end:
3mL+63
81/78
Canadian Pacific Railroad Baa1/BBB+ 4.00% 6/01/2028 500 +120a +105a (+/-3) +102 +102 99/96
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 3.551% 5/25/2021 1,750

 

+105a +90a (+/-5) +85 +85 83/80
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 4.057% 5/25/2023 2,000 +135a +125a (+/-5) +120 +120 116/114
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 4.417% 5/25/2025 1,000 +160a +150a (+/-5) +145 +145 141/137
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 4.597% 5/25/2028 2,000 +175a +165a (+/-5) +160 +160 162/158
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 4.985% 5/25/2038 500 +205a +190a (+/-5) +185 +185 190/185
Dr. Pepper Snapple/Keurig
Maple Escrow Subsidiary Inc
Baa2/BBB 5.085% 5/25/2048 750 +215a +200a (+/-5) +195 +195 202/197
Fidelity Nat’l. Info. Systems Baa2/BBB 4.25% 5/15/2028 400 +145 +135a (+/ (+/-5)-5) +130 +130 131/127
Fidelity Nat’l. Info. Systems Baa2/BBB 4.75% 5/15/2048 600 +190 +180a (+/-5) +175 +175 178/174
Goldman Sachs Group, Inc. A3/A FRN 8NC7
5/15/2026
1,500 3mL+125a 3mL+120a (+/-3) 3mL+117 3mL+117 3mL+121/118
Great-West Lifeco Finance A+/A 4.047% 5/17/2028 300 +130a +110a (+/-5) +105 +105 103/99
Great-West Lifeco Finance A+/A 4.581% 5/17/2048 500 +160a +145 the # +145 +145 143/141
San Diego Gas & Electric Co. Aa2/AA- 4.15% 5/15/2048 400 +110a +105 the # +105 +105 102/100

 

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

Thanks as always for tuning in to the daily “QC”, enjoy your read in preparation for the week ahead along with my impassioned plea to enjoy a fabulous weekend with you and yours!

Okay, the fixed income syndicate sound test is complete.  I have over 3,500 readers in the audience. Fade out the overture. Lights, camera, action!:

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 desks surveyed for today’s “Best & Brightest” Syndicate edition!  Thank you to all of them. 21 of today’s respondents are in the top 22 syndicate desks including 21 of the top 24 according to today’s Bloomberg U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  The 2018 League table can be found on your terminals at “LEAG” + [GO] after which you select (U.S. Investment Grade Corporates).  The participating desks represent 81.00% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they are the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they are the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.  

As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years – 2014, 2015 and 2016 !  Syndicate Desks: Please Note that we had a Friday print today from “SYF” so I updated the below survey question data to reflect Synchrony Bank’s 3-year new issue. If you notice any differences that’s why. Thanks! -RQ

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

  • 5/17 – Kim Jong-un warned that the de-nuclearization summit could be compromised due to John Bolton’s paralleling a NOKO-U.S. de-nuke deal with the Libyan “model of nuclear abandonment.” Bolton is highly qualified but needs to tone down and save the rhetoric for if and when needed – not prior to the historic summit.
  • 5/14 – Although Pres. Trump reversed sanctions on China’s ZTE telecom it was done in exchange for China agreeing not to impose tariffs on U.S. agricultural products that had been levied in response to Trump’s earlier steel and aluminum tariffs.
  • 5/14 – Tensions mounted in the Middle East as Israeli troops fired on protesting Palestinians along the fenced Gaza strip killing 55 and wounding over 1,700. More violent and armed men were intermingled with the mostly peaceful Palestinian demonstrators including families with children. Once they burst through fencing Israeli snipers began to shoot into the onrushing crowd. The protest happened to coincide with the opening of the U.S. embassy in Jerusalem leaving friction at its highest level in years in the historic conflict.  
  • 5/16 – U.S. interest rates: The strong U.S. economy is supporting rising UST yields. T2s & 5s reached highs since 2008; CT10 since 2011 and the LB peaked at 3.10% (2015) a higher yield trading band is established. The sensitivity of EM currencies to higher rates is chronic. Combined with their own additional political risks, EM risks falling out of favor as currencies fall out of bed. 
  • 5/17 – Pressure on UK PM Theresa May mounts as Britain’s House of Lords dealt BREXIT its 15th defeat, this time over environmental protections issues by a 54%-46% margin. In addition, friction intensified between supporters of a post-BREXIT customs partnership with the EU vs. resistance by those who support technology to monitor the critical border between Ireland and Northern Ireland.
  • May 2018 Terror Event MTD Casualty Total: 79 terrorist attacks; 618 dead; 781 wounded.
  • 5/17 – Italy’s two ant-establishment parties 5-Star and League plan tough immigration reform, lifting all sanctions against Russia, creating 2 tax brackets of 15 and 20%, dropping a previously increased retirement age and a citizen’s income for the poor. Wishful thinking!

