Wednesday, Dec. 9, 2015

Corporate Bond Market
It's risk off this morning as global equities all trade down, even as metals and crude oil rally and credit trades wider (Euro Stoxx are down 0.55%).  Stateside, DJIA Fut is +13 and S&P Fut is down -2.25.  Oil is up in early trading at $37.87/bbl.  US treasuries are selling off with the 10yr last at a 2.24%.  Credit appears to be 1bp wider on top of yesterdays 3-4bp widening, with the Investment Grade Index at 86.25/86.75.

Waking up this morning, there is a headline that Dow Chemical and DuPont are in advanced talks to merge, which would create a $120bn company.  Anglo American said it would cut 85,000 jobs over the next year as part of a large restructuring plan driven by low commodity prices.  Yahoo scrapped its long-planned spin-off of shares of Alibaba Group after concerns about tax risks associated with the transaction. Kinder Morgan, the largestpipeline operator in North America, reduced its dividend by 75% yesterday.

There were no deals done in the new issue market yesterday.  On the economic data front: MBA Mtge. Applications(7:00 AM) and Wholesale Inventories and Trade Sales(10:00 AM) are due to be released today. 


Municipal Bond Market
Munis are weaker this morning after strengthening on the long end for the third straight day.  We continue to see very light demand in the secondary with the market preferring to put money to work in the primary.   We expect to see the market continue to focus on the primary today with some of the weeks more interesting deals pricing.  The highlight of today’s calendar will be the pricing of $190mln bonds for Clemson University. 30-day supply is weaker this morning with $6.9bn on tap over the next 30 days versus $9.9bn on Tuesday.

PR demand remains light as the market awaits January debt payments.  The one notable trade of the day was seen in COFINA senior lien debt when 5mm+ traded @ 56.65 (10%) which is an all time low for the credit.  Benchmark GO 8’s of 2035 continue to stabilize in the mid-$70s with 1.5mm @ $75 (11.17%) .  We expect to see volume decline leading up to January debt payments. 

30-Day visible supply: $6.9bn


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