Browsing articles tagged with "veteran-owned broker-dealer Archives - Page 2 of 6 - Mischler Financial Group"
Bearish Flattening, Tax Reform: DCM Unscathed; Rinse Repeat
November 2017      Debt Market Commentary, Recent Deals   

Quigley’s Corner 11.28.17 Bearish Flattening; Tax Reform; US Corporate Debt Capital Markets Unscathed; Rinse Repeat

 

Investment Grade US Corporate Debt 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 This Week

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

Rates Trading Lab

New Issues Priced: Synchrony Financial and Deutsche Bank AG New York 

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

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending Nov 22

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

 

Investment Grade New Issue Re-Cap

Today the IG dollar DCM hosted 8 issuers across 8 tranches totaling $4.25b.  The big story for our nation’s oldest Service Disabled Veteran broker dealer – Mischler Financial Group, Inc., is that we were named a Co-Manager on the day’s two largest issues – Deutsche Bank AG New York Branch’s $1bn 15NC10 fxd-to-fxd Reset Sub Tier 2 Notes and Synchrony Financial’s 10-year Senior Notes new issue.  Those two transactions also just happened to account for 47% of today’s IG Corporate issuance!  You know what that means? Both DB and SYF are today’s Deals-of-the-Day which I will get to in alphabetical order following a review of an incredible day for markets and geopolitical events risk factors that I strongly advise you stay tuned to.

The S&P 500, the DOW and Nasdaq all closed at new all-time highs.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate desk estimates:

 

  • The IG Corporate WTD total is 47.81% of this week’s syndicate midpoint average forecast or $13.875b vs. $29.02b.
  • MTD we’ve priced 109.03% of the syndicate forecast for October IG Corporate new issuance or $105.079b vs. $96.38b.
  • There are now 11 issuers in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • IHS Markit Ltd. (Ba1/BBB) bumped up its 8.25-year 144a/REGS Senior Notes new issue this afternoon to $500mm from $400mm at the launch and at the tightest side of guidance.
  • Physicians Realty LP increased today’s 10-year Senior Notes new issue to $350mm from $300mm at the launch and at the tightest side of guidance.
  • Life Storage LP upsized its 10-year Senior Notes new issue today to $450mm from $400mm at the launch and at the tightest side of guidance.
  • BAML’s IG Master Index was unchanged at +104.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 0.99.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +145.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $16.9b on Monday versus $1.7b on Friday and $15.7b the previous Monday.
  • The 10-DMA stands at $14b.

 

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

 

IG Corporate New Issuance This Week
11/27-12/01
vs. Current
WTD – $13.875b
November 2017 vs. Current
MTD – $105.079b
Low-End Avg. $27.72b 50.05% $95.28b 110.28%
Midpoint Avg. $29.02b 47.81% $96.38b 109.03%
High-End Avg. $30.32b 45.76% $97.48b 107.80%
The Low $25b 55.50% $75b 140.11%
The High $38b 36.51% $130b 80.83%

 

Global Market Recap

 

  • U.S. Treasuries – Unchanged (30yr) to small losses (balance of curve) in a choppy session.
  • Overseas Bonds – JGB’s mixed. EU core & semi core little changed. Peripherals more green.
  • 3mth Libor – Set at the highest level since December 2008 (1.47882%).
  • U.S. Stocks – Big rally to all-time highs.
  • Overseas Stocks – China rallied. Nikkei & HS tiny losses. Winning day in Europe.
  • U.S. Economic – Mixed data today but the strong data was very, very strong.
  • Overseas Economic – Not a factor today but will be tomorrow.
  • Currencies – USD outperformed 4 of the Big 5. Solid rally for the DXY Index.
  • Commodities – Down day from crude oil, gold, cooper, silver, etc. Strong session for natural gas.
  • CDX IG: -0.89 to 52.65
  • CDX HY: -4.71 to 317.68
  • CDX EM: -1.15 to 179.38

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
“North Korea”
11/28 – South Korea’s Joint Chiefs of Staff verified that North Korea fired a ballistic missile that landed in the Sea of Japan. This comes 26 days after SOKO’s 11/02 NIS warning of activity at a NOKO nuke facility and expectations of a launch. Situation is “dire” Action needed = “Exclusive “QC” source. SOKO Olympics begin Friday 2/2018 and end Sunday 2/25 = Dates to keep in mind! 11/20 – Pres. Trump announced the U.S. designated NOKO as a state sponsor of terrorism. Warns NOKO that “nuclearization puts its regime in grave danger & increases the peril it faces.”
ELEVATED
“Beltway Dysfunction”
11/28 – U.S. Senate Budget Committee advanced the GOP tax reform bill to Senate for debate that could see a vote take place as early as Thursday 11/30. Congress passed the Tax Reform Bill on 11/16 in a 227-205. Strong push to unite all Republicans behind Trump to get tax reform done by year end.

