Monday, Sept. 14, 2015

Corporate Bond Market
Worldwide equity markets are mixed this morning.  US equity futures are up slightly with emerging markets, as traders suggested the Federal Reserve will delay raising interest rates at this week’s meeting (DJIA +4, S&P +2).  Copper and other industrial metals dropped after weak Chinese industrial output has created concerns that demand growth will stall in the world’s biggest user.  Oil this morning is down $18 at 44.46/bbl.  Credit spreads are opening wider this morning with IG Index 80.05/80.55 +.55.  US treasuries are higher with the 10 year up 4/32’s yielding 2.172%.

It was a very quiet week for corporate news. There is an article in the WSJ this morning regarding the trading of Exchange Traded Funds (ETF) during last month’s market volatility. There were many stocks that stopped trading and several ETF’s traded at sharp discounts to the sum of their holdings. This highlights concerns that ETF’s may not be as easy to move in and out of in periods of market volatility.


Municipal Bond Market
Munis are stronger this morning after an extremely quiet close to the week on Friday.  We saw very light volume in the secondary market and minimal trading off of bid-wanted situations. New issuance remains light with only $4.2bn this week compared to $2.29bn during the shortened holiday week.  We expect to see light trading into Wednesday as the market awaits this week’s FOMC meeting.  The largest deal on the calendar this week will be $1bn TX Transportation bonds.  30-day supply is slightly stronger this morning with $8.7bn on tap over the next 30 days versus $7bn last week.

PR trading remains extremely light as the market waits for more news out of the island.  We saw volatile trading in all PR credits after PREPA announced a potential restructuring plan and the governor unveiled his economic growth plan later in the week.     PR GO 8s of 2035 traded as high as $76.25 (10.95%) on Monday of last week before trading as low as 72.875 (11.499%) to close the week

30-Day visible supply: $8.7bn


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