Wednesday, Oct. 28, 2015

Corporate Bond Market
Equities in Europe are up this morning on speculation that central banks around the world will persist with monetary policies and stimulus designed to provide growth (Stoxx +69% and FTSE +.83%).  US equity markets are following with futures up (DJIA +28 and S&P +4.50).  Oil climbed 0.8% to $43.54 per barrel this morning.  Gold climbed 0.4% to $1,172.885 per ounce. Treasuries are little changed ahead of the Fed’s decision.  US 10yr is 2.037% this morning. Credit spreads are unchanged this morning with the IG Index at 78/78.5.

In corporate news, Walgreens agreed to purchase Rite Aid for about $9.4 billion in a move that will create another drugstore giant as the industry continues to consolidate. Apple stock rose 2% in early trading after forecasting a record holiday season.  Twitter stock lost 11% after saying revenue will miss.

There was $11.6 billion in new issuance yesterday, perhaps in advance of today’s FOMC statement.  The deals included Ace with a 4-tranche, Boeing with a 3-tranche, Hyundai with a 3yr and 5yr, Prologis with a 10yr, and NYL with a 3yr GIC.

Economic data:  MBA Mtge. Applications (7:00am), Advance Goods Trade Balance (8:30am) and FMOC Statement (2:00 pm).

 

Municipal Bond Market
Munis are mixed this morning after rallying on Tuesday.  We saw strong demand across the curve in the secondary market with such a light new issue calendar this week.  Customers continue to have cash to put to work and very few options with only $4 billion in new debt coming to market.  30-day supply is weaker this morning with $7.6 billion on tap over the next 30 days versus $8 billion yesterday.

PR trading remains nonexistent as the market waits on more news out of the island.  We continue to see very little interest in any PR debt and expect it to continue until we see any kind of progress in restructuring talks.   PR benchmark 8’s of 2035 traded as low as @ $70.39 (11.93%) after trading around $74 (11.23%) on Wednesday.

30-Day visible supply: $7.6bn

 

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