Gaining traction in the Beltway: Atty. Gen. Sessions raised the possibility of special counsel appointment to investigate the Uranium One Deal involving the Clinton Foundation in which a Russian company took control of 20% of entire supply of U.S. uranium supply used to make nuclear weapons in exchange for Clinton Foundation donations. In a decree on March 20, 2020 Russia’s Vladimir Putin, abolished the Federal Agency for Nuclear Power. The public corporation Rosatom (he owns) was vested with the authority to implement on behalf of the Russian Federation the rights of shareholders in the joint-stock companies in the nuclear energy industry. In 2013 Rosatom retained full ownership. Matter of U.S. national security.

 

CAUTION

MENA & EU

11/28Israeli Mossad working with Saudi’s General Intelligence Presidency (GIP) over mounting tensions with Iran. Shared interests against Iran are bringing both nation’s closer. Lebanon’s PM al-Hariri resigned from Saudi Arabia 11/05 blaming Iranian aggression. Abandons support of Iran’s Hezbollah terror group.  Beirut, is proving ground for Saudi-Iranian proxy wars. Consolidation of KSA power with Crown Prince Mohammed bin Salman breeds sweeping change in the Kingdom called “Vision 2030” to wean KSA off oil. bin Salman leadership saw more than 50 Saudi inner players arrested in anti-corruption probe including Prince Alwaleed bin Talal, Saleh Kamel & Khalid al-Tuwaijri to show he is clearly in charge.  Trump and House of Saud are close.  Both share strong views on an anti-nuclear Iran. KSA needs oil above $81 to break even. “Tensions” will surely boost the price of a barrel of “black gold.”

Negotiators reached agreement in principle on EU settlement demand or BREXIT “divorce bill.” Amount is heard to be in a €45b to €55b range down from the €60bn that the EU initially demanded. This breaks the deadlock and should promote further Dec. & Jan. negotiations. U.K. withdrawal from EU takes place in 3/2019. Moody’s downgraded the UK on 9/22 to Aa2 from Aa1. Critical that PM Theresa May has shown an ability to effectively.

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

The Caliphate is destroyed but ISIS is now scattered across a wider region including Europe. November MTD Terror Stats a/o 11/27: 39 terrorist attacks; 766+ dead; 705+ wounded. 

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

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

Italian elections in March 2018.

MARGINAL
“2018 US Recession?
Bearish flattening signals danger for the U.S. economy. Recent bullish flattening has completely disregarded the absence of inflation. Jay Powell nominated as new fed Chief. Should provide stability/continuity; positive for GOP if latter gets their act together. The balance sheet or “b/s” normalization program is proceeding and will remain highly incremental. Fed signals 1 more rate hike in 2017 (December12/13 FOMC); 3 in 2018. Dot plots are unchanged for 2017 & ’18; lower for ’19 & longer-term. Shifts/adjustments in monetary policy outweigh chance of a 2018 recession.

 

Deutsche Bank AG New York Branch 15NC10 fxd-to-fxd Reset Sub Tier 2 Notes Deal Dashboard 

Mischler Financial Group, Inc., the nation’s oldest Service Disabled Veteran broker dealer was honored today to serve on today’s $1b Deutsche Bank AG/New York Branch 15NC10 fixed-to-fixed Reset Subordinated Tier 2 Notes new issue. We thank Team DB for selecting Mischler as a Junior Co-Manager from among the host of diversity firms in our industry.

For the DB fair value study I looked at the outstanding 4.296% 15NC10 Global Sub Notes (5/24/2028) that was 4.63% to call or 4.70 YTM which is equal to T+237 vs. T10.  Adding 9 bps to account for the swap curve from 2028s to 2032s gets you to T+246 pegging NIC on today’s T+255 print at 9 bps. A personal “thank you” to Margaret Szczerbicki!

Use of proceeds from today’s transaction will be used for general corporate purposes.

