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Weather, Washington Wackiness, Drums of War..What’s Next?!
September 2017      Debt Market Commentary   

Quigley’s Corner 09.06.17 – Weather, Washington Wackiness, Drums of War..What’s Next?!


Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates For September

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

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending August 30th

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


Investment Grade Corporate Bond New Issue Recap

What’s Next?! Despite North Korea bomb-rattling, Hurricane’s Harvey and Irma natural play to stimulate infrastructure spending, and a host of global event risk factors, there was some good news today from of all places “Dysfunction Junction” a.k.a. The Beltway….Washington, D.C.  Despite GOP push back from House Speaker Paul Ryan, Washington Wackiness got even more wacky when President Trump crossed the aisle to join arms with the Democratic caucus and pledged to extend our nation’s debt limit to three months to December 15th.  The GOP hasn’t shown much support for the president anyway, so what the heck, right? WAKE UP GOP! Equally important was the $7.4b disaster relief bill passed by an overwhelming 419-3 vote to assist all those Gulf Coast families and businesses impacted by Hurricane Harvey.  Only when our fellow Americans and businesses are beaten, battered and bruised, do our nation’s politicians do the right and obvious thing.  Wouldn’t it be great if they came together for us and our great nation every time?  We’re their bosses, folks. They are supposed to work for us. We tell them what to do. If they don’t deliver then they’re not doing their jobs.

Today’s IG Corporate dollar DCM finished with 12 issuers that priced 23 tranches between them totaling $13.65b.  The SSA space added ADB’s well-telegraphed $4b Global 5-bringing the all-in IG Corporate plus SSA day totals to 13 issuers, 24 tranches and $17.65b.

Here’s how this week’s IG Corporate volume numbers measure up against the MTD syndicate estimates:


  • MTD we’ve priced 31.97% of the syndicate forecast for September or $35.95b vs. $112.45b.
  • There are now 17 issuers in the IG credit pipeline.


Today’s IG Primary & Secondary Market Talking Points


  • Mischler served as a “passive” Co-Manager on today’s Visa Inc. $2.5b 3-part 5s/10/s/30s Senior Global Notes new issue.
  • PPL Capital Funding Inc. boosted its 30-year Senior Notes new issue to $500mm from $450mm
  • The Carlyle Group LP increased today’s $25 par Series “A” PerpNC5 Preferred to $400mm from $150mm.
  • Visa Inc. upsized today’s three-part 5s/10/s/30s Senior Global Notes new issue to $2.5b from $2b at the launch and at the tightest side of guidance.
  • Sinopec Group Overseas Development added a 30-year tranche to today’s 3-, 5- and 10-year transaction at guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 22 IG Corporate-only new issues, that illustrated price evolution, was <16.76> bpsThis includes today’s Carlyle Group Preferred and does not include the Sinopec 30-year tranche that was an add-on at guidance.
  • BAML’s IG Master Index widened 1 bp to +116 vs. +115.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.11 vs. 1.10.
  • Standard & Poor’s Investment Grade Composite Spread widened 2 bps to +161 vs. +159.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12.9b on Tuesday versus $5.3b on Friday and $14b the previous Friday. Monday was a holiday.
  • The 10-DMA stands at $12.2b.


Global Market Recap


  • S. Treasuries – Debt ceiling 3-month extension deal does in the UST market.
  • Overseas Bonds – JGB’s mixed. Bunds and Gilts small losses. Peripherals weaker.
  • Stocks – U.S. stocks recovering some of yesterday’s sizeable losses.
  • Overseas Stocks – Nikkei and HS down. China higher. Europe more red than green.
  • Economic – U.S. data mixed. Fed’s Beige Book: moderate, modest with no inflation.
  • Overseas Economic – Japan data disappointing. Europe data weaker.
  • Currencies – USD closed mixed vs. the Big 5 but rallied on the debt ceiling news.
  • Commodities – Crude oil and copper higher. Gasoline, gold and wheat lower.
  • CDX IG: -0.70 to 58.46
  • CDX HY: -0.27 to 330.42
  • CDX EM: -1.17 to 177.09

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

-Tony Farren


The “QC” Geopolitical Risk Monitor


Risk Level/Main Factor Geopolitical Risks
North Korea
NOKO’s Kim Jong-Un explodes 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki; causes 6.3 magnitude earthquake according to the U.S. Geological Survey after last week’s ICBM launch over Japan lands in Pacific Ocean. Head of IAEA (Int’l. Atomic Energy Authority) calls NOKO’s recent hydrogen bomb test a “new dimension of global threat” to the world. U.S. Ambassador to the UN, Nikki Haley spoke today saying “the time has come to exhaust all diplomatic means to end this crisis. Only the strongest sanctions will enable us to solve this problem through diplomacy.” Monday 8/31 began joint U.S. & S. Korean military exercise the world’s largest computerized command control implementation that involved  over 80,000 U.S. and South Korean troops. CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” Russia’s Foreign Minister Lavrov says his country “does not want to see North Korea with nuclear weapons.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population).  NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. China insiders say PRC does not have the influence with NOKO that the U.S. thinks it does. U.S.’s NOKO strategy quickly changing from containment on the Korean peninsula to defending the Hawaii, Alaska and the continental United States and more offensive in nature. NOKO adding miniature nuclear warheads to its ICBMs. Asian allies now justified to build up militaries including Japan. China in precarious position given South China Sea Islands.
BREXIT Fallout
Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani border conflict as one of if not the most volatile. Both are nuclear capable. The 100-year old non-partisan Brookings Institute calls Pakistan “the world’s most dangerous country.”

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU.  UK withdrawal from EU takes place in March, 2019.

“U.S. political gridlock”
Trump tax reform targeted for this year according to Gary Cohn, Director of the NEC. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt after repeal and replace defeat in late July. Trump’s Strategic and Policy Forum disbanded as did his Manufacturing Council.

Mueller expanding FBI probe into Trump. Many think it’s a “witch” hunt.

Increasingly tense political environment.

GCC Crisis continues as Saudis, UAB, Egypt, Bahrain & 5 others cut diplomatic ties with Qatar; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base, severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.  German Foreign Minister blames Trump for inciting conflict in the region.

Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. There were 57 global terrorist attacks in the month August killing 766 people and wounding 1,112.

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

Central banks shrinking balance sheets/higher volatility; low rates persist; slow inflation pick-up.

Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Risk of VZ default.  4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3). PDVSA announces relief aid to victims of Harvey as ploy to get U.S. citizens to fill up at domestic CITGO stations. Don’t use CITGO! Donate to organizations instead.

MODERATE China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns.
2018 U.S. Recession
Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; recent absence of inflation and $4.5 trillion balance sheet unwind are concerns. Market expecting unwind announcement by Fed in September.  The 9/01 U.S. Unemployment Rate rose 0.1% to 4.4%. Impact of Hurricane Harvey and Irma on upcoming domestic data releases.


Syndicate IG Corporate-only Volume Estimates For September


IG Corporate New Issuance September 2017 vs. Current
WTD – $35.95b
Midpoint Avg. $112.45b 31.97%
The Low $100b 35.95%
The High $125b 28.76%


Have a great evening!

Ron Quigley


Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.


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