Tuesday, Feb. 24, 2015

Corporate Bond Market
Positive headlines out of Greece this morning as they inch closer to winning an extension of their aid package.  The EU Commission is on the tape as saying the plan is 'Sufficiently Comprehensive' to move forward.  This should put investors at ease over progress in the region and firm up equities. Yields on Greek debt fell for a fifth day , bringing the 10yr to 8.85%.  At the moment European stocks are mixed and US Equity Futures are split with the DJIA fut +15 and S&P Fut -.40.   Focus today will be on Janet Yellen's speech to the Senate at 10am and any subsequent clarity on rate hike timing.  Treasuries selling off to start with the 10yr at 2.075% last.  Oil currently at 49.66, up slightly from yesterday's levels.  Credit seems to be opening up unchanged to start having closed unchanged to slightly tighter.

In credit news more earnings hit the tape this morning.  Home Depot and Toll Brothers both beat expectations.  Home Depot also approved an $18bn stock buyback program. Comcast Corp missed slightly citing slowing subscriber growth. CMCSA has also approved a share buyback program and will be increasing their dividend.   Corporate investors are awaiting news of a large corporate debt offering from Actavis (ACT).  The deal could be as large as $20bn and price in early March.   This is in conjunction with an equity offering pricing today,  $4.2bn in convertible notes.

The primary market was active yesterday with deals from Daimler Finance (2yr, 3yr and 5yr) , Harley Davidson (5yr),  Arrow Electronics (7yr and 10yr),  long bonds from Commonwealth Edison and Kinder Morgan, and a 10yr deal from Coach Inc.  Coach was the star performer, pricing at +225 and trading  15bps tighter almost immediately.  Should be another busy day with a deal announced from Eli Lilly (3yr, 10.25yr, 30yr) and Digicel (8nc3yr).  On the economic data front:  in addition to Yellen's 10am talk, Case-Shiller and Consumer Confidence data due out this afternoon.


Municipal Bond Market
Munis were quiet yesterday, remaining unchanged throughout, as most buyers sat on the sidelines ahead of this week’s large new issue calendar and Yellens testimony.  We expect to see this week’s focus on the primary market with about $9bln in new deals   scheduled.  Today’s calendar is highlighted by $400mln in Clark County, NV GOs.

PR Benchmark GOs were unchanged to start the week.  Volume was light with no trades greater than 375m on the day.  Bonds continue to trade around $82.875(9.98%), which is where we saw bonds trade for most of the week. 

30 Day visible supply: $13.29bln

New Issue:
266mln    Clark County, NV School Dsitrict Ser A New $    2016-2019    A1/AA-
131mln      Clark County, NV School Dsitrict Ser B Refunding    2016-2022    A1/AA-
3mln        Grafton, ND Refunding    2015-2034   
26mln      Islip, NY School District    2016-2030    Aa3/
8mln        Kanabec County, MN G.O. Refunding    2017-2027     /A+
6mln        Maplewood. MO G.O.s    2016-2035     /AA


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