 

DB Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
15nc10
fxd-to-fxd
12/01/2032
+280a +260a (+/-5) +255 +255
Reset 5yr
MS +255.3
<25> bps 9 250/247 <5>

 

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand:

 

DB Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
15nc10 ftf
12/01/2032
$1bn $2.3b 2.30x

 

Final Pricing – Deutsche Bank AG New York Branch 15NC10 fixed-to-fixed Reset Subordinated Tier 2 Notes

DB $1bn 4.875% (15nc10) fxd-to-fxd due 12/01/2032 @ $99.968 to yield 4.878% or T+255  Reset 5yr MS +255.3

 

Synchrony Financial $1bn 10-year Senior Notes Deal Dashboard 

Mischler Financial Group, Inc., is proud to announce that it also served as an active 1.00% Co-Manager on Synchrony Financial’s $1bn 10-year Senior Notes new issue today.  We have enjoyed a longtime partnership with Synchrony.

For the Synchrony Financial relative value study I looked to the outstanding SYF 3.70% Senior Unsecured Global Notes due 8/04/2026 that were T+148 (G+153) pre-announcement. Adding 5 bps for the extension from the SYF 8/2026 to today’s SYF 12/2027 gets us to G+158 landing on today’s +165 print as 7 bps.

Use of proceeds from today’s transaction will be used for general corporate purposes.

 

SYF Issue IPTs GUIDANCE LAUNCH PRICED Spread
Compression
NICs
(bps)
Trading at
the Break
+/-
(bps)
SYF 10yr +180a +165 the # +165 +165 <15> bps 7 165 (issue bid) 0/flat

 

………and here’s a snap shot of today’s final book size and oversubscription rate – the measure of investor demand:

 

SYF Issue Tranche Size Final Book
Size
Bid-to-Cover
Rate
SYF 10yr $1bn $2.4b 2.40x

 

Final Pricing – Synchrony Financial 10-year Senior Notes

SYF $1bn 3.95% due 12/01/2027 @ $99.714 to yield 3.985% or T+165

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Chicago Leads Muni Market Negotiated Deals Offered This Week
November 2017      Muni Market   
Municipal Debt Offerings Scheduled Week of Nov 13 2017 via Mischler Muni Market Update.  The Nov 13 edition looks back to last week’s metrics and provides a lens on municipal bond offerings anticipated for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $8.4 billion. This week volume is expected to be $9.9 billion. The negotiated market is led by a pair of Illinois deals, $922.3 million for the Board of Education of the City of Chicago, and $475.0 million for Metropolitan Pier & Exposition Authority. The competitive market is led by $505.8 million general obligation bonds for the State of Washington 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

For reading ease, please click on image below

municipal debt new issue calendar

Since 2014 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 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.

 

Municipal Debt Offerings Scheduled Week of Oct 30
October 2017      Muni Market   
Municipal Debt Offerings Scheduled Week of Oct 30 2017 via Mischler Muni Market Update.  The Oct 30 edition looks back to last week’s metrics and provides a lens on municipal bond offerings anticipated for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $10.2 billion. This week volume is expected to be $6.7 billion. The negotiated market is led by $737.0 million P3 private activity bonds for Virginia Small Business Financing Authority. The competitive market is led by $684.3 million general obligation bonds for Montgomery County, Maryland in 4 bids 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

For reading ease, please click on image below

mischler-muni-market-outlook-103017

Since 2014 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 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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Mischler Muni Market Update-Municipal Bond Offerings Scheduled Week of Oct 10
October 2017      Muni Market   

Municipal Bond Offerings Scheduled Week of Oct 10 -Mischler Muni Market Update Oct 10 edition looks back to last week’s metrics and provides a lens on pending municipal bond offerings scheduled for this week. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $4.4 billion. This holiday shortened week volume is expected to be $7.2 billion. The negotiated market is led by $2.6 billion bonds for North Texas Tollway Authority, Texas. The competitive market is led by $566.8 million bonds for Los Angeles County Metropolitan Transportation Authority, California in 2 bids 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-bond-market-pending-deals-week-oct-10

Since 2014 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 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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Equities Market Comment: Coddle This! Then Keep Calm and Carry On
September 2017      Equities Market Commentary   

Peruzzi’s Perch 09.29.17- US Equities Markets Buttressed By Fed Coddling; Global Markets At/Near Record Highs-October Is Here.

