Tuesday, Jun. 23, 2015

Corporate Bond Market
Another strong start for the equity market as Greece edges towards a deal with creditors ahead of that June 30th debt payment.  DJIA Fut +30, S&P Fut +4.75.  Overseas European equities are all up at least 1% with Euro Stoxx up 1.37%.  Asian equities are strong as well , Nikkei +1.87%, Hang Seng +.93%.  Treasuries remain range-bound ahead of the Durable Goods, New Home Sales, and Manufacturing PMI numbers due out later this morning.  The 10yr last trading at a 2.391% yield.  Oil is roughly unchanged at $60.15.  The credit markets had a strong day yesterday though secondary trading was thin.  They are poised to go tighter again with equities.  The Investment Grade index is a touch tighter at 64.5/65. Cash spreads are 1-5bps tighter depending on the sector.

Yesterday we saw $1.85bln in new issuance to the corporate market, out of an estimated $25bln due this week.  The star performer was the two-tranche deal from AER,  5yr and 7yr which traded up 0.5pt after pricing.  We have seen buyers.  BB&T Corp priced a 5yr deal which traded at issue, +98 with sellers on the break.  We were focused on a new preferred from regional bank Wintrust Financial which priced a 6.5% 10yr fixed to float $25 par perp.  Retail loved the name and structure and the deal was significantly oversubscribed.  We will remain active in the name today.  So far this morning we have deals on tap from Asian issuers Kexim and Baidu , would expect more to come in New York time.

Nothing significant to note on the credit news front.  Economic Data: Durable Goods Orders (8:30am), FHFA House Price Index (9:00am), Markit Manufacturing PMI (9:45am), and New Home Sales (10:00am) are due to be released today.


Municipal Bond Market
Munis are slightly weaker this morning after a quiet start to the week.  We saw extremely light demand in the secondary and very few BW items actually trading as tsys drifted lower.  It seemed as if the majority of buyers were sitting on the sidelines ahead of this week’s $8.7bln in new issuance.  The focus this week will be on the primary with about $8.7bln in deal scheduled.  The largest competitive deal of the week will price today with $165mln Seattle Municipal light and power bonds. 30-day supply is unchanged this morning with about $12.10bln on tap over the next 30 days versus $12.4bln yesterday.

PR debt remains unchanged as we approach the July 1st payments.  We continue to see below average volume in benchmark and very few items out for the bid in all PR names.  Benchmark GOs Bonds continue to trade around $80 (10.42%) on very few transactions.

30-Day visible supply: $12.10bln