Thursday, Mar. 5, 2015

Corporate Bond Market
Global equities are up across the board with Europe leading the way after the ECB kept interest rates unchanged and at record lows.  Now investors are just waiting for more details on the 1.1 trillion- euro bond buying program.  Euro Stoxx is up .8% to start.  US Equity futures are following suit with the DJIA Fut +31 and the S&P Fut +3 so far.  Oil is up about 0.3% at 51.82 last.  Treasuries continue to sell off with the 10yr now at a recent high yield of 2.131%.  We will look toward the 8:30am data to see if that trend continues.  Credit traded sideways yesterday but looks to be opening up firmer this morning with the Investment Grade index right around 60½/61 to start.

Market movers this morning:  Fortescue Metals (FMGAU) is tendering for their 2017, 2018, and 2019 issues and extending their debt maturies out past 2021 via a new $2.5bn senior secured issue.  We have seen better buying of this issues ahead of this announcement and they have run up significantly.  Abbvie making headlines with a last minute $21bn bid for Pharmacyclics Inc.  The acquisition helps Abbvie diversify their revenue streams and edges out rival Johnson and Johnson.   In secondary action Cliffs continues to trade slightly off recent highs as the exchange offer heats up.  We have seen better sellers of the 2018's and better buyers of the long paper as would be expected.

In the primary market we saw deals yesterday from CBA (3yr and 5yr),  Ensco PLC (10yr and 30yr), Burlington Northern (10yr and 30yr),  DTE Elec (30yr), CME (10yr),  TD Ameritrade (7yr) and AIA Group (10yr) to name a few.  The ESV and the AMTD deals were the star performers, trading significantly tighter with nothing but buyers.  No new issues yet this morning but would expect something soon.  On the economic data front:  Initial Jobless Claims (Survey 295k),  Continuing Claims (Survey 2395k), and Factory Orders (Survey .2%) all due out at 8:30am.


Municipal Bond Market
Munis are unchanged this morning after a mixed trading day yesterday.  The focus in munis was on the pricing of $882mln Maryland GOs yesterday.  Underwriters priced in additional concession to distribute the deal quickly. We expect to see buyers continue to focus on the new issue market with above average supply each day.  Today’s calendar is relatively light with the $39mln Brookhaven NY, GOs highlighting the day.

PR Benchmark GOs were unchanged 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:
9.7mln    Clayton Borough, NJ Board of ED    2017-2040     /A+
7.1mln    Attleboro, MA G.O.s    2016-2025     /AA
39.3mln    Brookhaven, NY G.O.s    20172028    Aa2./AA+
3.8mln    Canton, MA    2016-2028   
15.8mln    Coventry, RI G.O. Bonds    2016-2035    Aa3/
6.8mln    Jefferson County, TN G.O.s    2018-2036    Aa3/


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