Monday, Dec. 21, 2015

Corporate Bond Market
European stocks are higher today (Stoxx +.44%) and the MSCI Asia Pacific Index was little changed as the Shanghai Composite index jumped 1.8% amid speculation that the Chinese government will take steps to improve the efficiency of state-owned enterprises.  Futures this morning are opening higher (DJIA +121 and S&P +17.00).  Oil is down $0.46 to $34.27/bbl  in early trading and has slipped below levels last seen during the 2008 global financial crisis after OPEC effectively abandoned output limits and the US passed legislation to lift a 40-year ban on crude exports.  Credit is tighter  by 0.6 with the IG Index at 94.4/95.4.  US Treasuries are flat across the curve with the 10yr at 2.208%.

There was  no issuance in the IG primary market on Friday.

Economic data: Chicago Fed Nat Activity Index (8:30am). 


Municipal Bond Market
Munis are unchanged this morning after rallying again on Friday.  We continue to see strong demand across the curve as muni buyers put money to work after sitting on the sidelines ahead of the Fed’s rate decision last week.  New issuance will be nonexistent during the shortened holiday week with only $73mln scheduled vs. $1.9bn last week.  Light new issuance combined with $300mln in fund inflows should create secondary demand heading into the New Year.  30-day supply is weaker this morning with $2.7bn on tap over the next 30 days versus $3bn on Friday.

In credit news, PREPA seems to be closer with bondholders and insurers on agreeing to restructuring terms.  PREPA debt traded up on the news moving from the low $50s to the low $60s and is now trading with interest.  Benchmark GO 8’s of 2035 continue to drift with bonds trading as low as $72.00 (11.66%) on Friday after trading in the mid $70s two weeks ago.

30-Day visible supply: $2.7bn


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