Children are born and then coddled and fed by their parents for years until the time comes for them to face the world on their own. This is like the Fed coddling and nurturing financial markets with asset purchases and low interest rates. At the September 20th  FOMC meeting, while not raising rates, the Fed did signal that they continue to increase the pace of their balance sheet unwind. While inflation is below their 2% target rate, which perplexes them, they are planning on raising rates soon, or eventually, or someday. While some doubt the Fed will actually raise rates again this year, the market is pricing in a meager 1% chance of an October rate hike, and a more substantial 67% chance of a December rate hike. The end of cheap money will eventually come, but the recently disclosed Tax reform blueprint could give financial markets its next coddle-induced growth spurt. Tax reform details suggest a battle in Congress is on the horizon. This leads us once again to focus on macro and micro economic data as well as upcoming corporate earnings growth.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

As Major League Baseball’s regular season and the third quarter comes to an end, the S&P 500 closes out September with its 6th straight monthly gain. This is the first time the S&P closed positive in the month of September since 2013, with leading sectors being: Techs, Energy and Industrials. The U.S dollar is closing out its best week of the year; Asian markets closed out a strong quarter with the MSCI Asia Pac index posting its 9th straight monthly gain. WTI crude, while pulling back the last few sessions, will close out Q3 up about 10%. U.K data on Friday showed the savings rate increased more than expected while wages grew faster than prices for first time in a year. We will be watching to see if this is a one month outlier or if a trend is developing. Deutsche Bank’s rating was cut by Fitch on a lack of revenue recovery. Volkswagen announced a $3billion charge related to the buy back or retrofit of tainted U.S. diesel cars.  Also, this week we saw a pullback in August U.S new home sales as well as pending sales; better durable and Cap goods orders and personal income and spending was mostly in line. The core PCE deflator slowed to 1.3% in August, while Euro area core inflation fell .1% to 1.1% in September.

U.K. PM May will give the keynote speech at next week’s Conservative Party’s annual conference and Janet Yellen will give opening remarks at a community banking conference in St. Louis on Wednesday. September ISM data is due on Monday, ADP employment change on Wednesday, August trade balance, factory and durable goods orders on Thursday. “Here we go again” as the Spanish region of Catalonia will attempt to stage a separatist referendum on Sunday. The most-watched release will be September U.S payroll due on Friday. Payrolls are expected to show that we added the fewest workers in six months (88K estimates) as hurricanes Harvey and Irma put a temporary halt to hiring in parts of the southeast. 3Q earnings will begin in 2 weeks, but we are expecting earnings from PepsiCo Inc., Monsanto Co., Tesco Plc, Paychex Inc., Lennar Corp. and Costco Wholesale Corp next week.

Nobel prizes will be awarded through the week. Equifax ex CEO will be questioned at a U.S House Energy and Commerce subcommittee hearing on Tuesday. Asian market volume will be light next week as China, Taiwan and Korea observe autumn festivals. North Korea has been quiet recently, and that’s a welcomed change.

Most global markets are at or are near all-time highs and the VIX index once again is near its lows at 9.61. So, while the FED would very much like its child to go out and confront the world on its own, recent data and September payrolls may warrant some form of continued coddling. The coming few weeks of economic data, tax reform and earnings should give us clarity as to when the Fed can raise rates and turn that bedroom into a den. Recent trading volumes suggests traders are currently not sure. Looking back at the S&P 500 return the last four Octobers: October 2016 -1.94%, October 2015 +8.3%, October 2014 +2.32%, and October 2013 +4.46%.  We can see that October is a month that investors do not want to sit idle on the sidelines. October is a month to pick apples, watch the leaves turn, watch football and watch the market.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

www.mischlerfinancial.com

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch September 29, 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

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Equities Markets Action Defy Many Experts-So Be It?
September 2017      Equities Market Commentary   

Peruzzi’s Perch 09.01.17- Equities Markets Action Defy Experts-“Houston, we don’t see a problem..”?

The U.S markets finished August with the NASDAQ comp at all-time highs, the S&P 500 on a 5 day and DOW on a 4 day winning streak.  In fact, both the DOW and S&P 500 were within ½ of 1 % of their all times highs set on August 8th.  We find this to be somewhat remarkable given the headwinds the market has had to face recently.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

We have seen the market repeatedly recover from events such as North Korea missile launches, Presidential cabinet turnover, failed heath care bills, and Hurricane Harvey’s destruction and near shut down of Houston’s oil refining capacity.  This market may be overvalued, it may be “long in the tooth” and it may even be a thorn in the FED’s side. All true, but it also proving to be very resilient.

