Thursday, Oct. 1, 2015

Corporate Bond Market
Yesterday pretty much all markets advanced with stocks, commodities and emerging-market currencies. This morning the Stoxx Europe Index is on course for the biggest two-day rally in a month and the US market looks like it will follow (DJIA +42 and S&P +3.75). West Texas crude oil is up 2% this morning to $46.09/bbl. The average price last quarter was the lowest since early 2009, when US crude inventory expanded and Iraq increased output. Credit spreads are a touch better in early trading this morning with the IG Index -1/2 at 92/93. US Treasuries are unchanged this morning (10yr 2.042%).

First Data Corp., the payment processor taken private by KKR eight years ago, is seeking to raise as much as $3.2 billion in what will be the largest IPO of the year.  After three years of regulatory review, M&T Bank purchase of Hudson City was approved. M&T compliance issues were cited as the reason for the long delay.

There was only one deal brought in the primary market yesterday, but it was a big one: HP issued $14.6 billion in nine tranches from 2yr to 30yr. The bonds are a couple of basis points tighter in early trading this morning.

Economic data: Challenger Jobs (7:30am), Jobless Claims (8:30am), Markit US Mfg. and Bloomberg Consumer Comfort (9:30am), and Construction Spending and ISM Mfg. Prices Paid (10:00am).

 

Municipal Bond Market
Munis are unchanged this morning after rallying for the third straight day this week. Attention remained on the primary market with the pricing of four competitive deals totaling $900 million from the State of Washington.  The 5’s of 2040 were priced to yield 3.24%.  We expect to see attention shift back to the secondary with very little new issuance left for the week and redemptions from a variety of states. 30-day supply is weaker this morning with $12.1 billion on tap over the next 30 days versus $13.5 billion on Wednesday.

PR trading remains extremely light as we continue to wait on more news out of the island.  The most active trading has been in GDB, PRASA, and GO paper with very few PREPA trades over the past week.  We continue to see very little trading benchmark GOs.  3mm in bonds traded at $75 (11.18%) on Wednesday versus trading at $74.75 (11.195%) early last week.

30-Day visible supply: $12.1bn

 

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