Wednesday, Aug. 26, 2015

Corporate Bond Market
After the ugly close in the US equity market yesterday, global equities are generally off less than one percent this morning. US futures are opening up DJIA +265 and S&P +31.75. The Treasury market is down this morning with the 30-year off 1 point at 2.848%. Oil is unchanged this morning trading at $39.47/bbl. Credit is opening up weaker this morning with the Investment grade Index up +15 at 85.1/85.8.

Miners and energy companies led losses in Europe, with Transocean down 6.9% . The world’s top offshore rig operator said it will halt investor dividends and book $2.1bln in asset impairments as an oil price crash weakens demand for its drill ships. In corporate news this morning Schlumberger, the world’s largest oilfield-services provider, agreed to buy Cameron International in a $14.8bln cash and stock deal.

Yesterday was the third day in a row in which there were no new issues brought in the IG primary market.

Economic Data: Durable orders, MBA Mortgage Applications and Cap Goods orders all out today.


Municipal Bond Market
Munis were significantly weaker Tuesday after Mondays rally.  The market ended Tuesday almost flat from where we started the week, as we continue to see increased volatility.  Attention will be on the primary today with allocations on $2.2bln in NJ Economic Development bonds and the pricing of multiple micro deals under $100mln. The New Jersey Economic development deal was met with extremely strong demand after 10-year paper was priced to yield 4.34%. 30-day supply is weaker this morning with $7.4bln on tap over the next 30 days versus $12bln yesterday.

In Puerto Rico news,   PRASA has decided to delay the sale of $750mln in debt due to current market conditions.    At this point, the market seems to have priced in that the deal would not get done and we do not expect to see much volatility related to the news.    Puerto Rico GO 8’s of 2035 firmed up yesterday with bonds trading as high as $70.625 (11.88%) after trading around $69 (12%) to start the week.

30-Day visible supply: $7.41bln


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