Wednesday, February 17, 2016

Corporate Bond Market
Firm tone to the market once again with equity futures up to start the day (DJIA Fut +111, S&P Fut +14.50).  European stocks are all up buoyed by better than expected earnings out of Credit Agricole.  Oil is hovering just under $30 at $29.95 last.  US Treasuries are selling off with the yield on the 10yr at a 1.80%.  Credit is better as well with the Investment Grade Index -2.5 at 118.5/119.5.  Cash is 2-5bps better with high yield up .5 to 1pt. 

Yesterday marked a return to the primary market for corporates with large deals from Apple, IBM, Comcast, and Goldman Sachs.   The multi-tranche deals from each fared relatively well in choppy market conditions and have moved tighter again this morning.  Apple was the outperformer with IBM and Comcast lagging somewhat.  Goldman Sachs priced a 6.3% $25 preferred.  The bond is DRD/QDI and we are seeing strong demand from retail investors.


Municipal Bond Market
Munis are unchanged this morning after showing signs of weakness across the curve during yesterday’s trading session. We saw very little buying in the secondary from end accounts as the market remains hesitant to put money to work here.  New issuance continues to face similar challenges with dealer balance sheets building from allocations of new deals and very few outs.  The market will look to this week’s new issuance for direction with a few larger names coming to market.  The highlights of today’s calendar will include $500mln NY MTA bonds, $425mln from the Florida Municipal Power agency and $200mln in revenue bonds from the Oregon Health & science universities.  30 day supply is weaker this morning with $8.82bn on tap over the next 30 days versus $12bn Tuesday.

In credit news, the senate approved the amendments made by the house to the PREPA restructuring deal.  The bill will now be sent to Governor Padilla to sign.   The market remains hesitant about this PREPA deal actually happening judging by the movement in PREPA debt.  We continue to see odd-lot paper trade below $60 where it has sat for almost 3 months now.  The only notable print was a trade on 1.4mm @ $63.50.  The market continues to view this deal negatively for GOs.  Benchmarks 8s were bid $68 in early trading.   

30-Day visible supply: $8.82bn


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