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

  • The IG Corporate WTD total stands at $32.855b. We priced $1.065b less than this week’s average midpoint estimate of $33.92b or <3.14%>.
  • MTD we priced 68.69% of the syndicate midpoint forecast for IG Corporate new issuance or $92.625b vs. $134.84b.
  • Entering today’s session, the YTD IG Corporate-only volume is $557.296b vs. the $574.314b YoY which is <$17.018b> or <2.96%> less than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $705.361b vs. $717.956b YoY making it  <$12.595b> or <1.75%> less than vs. 2017.

Here are the five key primary market driver averages for the 57 IG Corporate-only deals that priced this week: 

  • NICS:  4.59 bps  
  • Oversubscription Rates: 2.96x
  • Tenors: 10.18 years
  • Tranche Sizes: $842mm
  • Spread Compression from IPTs to the Launch: <15.12> bps

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

  • Week on week, average NICs widened 0.49 bps to an average 4.59 bps vs. 4.10 bps across this week’s 43 IG Corporate-only new issues that displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, increased by 0.26x to an average 2.96x vs. 2.70x. 
  • Average tenors extended by 3.14 years to an average 10.18 years vs. 7.04 years.
  • Tranche sizes increased by $37mm to $842mm vs. $805mm last week.
  • Spread compression from IPTs to the launch/final pricing of this week’s 43 IG Corporate-only new issues tightened by 2.21 bps to <15.12> bps vs. <12.91> bps.
  • Standard and Poor’s Investment Grade Composite Spread tightened 1 bps to +147  bps vs. +148 week-on-week. 
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 2 bps to 1.09 vs. 1.11 week-on-week.
  • Investment grade corporate bond trading posted a final Trace count of $19.7b on Thursday versus $20.8b on Wednesday and $19.1b the previous Thursday.  
  • The 10-DMA stands at $17.9b.
  • The VIX widened 0.78 or 6.16% to 13.43 at yesterday’s close vs. last Friday’s 12.65 close.
  • Week-on-week, BAML’s IG Master Index tightened 2.00 bps to +114 vs. +116 week-on-week.  
  • Spreads across the four IG asset classes tightened 2.00 bps week-on-week to 18.75 vs. 20.75 bps as measured against its cumulative post-Crisis low.
  • Spreads across the 19 major IG industry sectors tightened 1.89 bps to an average 25.11 vs. 27.00 bps as measured against their average cumulative post-Crisis lows!
  • For the week ended May 16th, Lipper U.S. Fund Flows reported a net inflow of $3.069b into Corporate Investment Grade Funds (2018 YTD net inflow of $40.444b) and a net outflow of $541.871m from High Yield Funds (2018 YTD net outflow of $15.381b).

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

  • IG Corps: $32.855b
  • All-in IG (Corps + SSA): $37.355b

And now it’s time for today’s question posed to the senior members of the Industry’s top 24  fixed income syndicate desks: “What are your thoughts and numbers for next week’s IG Corporate new issue volume?”
 

Please know that on each and every new issue, the guy-in-the-corner is ALWAYS in YOUR corner on deal day! If an issuer asks you who are some of the best diversity firms are, my hope is that you’ll mention Mischler Financial and the guy-in-the-corner.  Our distribution is high quality, prolific and consistent. On deal day, we perform enough to influence your bid-to-cover rates with REAL high quality and unpadded “sticky” investor orders. The “QC” won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years….2014, 2015 and 2016! But most of all we have a great certification-the nation’s oldest Service Disabled Veteran owned and operated broker dealer.

