Tuesday, Oct. 6, 2015

Corporate Bond Market
Equity markets overseas are mixed this morning and in the US stock index futures are down (DJIA-30 and S&P -5.50), indicating that equities may not extend its rally this year. Oil is off $0.23 at $46/bbl.  Credit is better this morning with the IG index down one basis points to 88/88 1/2.  Treasuries are up this morning with the benchmark 10yr note falling two basis points to 2.04%.  The probability that the Fed will increase rates this year has dropped to 35.2% from 60% at the end of August, according to futures data.

SABMiller  has rejected an informal takeover offer from Anheuser-Busch of about $100 billion that it considered too low.  In other corporate news, Suncor Energy’s unsolicited $3.3 billion offer for Canadian Oil Sands has created speculation that there will be more offers for takeover targets in the Canadian oil sands.

Only one deal in the IG primary market as Ford Motor Credit issued $1 billion 3yr bullet at plus 167.  They are 162/160 in early trading this morning.

Economic data: Trade Balance (8:30am) and IBD/TIPP Economic Optimism (10:00am).

 

Municipal Bond Market
Munis are unchanged this morning after trading weaker to start the week. We saw extremely light volume in the secondary as the market prepares almost $10 billion in new issuance this week.  Attention will be on the primary today with the pricing of $790 million Texas water development bonds.  We expect the market to continue to look towards Treasuries for direction.  Munis have seen decent outflow numbers mixed with strong new issuance over the past few weeks which could put pressure on the secondary with $10 billion in new deals coming.  30-day supply is unchanged this morning with $14.9 billion on tap over the next 30 days versus $15 billion Monday.

PR trading remains extremely light as we continue to see very little trading and few items out for the bid.  We should continue to see PR trade sideways until more information comes out of the island.  PR benchmark 8’s of 2035 traded yesterday @ $74.50 (11.23%)

30-Day visible supply: $14.9bn

 

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