Thursday, Mar. 19, 2015

Corporate Bond Market
Global equities all up this morning after yesterday's press conference signaled the Fed was in no rush to raise rates.  European stocks hitting new highs with Euro Stoxx +.29%.  US Equity futures down slightly after a monster rally  yesterday into the close,  DJIA Fut -15,  S&P Fut -1.75.  Treasuries holding at post-Fed levels with the 10yr treasury last at 1.939%.  Commodities continue to struggle with continued pressure on highly correlated corporate names.  Oil trading at $43.16, down 1.5%,  Natural Gas and Iron Ore both lower again as well.  Credit rallied sharply post Fed as well, retracing some of the week's earlier widening,  with most sectors closing -5bps.  Hybrids in particular took advantage of the positive momentum up .25 to .50pt across the board.  The IG index closed -3 at 62/62.5  and is tighter again this morning, opening up 61.50/62.

In credit news, RIG - Transocean is making headlines with the announcement that they are scrapping four rigs for a total charge of $300-325mm.  Stock is up 1.3% pre-market, bonds up roughly 1pt.  Cliffs Natural Resources is on the tape with plans to sell $500mm 5yr senior secured notes.  Successfully accessing the capital markets should bring some stability to the name despite the continued pressure from Iron Ore prices and the delayed exchange offer.  Target has agreed to pay a $10mm settlement to customers affected by the 2013 data breach. Should be a credit positive as the company moves forward.

The primary market was quiet yesterday but we are expecting things to pick back up again today.  Hearing at least two large deals on tap with Mizuho already having announced a new 3yr and 5yr deal.  On the economic data front:  Initial Jobless Claims (8:30am), Current Account Balance (8:30am), Bloomberg Consumer Comfort (9:45am), Philadelphia Fed Business Outlook (10:00am), and Leading Index (10:00am) are due to be released today.


Municipal Bond Market
Munis are unchanged this morning after a substantial rally post FOMC.  We should see attention on the secondary this morning as this week’s new issue calendar begins to slow down.  The primary is mostly comprised of micro deals today with $156mln Montgomery County MD as the largest deal of the day. 30 day supply continues to decline with $7.5bln scheduled compared to $11.5bln earlier in the week.

We continue to see weakness in PR benchmark GOs.  Bonds traded as low @ $83.875(9.84%) yesterday after trading as high as $86.625 (9.56%) earlier in the week.  We expect GOs to remain in this range until we receive more news on the pricing of the new deal.    PREPA continues to trade flat in the mid $50’s…Yesterday we traded 200m PREPA 5%s of 2037 @ $56 flat. 

30 Day visible supply: $7.85bln

Deals we will bidding:
14mln    Grant County School District, KY Series A       
8mln    Holbrook,MA    2016-2035   
156mln    Montgomery County, MD
40mln    Washoe County School District, NV    2020-2028    Aa3/AA
3mln    Williamston, MA    2016-2025    Aa1/


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