Wishing you and yours a wonderful weekend!
Ron Quigley, Managing Director, Head of Fixed Income Syndicate

 

The “Best and the Brightest” in Their Own Words

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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

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Mischler Financial Group 2018 Memorial Day Month Pledge
May 2018      Company News, Giving Back   

memorial day pledge mischler financial semper fi fund

May 01 2018

Re: 2018 Mischler Memorial Day Month Pledge

Since our inception in 1995, Mischler Financial Group (“MFG”) has been devoted to meeting the capital market needs of the nation’s leading corporations, municipal issuers and a broad spectrum of the industry’s most demanding investment managers and public plan sponsors.

Of equal importance, throughout our history we’ve committed resources and year-round financial support to veteran-centric legislative initiatives, career building and mentoring veterans. This includes our support of carefully-evaluated philanthropic programs focused on improving the quality of SDVs and their families’ lives and charitable programs that concentrate on supporting the families of military men and women who made the ultimate sacrifice in the course of serving our country.

In connection with our year-round philanthropic mission, the months of May and November are specifically dedicated to honoring Memorial Day and Veterans Day. During these two months, we contribute a percentage of the firm’s profit to carefully-selected organization(s) that we believe provide a unique and positive impact on the lives of vets, SDVs and Gold Star family members who simply do not have the depth of resources that so many of us take for granted.

With that, in honor of “Memorial Day Month 2018,” MFG is proud to make our pledge to the Semper Fi Fund, one of the country’s highest-rated charities. Formed in 2004, “SFF” is committed to providing immediate financial assistance, education scholarships, career transition programs and life-time support to post-9/11 combat wounded, critically ill and catastrophically injured members of all branches of the U.S. Armed Forces and their families.  Since its inception, Semper Fi Fund has distributed over $167 million to more than 20,000 service members and their families and MFG is therefore privileged to continue our support of SFF.

On behalf of the entire Mischler Financial Group family, we are grateful and honored that clients of our firm will be supporting our Memorial Day Month 2018 pledge via our trading and capital markets desks and/or direct contribution to SFF.

Dean Chamberlain (SDV) | Principal & Chief Executive Officer

Doyle Holmes | President & Chief Operating Officer

Walter Mischler (SDV) | Founder & Chairman

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Muni Bond Credit Spreads Stay Flat; New Deals This Week: GO Bonds
April 2018      Muni Market   

Municipal Debt New Issue Outlook Week of 04-16-18: Muni Bond Credit Spreads Stay Flat; Week’s Scheduled Deals: GO Bonds from CA, UConn. and City of Memphis Mischler Muni Market Update looks back to last week’s new issue and muni bond fund flow metrics and provides a focused lens on municipal debt new issuance scheduled 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 $4.5 billion. This week volume is expected to be about $7.5 billion. The negotiated market is led by $2.1 billion taxable general obligation bonds for the State of California. The competitive market is led by $314.9 million general obligation bonds for the City of Memphis, Tennessee 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

 

mischler-muni-market-calendar-week-041618

During 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 $600 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.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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Muni Deals This Week: State of CT, GWU; Go Colonials
March 2018      Muni Market   

Municipal Debt New Issue Outlook Week of 03-26-18 – $1.5b taxable for GWU (The George Washington University); Go Colonials. Mischler Muni Market Update looks back to last week’s new issue and muni fund flow metrics and provides a focused lens on municipal debt new issuance scheduled 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 $2.1 billion. This week volume is expected to be about $3.7 billion. The negotiated market is led by $1.5 billion for two taxable financings for George Washington University and Sutter Health and $617million of general obligation bonds for the State of Connecticut. The competitive market is led by $123.7 million tax-exempt and taxable general obligation bonds in two bids for the City of Oklahoma City, Oklahoma 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-issue-calendar-mischler

During 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 $600 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.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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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

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Municipal Bonds “A Powerful New Appeal” – New Issue Schedule Week 022618
February 2018      Muni Market   

Municipal Bonds: New Federal Tax Laws Give Muni Bonds “A New Appeal”;  This Week’s New Issue Schedule   Mischler Muni Market Update looks back to last week’s metrics and provides a lens on municipal bond new issues scheduled 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 this week’s issuance.

Last week muni volume was about $5.3 billion. This week volume is expected to be about $4.8 billion. The negotiated market is led by $650.0 million for The Black Belt Energy Gas District, Alabama. The competitive market is led by $837.0 million general obligations for Baltimore County, Maryland, $346.0 million bonds in 2 bids on Wednesday and $491.0 million BAN’s in 2 bids on Thursday.

