Friday, Oct. 16, 2015

Corporate Bond Market
European stocks are up today following the rise of Asian stocks, extending the rally in global equities this month.  US Equity futures are down to start with the DJIA Fut -24 and S&P Fut -2.75.  The 10yr treasury was last at 2.010%.  Oil is up again at $46.70/bbl last.  The credit market feels firm this morning, with cash spreads unchanged to 2bps tighter and the Investment Grade Index unchanged at 82.75/83.25.

The primary market yesterday was active with new deals from Meiji Yasuda (Jap. Life Co.), Dollar General and CSX Corp.  Trading in the new issues was quiet but they were all 1-2bps tighter.  In rare Friday action, two deals are announced for this morning: GS is to sell 5yr fixed/float taps, 10yr sub and 30yr and AER is bringing $400 million 5yr.

GE reported this morning and beat analyst’s third quarter earnings estimates, led by gains in the aviation and transportation units, as the company continues to shed its finance business’s.

Economic data this morning: Industrial Production (9:15am), Capacity Utilization (9:15am), U. of Mich. Sentiment (10:00am).

 

Municipal Bond Market
Munis are unchanged this morning after a mixed trading day on Thursday.  BWs were extremely light with accounts raising cash earlier in the week to put money to work in the primary.  We expect to see the market continue to focus on new issuance next week with funds facing $520 million in inflows.    New deals continue to be oversubscribed as accounts prefer to put money to work in the primary.  30-day supply is slightly stronger this morning with $11 billion on tap over the next 30 days versus $10 billion yesterday.

PR debt was unchanged after a report that US officials were discussing the issuance of a new “super” bond that would help Puerto Rico restructure $72 billion in debt.  The market seems to have very little faith that a deal like this could get done.   PR benchmark 8’s of 2035 traded as high as @ $75.60 (11.06%) after trading around $74 (11.23%) earlier in the day.

30-Day visible supply: $11bn

 

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