Tuesday, Nov. 17, 2015

Corporate Bond Market
Global equities are higher across the board today and the Euro fell to a seven-month low against the dollar on speculation that the European Central Bank will add to monetary stimulus, helping markets withstand higher US interest rates (Stoxx+2.08% and Hang Seng+1.22%).  US stocks were up yesterday and futures are opening higher this morning (DJIA +66 and S&P +5.50).  Credit is slightly tighter at the open with the IG Index -0.40 82.35/82.85. US Treasuries are down  this morning across the board by 1 to 9 ticks with the 10yr at 2.285%. Oil is down $0.26 at $41.17/bbl.

In corporate news, Marriott agreed to buy Starwood for $12.2 billionto create the world’s largest hotel company.  Walmart beat third quarter profit estimates and increased the low end of its annual forecast. GE completed the spinoff of consumer finance arm Synchrony by exchanging the units shares for its own stock, concluding a big step towards its shift to an industrial company.

There were a few deals in the new issue market yesterday: Florida Power and Light  came to market with a 10yr, Duke with a 30yr and 10yr tap, and Lockeed did a five-tranche benchmark. USB came with a benchmark hybrid perpetual nc 5yr fixed-to-floating at 5.125%.

Economic data: CPI data for October (8:30am), Industrial Production (9:15am), Capacity Utilization (9:15am), Mtg data (10:00am).


Municipal Bond Market
Munis are weaker this morning after a strong start to the week.  The market will continue to focus heavily on the primary this morning as the market digests almost $10 billion in new debt.  New deals were met with strong demand yesterday, leaving very little focus on the secondary.  BW situations saw few bidders and weak support as buyers chose to put cash to work in new deals.  30-day supply is stronger this morning with $12.5 billion on tap over the next 30 days versus $11 billion Monday.

PR trading remains nonexistent as the market waits on more color out of the Island.  We continue to see zero demand for any type of PR paper.   PR benchmark 8’s of 2035 traded @ $71.375 (11.76%) on Monday after trading around $71.75 (11.68%) on Friday.

30-Day visible supply: $11bn


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