This past Sunday edition of the New York Times published an interesting snapshot re “new appeal” provided by municipal bonds consequent to the recently-passed federal tax legislation. While ‘academic’ for the universe of municipal debt analysts and professional muni fund managers, the narrative is topical and could be insightful to those who don’t subscribe to the publication. The piece written by NYT reporter Carla Fried is via this link

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

For reading ease, please click on image below

municipal-bond-new-issuance-scheduled-022618

During the past two years alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 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…)

Mischler Investment Grade Debt Market Comment-Weekend Edition 02-23-18
February 2018      Debt Market Commentary   

Quigley’s Corner 02.23.18 – Investment Grade Debt Market Comment Weekend Edition

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

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

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

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 21st

IG Credit Spreads by Industry

IG Credit Spreads by Rating

New Issue Pipeline

M&A Pipeline Highlights

 

Investment Grade New Issue Re-Cap

Well, there were no new issues from either the IG Corporate or the SSA space today. No harm, no fowl and a welcome relief on a Friday! Next week is shaping up to be a nice one with the average syndicate estimate calling for $26.92b to price.  In conducting my Friday morning survey of the top 25 syndicate desks, not only did all respond again but there seemed to be considerable “chatter” away from them on the street that CVS may be sooner than we think.  That could be a significant volume booster to what’s already a hefty week next week.  53.33% of this week’s IG Corporate new issues tightened with 23.33% flat to new issue spread levels for an overall 79% rate which is a very healthy number.

I have this week’s primary market data download below as well as comments and projections from the sagacious, scholarly, sapient sages of syndicate. That’s right they are all here as my personal guests each and every Friday, for which I am grateful to them all, but hustle up before they leave for their weekends. Some key investment grade debt market comment talking points are to keep an eye, more like an ear, on our new Fed head, Jerome Powell’s first Congressional testimony before the House that was rescheduled this morning for next Tuesday, February 27th from Wednesday.  Otherwise known as the Humphrey-Hawkins hearings, this is the first of two such annual appearances the Fed chief makes each year. He is supposed to follow that up with a repeat performance before the Senate on Thursday assuming they don’t shift that schedule as well. His testimony may well have a strong immediate market impact should he elaborate on interest rates and inflation. Expectations are that he will stay the Fed course and not “rock the boat.”  Great tune by the Hues Corporation BTW. Advice to the newbie, ………don’t rock the boat baby……… don’t tip the boat over!

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

  • The IG Corporate WTD total is 96.65% of this week’s syndicate midpoint average forecast or $18.15b vs. $18.78b.
  • MTD we’ve priced 67.67% of the syndicate forecast for February IG Corporate new issuance or $60.217b vs. $88.98b.
  • There are now 11 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • 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 $20.1b on Thursday versus $19.4b on Wednesday and $19.2b the previous Thursday.
  • The 10-DMA stands at $18.5b. 

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

 

IG Corporate New Issuance This Week
2/19-2/23
vs. Current
WTD – $18.15b
February 2018 vs. Current
MTD – $60.217b
Low-End Avg. $17.74mm 102.31% $88.28b 68.21%
Midpoint Avg. $18.78mm 96.65% $88.98b 67.67%
High-End Avg. $19.82mm 91.57% $89.68b 67.15%
The Low $30mm 60.50% $70b 86.02%
The High $10mm 181.50% $110b 54.74%

 

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 82.21% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they are the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they are the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted. 

As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker-Dealer Research in our financial services industry for three consecutive years – 2014, 2015 and 2016 ! 


The Segue: Here is this week’s geopolitical recap:


The PyeongChang Winter Olympics will officially come to and this Sunday February 25th, and you know what that means?  North Korea will invariably return to its pre-Olympic nuclear stride. U.S. financial markets will be focused next week on new Fed head Powell’s testimony before the House next Wednesday followed by the Senate on Thursday. Three rate hikes have been solidly forecast for 2018 with many now touting four and murmurings of the possibility of five! With a massive budget, the largest UST auctions on record this week – $258b – and higher rates to pay off, many are worried that our economy, that is running on all cylinders with low unemployment, means inflation is lurking around the corner.  Equity markets proved resilient this week although we are still witnessing extreme intra-day swings as the “correction” finds itself.  Next Friday, March 2nd Germany‘s Social Democrats (Socialist Party) votes to approve or reject the recent grand coalition deal better referred to as a “marriage of convenience” with Merkel’s CDU/CSU party. A “no” vote means new elections for the Hinterland and further political tension and turmoil in the EU’s keystone state and the world’s third-largest economy. A week from Sunday – March 4th – Italy holds its eagerly anticipated election with many projecting Berlusconi’s Forza Party to win and form a coalition government with other Eurosceptic parties. In a nation with 65 governments in 71 post-WWII years, anything can happen. Italy’s national debt is $2.8trillion and its banking sector holds $220bn of bad loans.  It has the world’s third highest debt-to-GDP ratio. So, fun times ahead folks!


