Friday, February 19, 2016

Corporate Bond Market
The market is selling off a bit to the end week with global equities down overnight (Euro Stoxx was off -.72%,  Nikkei -1.42%).  Stateside, stock futures are also lower with DJIA Fut – 43 and S&P Fut -5.75.  Treasury yields are lower with the 10yr last at a 1.743%.  Oil is trading off a bit at $30.26.  Credit is weaker with the Investment Grade Index +2.5 at 118.50/119.50.  Cash spreads are unchanged to slightly wider to start. 

Secondary trading has been dominated by the new General Motors deal which priced roughly 50bps cheap to the outstandings.  They printed a 20yr and a 30yr at +400 and +415 respectively.  That brings MTD issuance to $35bn and WTD to $29bn.  We are hearing rumors of a benchmark financial transaction due to come today but no names yet.  Elsewhere Moodys downgraded a number of Energy companies with more expected to come next week.  Most of these moves were priced in. 

In economic news, CPI (8:30am) and Real Average Weekly Earnings (8:30am) are due to be released today.



Municipal Bond Market
Munis continued to lag Treasuries for the second straight day, with the market remaining unchanged across most of the curve and weaker in some spots.  Liquidity has dried up as dealers struggle to move aged line items.  We saw very few bidders in the secondary leading to a few sloppy trades across the curve and most traders remain extremely hesitant to put in for new deals.  Cash continues to build on the sidelines with funds facing their 20th straight week of inflows with $680mln in new cash.  30-day supply is stronger this morning with $10bn on tap over the next 30 days versus $8.8bn Thursday.

PR trading was light on Thursday with PREPA trading down about 1pt from Wednesdays levels.  The market seems to be skeptical about the time it will take for a new deal to come to market and the hurdles that will accompany it.   PR benchmark 8’s traded @ $70.375 (11.95%) after dipping into the high $60’s last week. 

30-Day visible supply: $10bn



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