Thursday, Dec. 3, 2015

Corporate Bond Market
European stocks are higher today as the European Central Bank is expected to expand its asset purchases in an effort to provide more stimulus to the economy (Stoxx +1.04%).  Futures this morning are opening higher (DJIA +74 and S&P +9.50).  Oil  fell below $40/bbl yesterday but closed above $40 and is up $0.55 in early trading at $40.50/bbl.  Credit is tighter with the IG Index at 81.25/81.75.  US Treasuries are off across the curve with the 10yr at 2.192%.

Several potential suitors are emerging for Yahoo Inc.’s core Internet business, ranging from media companies to private equity.  Verizon and IAC were mentioned to be interested.  Medtronic, a large medical devices company, reported a strong quarter and raised earnings estimate for fiscal 2016.

There were just a few deals done in the IG primary market.  The highlight was a McDonald’s five-tranche deal, with 3-, 5-, 10-, 20-, and 30-year tranches.  They are all tighter this morning with the 30-year 10 bps. tighter.

Economic data: Claims (8:30am), Markit PMI(9:45am), Factory Orders(10:00am) and Durable Goods (10:00am).


Municipal Bond Market
Munis are unchanged this morning after a strong performance on Wednesday.  The market continues to focus on the primary with $6.7bn in new issuance this week. Deals below $100mln in size seem to provide an opportunity to pick up some extra yield in the primary and have been well received.  We should see secondary below average flow in the secondary in the secondary as the market awaits Friday’s payroll number.  30-day supply is weaker this morning with $7.03bn on tap over the next 30 days versus $9.3bn Tuesday.

PR paper continued to rally on Wednesday after the commonwealth made payments on both GDB and commonwealth guaranteed debt.   Benchmark 8’s of 2035 traded as high as $75.375 (11.10%) after trading around $75.00 (11.15%) on Tuesday.  The market will now look ahead to January 1st when the island faces a large payment on GO debt. 

30-Day visible supply: $7.03bn


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