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

  • The IG Corporate WTD total stands at $18.15b. We priced $630mm less than the week’s average midpoint estimate of $18.78b or 96.65%.
  • MTD we priced 67.67% of the syndicate projection for February IG Corporates or $60.217b vs. $88.98b.
  • Entering today’s session, the YTD IG Corporate-only volume is $192.602b vs. the $233.533b that priced on Thursday, February 23rd, 2017 or $40.931b (21.25%) less than this time last year.
  • The all-in or IG Corporate plus SSA YTD volume is $267.967b vs. $303.183b on Thursday, February 23rd, 2017 or $35.216b (13.14%) less than the same time year ago total.

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

o   NICS:  1.95 bps  

o   Oversubscription Rates: 3.29x

o   Tenors: 11.97 years

o   Tranche Sizes: $626mm

o   Spread Compression from IPTs to the Launch: <16.46> bps 

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

  • Week on week, average NICs tightened minutely by 0.67 bps to an average 1.95 bps vs. 2.62 bps across last this week’s 29 IG Corporate-only new issues that displayed relative value.
  • Over subscription or bid-to-cover rates, the measure of demand, increased considerably by 1.33x to an average 3.29x vs. 1.96x. 
  • Average tenors reduced dramatically by 6.19 years to an average 11.97 years vs. 18.16 years.
  • Tranche sizes grew by $127mm to $626mm vs. $499mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 29 IG Corporate-only new issues tightened by 3.64 bps to <16.46> bps vs. <12.82> bps.
  • Standard and Poor’s Investment Grade Composite Spread was unchanged at +133. 
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning was unchanged at 0.93 week-on-week.
  • Investment grade corporate bond trading posted a final Trace count of $20.1b on Thursday versus $19.4b on Wednesday and $19.2b the previous Thursday.
  • The 10-DMA stands at $18.5b.
  • The VIX narrowed 0.74 to 18.72 at yesterday’s close vs. last Friday’s 19.46.
  • Week-on-week, BAML’s IG Master Index widened 1 bp to +99 vs. +98.  
  • Spreads across the four IG asset classes widened 0.75 bp week-on-week to 8.00 bps vs. 7.25 bps as measured against its cumulative post-Crisis low.
  • Spreads across the 19 major IG industry sectors widened 0.58 bps to an average 8.95 bps vs. 8.37 bps wider as measured against their average cumulative post-Crisis lows!
  • For the week ended February 21st, Lipper U.S. Fund Flows reported a net inflow of $1.572b into Corporate Investment Grade Funds (2018 YTD net inflow of $20.260b) and a net outflow of $335.066m from High Yield Funds (2018 YTD net outflow of $12.499b).
  • Taking a look at the secondary trading performance of this week’s 29 IG Corporate and 1 SSA new issues, of the 30 deals that printed, X tightened versus NIP for a 53.00% improvement rate, 7 widened  (23.50%), 7 were flat (23.50%).  

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

  • IG Corps: $18.15b
  • All-in IG (Corps + SSA): $20.65b

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

Ron Quigley, Managing Director, Head of Fixed Income Syndicate

 

The “Best and the Brightest” in Their Own Words

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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

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Municipal Bond New Issues Scheduled Week Ending Feb 23 via Mischler Financial
February 2018      Muni Market   

Municipal Bond New Issues Scheduled Week Ending Feb 23 2018– Mischler Muni Market Update looks back to last week’s metrics and provides a lens on municipal bond new issues scheduled 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 this week’s issuance.

Last week muni volume was about $3.9 billion. This holiday-shortened week volume is expected to be about $5.8 billion. The negotiated market is led by $1.4 billion for Los Angeles Unified School District, California. The competitive market is led by $250.0 million taxable general obligation bonds for The City of New York 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

For reading ease, please click on image below

municipal-debt-new-issues

 

During the past two years alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 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.

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