Thursday, Jan. 8, 2015

Corporate Bond Market
Strong start for the credit market this morning led by equity futures.  DJIA Fut +169 ,  S&P +17.5.   The treasury market is off a bit with the 10yr yield now at 1.997%.  Oil at 49 which continues to put pressure on the energy sector in corporates.   Some economic data out this morning:   Initial Jobless Claims coming in at 294k versus 290k expected.  Looks like a decent number and shouldn’t move the market too much either way.    European equities all positive on optimism that the FED and ECB will continue to support the economy.    The Investment Grade credit index is currently about 1bp tighter , wrapped around 69.

In specific credit news,  looks like Santander will meet with their Board to discuss a Euro 7.5bn capital increase.   Should be a positive for the bonds and will keep you posted as we start to see movement.  Elsewhere, Meadwestvaco (MWV) has decided to spin off its specialty chemical business.  Looks at first glance as if proceeds will go toward paying down debt and maintaining their investment grade rating. 

The new issue market was extremely active yesterday.  A few deals of note:   GM brought a 5yr and 10yr which both traded 5bps tighter,  Air Lease brought a 7yr deal that traded 5-10bps better,  and CBS printed 10yr and 30yr paper which traded 5bps tighter.  Would expect more deals today but so far only Sumitomo Bank on the tap with a 3yr and 5yr.   WTD issuance numbers at $20bn versus expectations of $30-35bn.

 

Municipal Bond Market
Munis were quiet on Wednesday after a strong rally to start the year.  We saw a large amount of items out for the bid in the muni secondary with very few items actually trading. This week’s largest deal (NY DORM PIT) saw strong demand in the preliminary pricing period… The 5%’s of 2035 c’25 were bumped 8bps. 

We continue to see buyers to splitting their attention between the primary and secondary.  We anticipate that this will be the trend for most of January until new kicks into high gear.   

Volume in in PR GO 8’s rebounded after a light start to the New Year.  5mm GOs traded @ 86.625 (9.49%) versus trading as low as $84 (9.82%) in early December. 

30 Day visible supply: $9.49bln

New Issue:
$172mln    Shelby County, TN    2015-2027    Aa2/AA+
$9mln    Southern Worcester Reg'l Vocational SD, MA    2016-2044     /AA