Another surprising aspect is the lack of surprise in the economic releases. Perhaps it’s a function of better forecasting, but we rarely see surprises in the numbers. This week Wholesales inventories, Dallas Fed, jobless claims, income, spending, Q2 GDP adjustment all came in as expected. July pending sales however did pull back a bit. We closed out the week with August employment report and while the headline number of 156K versus 180K estimates looked light, the bulk of that was in lower government hiring. The participation rate remained at a healthy 62.9%.  The biggest story of the week was the massive flooding caused by hurricane Harvey. The storm looks like it will be the costliest in U.S history, and the human and personal toll is difficult to comprehend. Gasoline has spiked to multi year highs, but with oil maintaining a $47.25 a barrel price, we expect gasoline prices to ease on refining capacity and pipelines return to service. The one silver lining from this storm was the drastic improvement in response time that we experienced during the Katrina Hurricane 12 years ago.

With markets closed for Monday’s Labor Day holiday we expect to see volumes slowly return more toward normal as the week progresses. Economically, we get July factory and durable goods orders on Tuesday, July trade balance and Fed Beige book on Wednesday, productivity, jobless claims and labor cost on Thursday, followed by July’s final read of wholesale inventories.

The most closely watched items will be the beige book as well as damage cost out of Houston ($70 to $90B estimate). While escalating numbers will continue to put pressure on the insurers, eventually an economic boom will be realized in construction, material and transportation stocks as the Houston area begins the rebuild process. Hurricane Irma is making its way across the Atlantic and we will be watching the storms progress.

The North Korea threat will most likely not go away, but the government and market has recently been better at handling the situation. The pending debt ceiling and tax reform debate in Washington could have some market moving effect. The EU and UK will continue to negotiate Brexit terms. Friday GM reported nice sale gains. We will be watching auto sales going forward to see if the industry has turned a corner.

While many are touting the regulatory reform as being the prime market driver the earning growth, modest job growth, and non-inflationary pressures (next FED hike now pushed out to December) are all helping to diminish investors’ concerns of a September correction. Historically, September has not been kind to equity markets. But as we know, this is a totally different market. Enjoy the ride and enjoy the long weekend. It’s back to work on Tuesday.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch September 01, 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

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Summer Avalanche New IG Debt Issuance Forecast-Mischler Comment
August 2017      Debt Market Commentary   

Quigley’s Corner-08.04.17- Summer Avalanche New IG Debt Issuance Forecast 

Below is the opening extract from Quigley’s Corner aka “QC”  Friday, Aug 4 2017  weekend 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 fixed income trading and 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: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade New Issue Re-Cap – Summer Avalanche of New IG Debt Issue Forecast for Next Week

Today’s IG New Debt Issuance & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and August

The Best and the Brightest: IG DCM Syndicate Forecasts and Sound Bites for Next Week 

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

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 2nd               

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

 

Today’s Friday IG Corporate dollar DCM featured  2 issuers that priced 2 tranches between them totaling $650mm as of this writing. The SSA space was quiet today. Please note that I scribed the below Best & Brightest IG Corporate primary market data download piece early this morning, so the data does not include today’s Murphy Oil and TC Pipelines deals.

Thanks! –RQ (In case you left early en route to the beach, the DJIA reached yet another new intra-day high today!)

As for next week, well British American Tobacco’s $49bn purchase of Reynolds American looks like it will manifest itself as the Company announced fixed income investor meetings for an expected mega cross currency transaction across USD, Euro and Sterling.  The Senior Unsecured dollar-denominated portion will feature joint leads Bank of America/Merrill Lynch, Barclays, Citigroup, Deutsche Bank and HSBC. The three tranches could potentially raise $25b dollar equivalent. I am also hearing “chatter” of another big issuer lurking.  We all know that after next week, it begins the traditional summer slowdown period. . But before that, the big push is on, so rest up this weekend, as next week’s syndicate midpoint average forecast calls for $34.29b to price.  Factoring in that average amount to the $21b priced thus far in August would bring the MTD total to $55.29b. The forecast for August is $79.10bn so that would leave $23.81b to get done across the last three weeks of the month or an average of $7.93b.  This ASSUMES that next week will reach the midpoint average forecast. I happen to think we could see $40b next week, which would push the average of each of the last three weeks of August down to $6bn.

But, before we all go away with our families, re-energize this weekend because next week will be a big one.  Read all about it below from the pros who price all the deals in our IG dollar DCM.  We’ll first review today’s primary and secondary market talking points, the growing geopolitical risk factors in our world, take a glance at the weekly and monthly IG primary market volume tables and then it’s onto the masters, maestros and mavens of syndicate who price all the deals in our IG dollar DCM.
Ready?.SET?..R-E-A-D!

