Wednesday, Mar. 4, 2015

Corporate Bond Market
Global equities are mixed this morning with Europe trading off slightly on weaker than anticipated economic data.  Look for the region to trade sideways to slightly down into Thursday's ECB meeting, as they hammer out details of the 1.1 trillion quantitative-easing program they announced earlier in the year. Asian equities are down across the board.  Stateside the DJIA Fut are -50, and S&P Fut -7.   Credit is starting out weaker as well with the IG index +½ at 62/62½.  Treasuries are rallying a bit to start the 10yr last at 2.116%.  Oil is up around $51.

The focus in the Corporate Bond Market yesterday was on supply.  Actavis priced their much anticipated 10 tranche, $21bn deal which was well received despite the tightened price talk and large size.  The deal traded 15-20bps tighter before it had even allocated.  We saw demand across the tranches with the the real short paper and frns the most difficult to source.  The longer paper seems to be opening up this morning 2-4bps off the tights.  There was also a large deal from Exxon Mobile.  They priced 7 tranches of AAA paper which traded right around issue to a couple bps better.  Charles Schwab priced a 3yr and 10yr, Paccar Financial priced a 3yr,  and Marsh & McLennan priced a 5yr - not much secondary activity last night but all seemed to be well received.  On the high yield front there were deals from Sirius Radio (10yr) and Antero Resources (8yr) that both traded up.

On the data front the focus will still be on the jobs numbers due out tmrw and Friday but on tap for today:  MBA Mtge Apps came in at .1% versus prior -3.5%,  ADP employment due at 8:15, survey 219k, ISM Non-Manf at 10am , survey 56.5. Fed Beige Book also due out this afternoon.    


Municipal Bond Market
Munis are unchanged this morning after trading weaker yesterday.  The yield on the 10-year benchmark muni general obligation on Tuesday moved three basis points higher to 2.08% from Monday’s 2.05%.  We continue to see very little flow in the secondary market as cash flows into new deals.  The highlight of today’s primary is the pricing of $518mln MD GOs & $152mln Clark County GOs.

PR Benchmark GOs were slight weaker on the day.  Bonds traded around @ 83.00(9.96%) compared to trading around $82.375 (10.04) last week.  We expect benchmarks GOs to remain in this range until we get more information on a potential new deal or a new ruling on the bankruptcy law. 

30 Day visible supply: $12.68bln

New Issue:
39mln    Brookhaven, NY G.O.s    20172028    Aa2./AA+
3mln    Canton, MA    2016-2028   
15mln    Coventry, RI G.O. Bonds    2016-2035    Aa3/
6mln    Jefferson County, TN G.O.s    2018-2036    Aa3/


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