Corporate Bond Market
European stocks are higher today on data that showed improvement in euro-area manufacturing, leading to optimism that the region’s recovery is strengthening. Futures this morning are opening flat (DJIA +4 and S&P +0.25). Oil is down a dollar in early trading at $45.62/bbl. Credit is unchanged with the IG Index at 78.5/79. US Treasuries are off across the curve with the 10yr at 2.174%.
Visa, the world’s largest payments network, has agreed to acquire Visa Europe in a deal valued at $23.4 billion. HSBC, Europe’s largest lender beat estimates as it pared costs at a greater rate than its revenues declined. In another drug deal, Shire Plc. agreed to buy biotechnology company Dyax Corp. for at least $5.9 billion.
There was no issuance in the IG primary market on Friday but it is expected to be a busy week as earnings season is winding down and companies want to get ahead of the holiday season. Year-to-date volume is $1.013 trillion, with October hitting $103 billion - a record for the month.
Economic data: Market US Manufacturing PMI (9:45am), Construction Spending (9:00am), and ISM Manufacturing and Prices Paid (10:00am).
Municipal Bond Market
Munis are weaker this morning after trading stronger to close out the week. New issuance will pick up slightly this week with $6.3 billion scheduled vs. $3.6 billion in the prior week. We expect to see extremely strong demand in the primary for the third straight week as funds continue to face inflows and need to put cash to work. Muni funds reported $349 million in new cash compared to $245 million during the previous week. The calendar is mostly comprised of smaller deals this week with 15 deals over $100 million. The two largest deals of the week will be the pricing of $450 million MA Trans and $400 million NV ST GOs. 30-day supply strengthened this morning with $10 billion on tap over the next 30 days versus $5 billion Friday.
PR trading remains nonexistent as the market waits on more news out of the island. We continue to see very little interest in any PR debt and expect it to continue until we see any kind of progress in restructuring talks. PR benchmark 8’s of 2035 traded around @ $73.00 (11.48%) on Friday after trading around $71 (11.82%) early last week.
30-Day visible supply: $5bn
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