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

  • The IG Corporate WTD total is 110.84% of this week’s syndicate midpoint average forecast or $27.986b vs. $25.25b.
  • MTD we’ve priced 26.55% of the syndicate forecast for July or $21.00b vs. $79.10b.
  • There are now 5 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

  • The average spreads across 2 of the 19 major industry sectors tied their post-Crisis lows. That’s 10.53% of the sectors.
  • BAML’s IG Master Index widened 1 bp to +109 vs. +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.04 vs. 1.03.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +152 vs. +151.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $19.6b on Thursday versus $19.9b on Wednesday and $19.6b the previous Thursday.
  • The 10-DMA stands at $17.4b.

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·   N. Korea launches ICBM on 7/28. Jong-Un claims 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).  Fear that 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. U.S. lofts Trident missile in Pacific Ocean in response. China insiders say PRC does not have the influence on NOKO that the U.S. thinks it does.
ELEVATED
BREXIT Fallout
·   U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.
CAUTION
“U.S. political gridlock”
·   Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump with federal grand jury issuing subpoenas.

·   U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

·   GCC Crisis 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.

·   Italian debt-to-GDP ratio is 133% – world’s 3rd highest.

·   Despite destroying the Caliphate, ISIS will be scattered across a wider MENA region and Europe.

·   Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

·   Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

·   Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE ·   China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
·   Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and August

 

IG Corporate New Issuance This Week
7/31-8/04
vs. Current
WTD – $27.986b
August 2017 vs. Current
MTD – $21.00b
Low-End Avg. $24.21b 115.60% $78.37b 26.80%
Midpoint Avg. $25.25b 110.84% $79.10b 26.55%
High-End Avg. $26.29b 106.45% $79.83b 26.31%
The Low $15b 186.57% $60b 35.00%
The High $35b 79.96% $100b 21.00%

 

The “Best and the Brightest” Syndicate Forecasts and Sound Bites re New IG Debt Issuance Next Week 

 

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  Thank you to all of them. 21 of those participants are among 2017’s YTD top 22 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.

*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! That’s 2014, 2015 and 2016 !!   

The preface to the weekly canvass of the top fixed income syndicate desk teams begins with the following background-
Entering this morning’s Friday session, here are this week’s IG new issue volume talking points:   

  • The IG Corporate WTD total outperformed once again with issuance 108.26% of the syndicate midpoint average forecast or $27.336b vs. $25.25b.
  • MTD we have now priced 25.73% of the syndicate projection for August IG Corporates or $20.35b vs. $79.10b.
  • Entering today’s session, the YTD IG Corporate-only volume is $862.833b vs. $843.591b on August 3rd, 2016 or 2.28% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $1,054.568b vs. $1,077.377b on August 3rd, 2016 or 2.16% less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages from the 42 IG Corporate-only deals that priced this week: 

  • NICS:  0.06 bps
  • Oversubscription Rates: 3.34x
  • Tenors: 11.96 years
  • Tranche Sizes: $651mm
  • Spread Compression from IPTs to the Launch: <18.56> bps

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

  • Average NICs tightened 1.62 bps to an average 0.06 bps vs. 1.68 bps across this week’s 42 IG Corporate-only new issues.
  • Over subscription or bid-to-cover rates, the measure of demand, slightly increased by 0.04-times to 3.34x vs. 3.30x. 
  • Average tenors contracted by 1.07 years to an average 11.96 years vs. 13.03.
  • Tranche sizes decreased by $861mm to $651mm vs. 1,512mm. Last week featured the $22.5bn 7-part transaction for AT&T which boosted the average tranche size.  
  • Spread compression from IPTs to the launch/final pricing of this week’s 42 IG Corporate-only new issues widened by 2.59 bps to <18.56> bps vs. <21.15>.
  • Standard and Poor’s Investment Grade Composite Spreads widened 2 bps to +152 vs. +150 bps.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning widened 2 bps to 1.04 vs. 1.02 bps. 
  • Week-on-week, BAML’s IG Master Index widened 1 bp to +109 vs. +108. 
  • Spreads across the four IG asset classes widened 2 bps bps to 6.00 bps vs. 4.00 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also widened 2.36 bps to 9.89 vs. 7.53 bps also as measured against their post-Crisis lows.
  • For the week ended August 2nd, Lipper U.S. Fund Flows reported an inflow of $1.485b into Corporate Investment Grade Funds (2017 YTD net inflow of $79.114b) and a net inflow of $20.818m into High Yield Funds (2017 YTD net outflow of $6.663b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 50 deals that printed, 26 tightened versus NIP for a 00% improvement rate,  13 widened (26.00%), 9 were flat (18.00%) and 2 were not available (4.00%) or N/A.

