Wednesday, Feb. 25, 2015

Corporate Bond Market
Global equities are down overnight and US equity futures are in the red as well with DJIA Fut -9 and S&P Fut -3.3.  The focus again today will be on Yellen's testimony to lawmakers, due to begin at 10am.  Markets rallied yesterday after she spoke, revealing rate hikes were not imminent.  Greece headlines are quiet for the moment.  Oil is trading this morning at $49.10,  and treasuries continue to rally bring the 10yr to a 1.972%,  back through that 2% level.  Credit is opening up unchanged to start after closing unchanged to +/- 1bp depending on sector.  The IG index is opening up +¼ so far at 62/62½.  Still trading at recent tights.

Hearing it's going to be a busy day on the new issue front, following the $10+bn that priced yesterday.  At least 6 deals rumored to be on tap for today with a large 3yr and 5yr deal already announced for Bank of Tokyo Mitsubishi.  Yesterday's deals included Chevron (2yr, 3yr, 5yr, 7yr),  Eli Lilly (10yr, 30yr),  Nissan Motor (3yr and 5yr),  Apollo Inv Corp (10yr), and TCF National Bank (10yr).  All were well received and traded at least a few bps tighter in secondary activity.  WTD we are at $16.5bn out of an estimated $25bn.  ACT investors calls have begun making it all the more likely we see that deal next week.

In corporate headlines this morning , HPQ is on the tape reporting earnings below analyst expectations.  The equity is down almost 8% pre-market.  The company is citing foreign currency exposure as the main culprit.   In addition to Yellen we also had MBA Mtge Apps numbers this morning (-3.5% vs -13.2% prior), and New Home Sales due out at 10am.  


Municipal Bond Market
Munis were quiet for the second straight day as buyers continue to focus on the primary market.  New issue was met with strong demand as $100mln ( Aaa/AAA) Mecklenburg Co, NC priced 2bps-24bps through.  Today’s calendar is highlighted by about $300mln Nevada GOs. 

PR Benchmark GOs were slightly stronger yesterday on increased volume..46mm bonds changed hands Tuesday vs. 2.5mm on Monday.  3mm bonds traded @ 83.125 (9.94%) compared to $82.375 (10.04) last week. 

30 Day visible supply: $12.3bln

New Issue:
23mln        Lovejoy ISD, TX G.O. *PSF*        Aaa/AAA
13.8mln     Lowell, MA G.O. Refunding    2017-2027    Aa2/AA
20.8mln    Nevada G.O.s Natural Resource Refunding Sr 2015C    2015-2035    Aa2/AA
196.2mln   Nevada G.O.s Capiatal Improvements Sr 2015B    2018-2026    Aa2/AA
74.4mln    Nevada G.O.s University System Bonds Sr A    2017-2032    Aa2/AA
8.6mln       Rochester, NH *Taxable*    2016-2025    Aa3/AA
9.5mln       Rochester, NH Tax Exempt     2016-2035    Aa3/AA
9.5mln       Smith County, TN G.O. refunding    2016-2021     /A+


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