Thursday, Sept. 3, 2015

Corporate Bond Market
World equity markets are higher today with the Stoxx up +26 and all other European index’s are positive.  China is having a two-day holiday creating a respite from a recent center of volatility.  The equity markets remain volatile with the Dow up 1.82% yesterday and this morning equity futures are positive, DJIA +50 and S&P +6.  Oil this morning is flat at $46.29/bbl.  Credit is opening unchanged this morning with the Investment Grade Index 81.6/82.1 -.9 and the US Treasury note are little changed, at 2.18%.

On the corporate front it has been a quiet week which is typical for the last week of the summer.  Syngenta, which just fended off a $47bln takeover approach from Monsanto, moved to shore up investor support with a plan to buy back more than $2bln of shares and sell a vegetable-seeds business.

There were no deals done in the primary market yesterday, which extends that almost two weeks without a company coming to market.  The expectation is that there is pent up demand and volume in September will be a large.

Economic Data: Jobless claims (8:30 am) and Trade balance (8:30am)


Municipal Bond Market
Munis are stronger this morning after mixed trading yesterday.  Secondary flow was extremely light in top-rated munis as the market focused on the restructuring deal out Puerto Rico.  We expect to see the market focused on the secondary this morning with the majority of new issue wrapped up ahead of the holiday weekend.  The week’s largest deal of NY ST DORM PITs saw extremely strong demand and will be free to trade this morning.  30-day supply is slightly weaker this morning with $6.3bln on tap over the next 30 days versus $7.5bln yesterday.

Some PR credits rallied after it was announced that the power authority had come to a restructuring agreement with creditors.  PREPA paper traded as high as $68, while GOs rallied into the mid sixties.   We should see PR paper stabilize today as the market continues to digest the restructuring agreement.

30-Day visible supply: $6.3bln


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