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

  • IG Corps: $27.336b
  • All-in IG (Corps + SSA): $31.986b

And now ladies and gentlemen, it’s time for the guy-in-the corner, to ask today’s question, “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

Thank you in advance for your time and contribution!

The “Best and the Brightest” in Their Own Words

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Equities Markets: Scaling The Peak-Mischler Comment via Peruzzi’s Perch
August 2017      Equities Market Commentary   

Peruzzi’s Perch 08.04.17- All Systems Remain in “Go” Mode; Equities Markets Continue to Scale The Peak

Throughout the last several weeks more than a few strategists and commentators have been warning investors of overvalued and overbought equities markets. Calls were being made to head for the exit. Yet, for reasons known and unknown, investors kept plowing money into the market. Lack of volatility, low interest rates, cheap oil, tame inflation and favorable business policy drew investors in to US [and global] equities markets as they did not heed the warnings. To understand this, we should look at the hikers that attempt to conquer Mt Everest. Those mountaineers are well aware that peril could be met with a slight slip of foot or unforeseen storm, yet they trudge forward for the glory and euphoria of reaching the top. Likewise, investors today are presumably well aware of the risks (until they’re not!) and this week, the glory of new all-time highs as well as very good earnings and a strong jobs report made the voyage worth it.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

We had another heavy earnings week. So far, this recent quarter is shaping up as the best earnings season in 7 years, with 77% of companies reporting beating estimates. Economics-wise, this week‘s June Pending home sales, June Personal spending, July ISM manufacturing and June factory orders all came in at or very close to estimates. Price deflator and personal income data was dovish. The major economic release was Friday’s July employment report. Unemployment dropped to 4.3% as expected and non-farm payrolls added a better than expected 209,000 jobs. Average hourly earnings met estimates at +.3% M/M which at a +2.5% Y/Y rate should NOT ignite any inflation fears.

The Washington/Russia/North Korea/Venezuela soap opera drama continues. The Trump administration cabinet turnover is reaching a record pace, but none of this seems to be enough to spook the markets. Possible new sanctions against Venezuela help lift oil close to $50 a barrel but many U.S refineries have been fitted, at sizeable cost, to refine Venezuela’s heavy type of crude so look for a fair amount of politicking here.

Looking ahead to next week, earning season is nearing its end with just 206 companies due to report. Also due are Consumer credit on Monday, 2Q non-farm productivity and labor cost on Wednesday, July PPI data on Thursday and July CPI data on Friday.

With the DOW at 22, 000 and the economy close to being at full employment, analysts and investors will closely monitor any type of inflationary pressure which might cause the FED to raise rates at a faster pace or possibly, amplify asset sales.  So, we will be listening to speeches by Fed  governors Bullard, Kashkari, Dudley next week ahead of the August 16th FOMC meeting minutes.  With global growth, low inflation, low energy prices and emerging market growth investors will be cautiously move forward as we scale the peak.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch July 28, 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group

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Investment Grade DCM Talking Points-Mischler Comment
August 2017      Debt Market Commentary   

Quigley’s Corner 07.31.17- Investment Grade DCM – American Airlines Floats and Flies Ahead of Day’s Debt Issuers 

Below is the opening extract from Quigley’s Corner aka “QC”  Monday July 31 2017  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 fixed income trading and 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: rkarr@mischlerfinancial.com or via phone 203.276.6646


Investment Grade DCM 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 This Week and July

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 July 26th              

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 New Issue Re-Cap

Today’s IG Corporate dollar DCM finished with 11 issuers pricing 15 tranches between them totaling $6.986b.  The SSA space was quiet today. It seemed much busier than today’s final tally given the 15 tranches but if you’ll recall several syndicate desks did comment in last Friday’s “QC” survey for this week’s IG Corporate new issue volume that it would seem busier given the expectation for lots of smaller sized deals.

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

  • The IG Corporate WTD total is 27.67% of this week’s syndicate midpoint average forecast or $6.986b vs. $25.25b.
  • MTD we’ve priced 143.28% of the syndicate forecast for July or $120.926b vs. $84.40b.
  • There are now 6 issuers in the IG credit pipeline.

July 2017 finished as the second highest volume July on record for IG Corporates at $120.876b as well as for all-in IG supply (Corporates plus SSA) – $141.476b. 

Today’s IG Primary & Secondary Market Talking Points 

  • Banco General, S.A. upsized today’s 10yr 144a/REGS Senior Unsecured Notes new issue to $550mm from its $500mm launch size.
  • International Paper Co. dropped the FRN tranche from today’s earlier announced two-part 3NC1 FGRN and 30yr Senior Notes offering.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 15 IG Corporate-only new issues, was <19.73> bps.
  • Excluding today’s IG-rated preferred for Public Storage, the average spread compression of today’s 14 IG Corporate-only new issues, was <20.61> bps.
  • The average spreads across 1 of the 19 major industry sectors set a new post-Crisis low while 6 of the 19 tied their post-Crisis lows. That’s 36.84% of the sectors.
  • BAML’s IG Master Index was unchanged at +108.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.03 vs. +102.
  • Standard & Poor’s Investment Grade Composite Spread widened 1 bp to +151 vs. +150.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.3b on Friday versus $19.6b on Thursday and $12.8b the previous Friday.
  • The 10-DMA stands at $17.1b.

 

Global Market Recap 

  • U.S. Treasuries – Unchanged (2yr & 3yr) to +0.8 bps (30yr) in a very quiet day.
  • Overseas Bonds – JGB’s small loss. Bund small gain & Gilt weaker.
  • Stocks – U.S. stocks mixed heading into last hour. Dow traded closed at a new all-time high……again!
  • Overseas Stocks – HS & China rallied. Nikkei small loss. Europe mostly red.
  • Economic – U.S. data was mixed. Core PCE tomorrow.
  • Overseas Economic – China weaker. Japan stronger. Europe stronger with tame inflation.
  • Currencies – USD was better overnight but was hit hard during NY trading hours.
  • Commodities – Crude oil little changed but did trade over 50. Copper 2+ year high.
  • CDX IG: -0.28 to 57.37
  • CDX HY: -0.20 to 320.94
  • CDX EM: -0.53 to 190.66

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

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
N. Korea launches ICBM on 7/28. Jong-Un claims 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).  Fear that 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 obviously failed. Tensions are mounting.  
ELEVATED
BREXIT Fallout
U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent.  
Venezuela – civil unrest as Maduro dictatorship claims bogus election outcome favors unlimited powers and a new constitutional assembly in elections that U.S. and key LATAM nations will not acknowledge. Caracas named most dangerous city in the world with highest murder rate. VZ gov’t stopped publishing crime stats a decade ago. Dictatorship in our Western Hemisphere. U.S. Tsy. freezes Maduro family assets.  
CAUTION
“U.S. political gridlock”
Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned; Mueller expanding FBI probe into Trump. White House cleans house; New Chief of Staff.

U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

GCC Crisis 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.

Italian debt-to-GDP ratio is 133% – world’s 3rd highest.

Despite destroying the Caliphate, ISIS will be scattered across a wider MENA region and Europe.

Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

Central banks shrinking balance sheets/higher volatility in 2H17; ECB dovishness; low rates persist.

Renewed tensions along the India-Pakistan cease fire line dividing Indian-controlled Kashmir.

MODERATE China hard landing – rising corporate debt have the OECD and IMF concerned.
MARGINAL
2018 U.S. Recession
Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak?; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/31-8/04
vs. Current
WTD – $6.986b
July 2017
Forecasts
vs. Current
MTD – $120.926b
August 2017
Low-End Avg. $24.21b 28.86% $83.87b 144.18% $78.37b
Midpoint Avg. $25.25b 27.67% $84.40b 143.28% $79.10b
High-End Avg. $26.29b 26.57% $84.92b 142.40% $79.83b
The Low $15b 46.57% $70b 172.75% $60b
The High $35b 19.96% $111b 108.94% $100b

 

 

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

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Muni Bond Issuance Scheduled-Week of July 31 2017 via Mischler Financial Group
July 2017      Muni Market   

Mischler Muni Market Market Update for the week of 07-31-17 looks back to last week’s metrics and provides a focused lens on pending muni bond issuance scheduled for the upcoming week. As always, the Mischler Muni Market Outlook provides public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings scheduled for this week’s issuance.

Last week muni volume was about $4.2 billion. This week volume is expected to be $7.2 billion. The negotiated market is led by $1.1 billion senior and subordinate bonds for the Bay Area Toll Authority, California. The competitive market is led by $388.9 million tax-exempt and taxable general obligation bonds for Portland Public School District #1J, Oregon on Thursday. Commonwealth of Massachusetts is selling $1.5 billion GO RANs at competitive sale 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 203.276.6656

For reading ease, please click on image below

municipal-bond-issuance week jul 31 2017

Since 2014 alone, Mischler Financial Group Inc.’s  presence across the primary Debt Capital Markets 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 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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